Shareholders nixed Kroger proposal to increase labor wages

I’ve always thought shareholders were a huge part of the problem for our current type of capitalism: while productivity has increased (according to some news I’ve read), labor’s wages have remained flat while all productive gains accrue to the shareholders. This site gives an example of what I have read quite a few times: Economic Policy Institute.

Yes, it is most likely a left-leaning institute, but other economists have pointed out the break between productivity and labor wages.

The World Economic Forum has noted the break between labor wages and productivity.

Anyway, way back when I was younger and was reading about shareholders’ reaction to the news that a company would conduct layoffs, pushing the stock prices up, I thought shareholders were not our friend. To be happy that people were being laid off did not sound like a bunch of investors who cared about regular people’s lives. Instead, they were happy that management were laying off people.

I thought, surely, you can’t fire more and more people in the effort to juice up the stock price because those people whom you were firing were your market, your customers. By laying off people, you were reducing the number of available customers. And I think by the 90s that became the case (I don’t have hard evidence – this is just a guesstimate) because companies began to look outside of the US for more markets to sell to when the US market was desultory.

The problem I had was that those investors could be regular people like you and me, but I had a sneaking suspicion that that was not the case. I just didn’t have the data to tell me that regular people were not doing the investing; it was just a gut feeling based upon looking around me.

Then one day I read something that indicated that the wealthy owns most of the stock. Something like the top 1% owned 53% of the stock, the next 9% owned 40% and the rest of us (the bottom 90%) owned only 7%. If you do some googling, you will get some different percentages, but they all appear to say that the wealthy own most of the stocks. This variance might be due to timing of the finding.

Even though the specific numbers varied, the main headline was that the wealthy held most of the investments and were most likely the drivers of the current type of capitalism (shareholder driven with no relationship between productivity and labor wage).

In order for labor to be able to increase their wages, or tie their productivity to their wages, you would have to do something about the shareholder power which is basically the power of the wealthy.

Anyway, that has been my thinking ever since I learned that shareholders were happy when workers were laid off.

Why am I talking about this topic?

Well, a couple of days ago, I read an article about how shareholders nixed a proposal that would raise Kroger’s employees wages to a living wage.

That was the first time I have ever seen an article spelling out that the shareholders, not the management, voted down the proposal to give employees a living wage. Providing a living wage seems like such a noble and right thing to do, but not to the shareholders. They were not in a generous mood.

Neither were the shareholders of Target and Walgreens.

“During Kroger’s annual meeting last week, shareholders voted against a proposal that could have secured higher wages for hundreds of thousands of workers employed by the grocery giant. The majority of shareholders—about 83%—ultimately rejected the proposal, which was brought by a trio of activist investors and urged the company to pay workers a living wage that would provide the “minimum earnings necessary to meet a family’s basic needs.” 

This year, Target and Walgreens have faced similar proposals pushing for living wage policies, both of which were also struck down when put to a vote.”

Pavithra Mohan, Fast Company, “‘I have coworkers . . . barely making it’: A Kroger employee on the recent shareholder vote over wages”, July 3, 2024

This is the first time I am actually seeing news articulating that shareholders are turning thumbs down on giving raises.