For most Americans, the COVID-19 pandemic has been a traumatic experience. Nearly 1 million Americans have died. Millions more lost their jobs. And nearly everyone had their daily lives upended dramatically. 

But for a number of large corporations, the pandemic has created an unprecedented windfall and record profits. These profits would not have materialized without frontline workers, who put their lives at risk to keep companies operating and the economy functioning. In the end, however, corporations chose to use almost all of that extra cash to reward shareholders and executives, according to a new study by Brookings. Workers, comparatively, received almost nothing. 

The Brookings study looked at performance of 22 major corporations, which collectively generated an additional $1.5 trillion in wealth for shareholders between January 2020 and October 2021. That was 57 times more than the additional wages provided to the workers whose labor generated that wealth. 

Those 22 corporations employ about 7 million workers. Those workers collectively received $27 billion in additional pay during the first seven quarters of the pandemic. That sounds like a lot, but it amounts to about $3700 per worker or a less than $1 per hour increase for a full-time employee. Conversely, the richest 5% of households — the 6 million households that hold a large majority of stock in the United States — saw their wealth increase by $140,000 per family due to the rising stock prices of those companies. 

Brookings identified a subgroup of 12 major companies that "won" the pandemic: Albertsons, Amazon, Costco, CVS, Dollar General, FedEx, Home Depot, Kroger, Lowe's, Target, UPS, and Walmart. These are all businesses that benefited from the shift to eating at home and shopping online. As the pandemic wanes, these companies are poised to continue to benefit from permanent shifts in consumer behavior. 

From January 2020 to November 2021, these 12 companies saw their profits increase "$56.1 billion, or 45%, compared to the previous seven quarters." Very little of this extra cash made its way to workers. 

Workers at two of the "winning" companies, Dollar General and UPS, received no additional pay in 2020 for working during a deadly pandemic. Home Depot offered the most additional pay, a $3500 bonus for full-time workers, which amounted to a 13% pay increase. The average temporary pay increase among these companies was just 6%. 

Due to a tight labor market, every company in the "winning" group except Lowe's and Dollar General raised their hourly wages over the course of the pandemic. But, due to inflation, the increase in real wages was quite small. Kroger, for example, increased its average hourly wage from $15 per hour in January 2020 to $16.25 per hour in October 2021. That's an 8% nominal increase but, due to inflation, only a 1% increase in real wages. 

As of October 2021, "the living wage would be $17.70 per hour, or just under $37,000 annually." Workers who get assigned less than 40 hours per week, which is common in the service sector, would need to make even more. Only four of the twelve companies that saw their profits explode during the pandemic — FedEx, UPS, Costco, and Amazon — currently pay at least half of their workers a living wage. 

"In general, worker pay is still far too low, compared to either a living wage or company financial performance; shareholders reaped tremendous rewards while workers shared only minimally in company success," the Brookings study conclude. 

Corporate priorities

The fact that a small percentage of Americans benefit from rising stock prices is outside of any one corporation's control. It reflects the fundamental inequality in the United States where a relatively tiny number of households own most of the stock. 

But corporations do control how they spend their own money. The 22 companies included in the Brookings study spent $49 billion on stock buybacks during the first six quarters of the pandemic.(Six companies — Amazon, CVS, Disney, Hilton, Marriott, and Starbucks — suspended stock buybacks during this time period.) If those funds had been diverted to worker pay instead, these companies could have increased wages by almost 40%, from an average of $23,707 to $32,705, without impacting profitability. 

Public companies need to make a profit, but could have chosen a more equitable balance between profitability and improving worker pay. Devoting just 25% of record annual profits at the 12 "winning" companies to worker pay could have a meaningful impact. 

It doesn't have to be this way

One might dismiss the inequitable distribution of the pandemic windfall as the inevitable result of capitalism. But, as the Brookings report notes, it wasn't always this way:

Workers, at least white men, used to share in company success through higher wages. In the three decades after World War II, the economy divided gains more equitably between workers and shareholders; worker pay and the S&P 500 grew at roughly the same rate. But in the late 1970s, economic productivity and worker pay diverged dramatically. In the subsequent three decades, productivity has risen more than three times as much as compensation. Instead of boosting pay for the average worker, increased productivity drove greater compensation for highly paid corporate employees, higher company profits, and higher shareholder returns.

Corporate America has implicitly acknowledged it has lost its way. The Business Roundtable, a lobbying organization that represents the CEOs of virtually every major American corporation, issued a statement in August 2019 that "redefines the purpose of a corporation." According to the statement, corporations exist to promote "an economy that serves all Americans." 

The statement says that corporations don't exist merely to generate returns for shareholders. Rather, corporations are "committed to all stakeholders." This includes customers, employees, suppliers, and the broader community. Americans, the statement said, "deserve an economy that allows each person to succeed through hard work and creativity and to lead a life of meaning and dignity."

Specifically, the statement pledged to invest in employees and "move away from shareholder primacy." The pandemic provided an early test of this commitment and nearly every corporation that signed the Business Roundtable statement failed.