By Les Leopold / Substack

Intel, the largest chip maker in America, with 2023 revenues of $54 billion, has just been awarded an $8.5 billion grant from the federal CHIPS and Science Act, plus $11 billion in favorable loans. 

In addition to badly needed microchips, Intel produces totally useless stock buybacks. On its website the company proudly proclaims to have spent $152 billion on stock buybacks since 1990. That’s not a typo — $152,000,000,000. Which is why I call it Stock Buybacks Я Us.   

Intel took $152 billion of its revenues, some portion of which could have been used for R&D and building new microchip facilities in the U.S. as well as paying workers more, and instead funneled it to its largest Wall Street stockholders and corporate executives, enriching the top fraction of the top one percent. 

A company repurchasing its own shares sees earnings per share rise because there are fewer shares in circulation. Share prices rise, though nothing new is made, and the largest stockholders, including top Intel executives, cash out with eye-popping profits. Intel CEO Pat Gelsinger hauled in $179 million in 2021, most of it coming from stock-related compensation.  

Stock buybacks are a form of stock manipulation, which is why they were outlawed by the Securities and Exchange Commission after the Great Depression, up until deregulation in 1982, that limited buybacks to two percent of profits. Now it’s all the buybacks your corporation can eat, with nearly 70 percent of all corporate profits going to this form of stock manipulation.  

So, why are we giving Intel another $8 billion? 

National security is at risk, we are told. Semi-conductors are far too important to our defense and to our economy to be produced overseas, especially in or anywhere near China, our communist enemy de jure.  If we don’t bribe Intel to build here, the argument goes, they just might go elsewhere. They are in business to produce profits (and stock buybacks) not national security.

But the biggest selling point, as always, from politicians of both parties, is Jobs! Jobs! Jobs! The White House calculates that Intel will generate 20,000 temporary construction jobs and 10,000 more permanent manufacturing jobs because of this grant. 

But what’s to stop Intel from shoveling taxpayer grants into more stock buybacks?

Not much. Sen. Chris Van Hollen (D-Md.) writes: 

“While the legislation specifically prohibits the use of CHIPS funds for stock buybacks and dividend payments, these restrictions do not explicitly prohibit award recipients from using CHIPS funds to free up their own funds, which they can then use for those purposes.”

Sen. Elizabeth Warren (D-Mass.) is already worried that BAE Systems, a much smaller CHIPS recipient, but also a buyback recidivist, has not said it would refrain from stock buybacks for the duration of its CHIPS money.  

Intel hasn’t made that pledge either. In fact, Intel’s website states it still has authorization to conduct another $7.24 billion in stock buybacks.  

How can you tell if such a large company is using CHIPS money or other money to conduct its buybacks? You can’t.

Doesn’t the CHIPS Act prohibit Intel from conducting mass layoffs?

Not a chance. 

Intel could very well increase jobs in some locations while cutting jobs in other locations. And there is evidence that they are doing that right now. 

As the CHIPS Act was moving through Congress in 2022—strongly lobbied for by CEO Gelsinger—Intel laid off approximately 2,000 employees in California. Now, the company says, it “is working to accelerate its strategy while reducing costs through multiple initiatives, including some business and function-specific workforce reductions in areas across the company.” 

What that word salad means is that by the time Intel creates 10,000 new manufacturing jobs, it will have laid off more workers than that. And they know there’s nothing the government will do about it.

Why are most politicians so gutless about preventing mass layoffs?

That’s a longer story that I cover in Wall Street’s War on Workers. Simply put, our political system refuses to acknowledge that mass layoffs are the ruination of working people.  

More than 30 million working people have suffered through mass layoffs since 1996. Last year there were more than 260,000 jobs lost in the highly prosperous tech sector, with another 50,000 so far this year. In January 2024, there were 82,000 layoffs across the economy. Many of those workers will suffer greatly both from financial loss and deterioration of their health.   (For those worried about the catastrophic impact of artificial intelligence, the Challenger Report claims AI killed only 381 jobs in January 2024.)

It should be a no-brainer for the government to make a simple regulation:

If you are supping at the taxpayer trough, you can’t conduct compulsory layoffs of taxpayers. All your layoffs must be voluntary. That is, you have to buy workers out. No forced layoffs!

Most elected leaders believe that regulating corporations about how they can and can’t destroy jobs is blasphemy, an attack on sacred capitalist freedoms, something that only the Communists would do! In addition to the ideological blowback, the political establishment actually buys the corporate line that halting mass layoffs would make corporations uncompetitive, which is total nonsense.

Here’s a telling piece of evidence.

In 2021, Siemens Energy, the German-based company with 90,000 employees globally, decided to stop making equipment used in oil extraction and fracking. In Germany, 3,000 workers were to lose their jobs, and another 1,700 in the U.S.

In Germany, companies must live within a legislated system of codetermination, meaning that half the seats on a company’s board of directors are held by worker representatives, and labor-management committees run the day-to-day operations of each facility. (BTW, this system was urged upon German businesses by the U.S. after WWII, because we believed unionized workers were less likely than their bosses to cozy up to fascists.)  

In Germany, the workers used their power to persuade Siemens management to agree to no forced layoffs. On top of that, Siemens agreed not to shut down six facilities and instead put other production lines in them.In the U.S.? All 1,700 workers lost their jobs AND the president of Siemens USA was invited to the infrastructure bill signing ceremony. In honor of the legislation she had the gall to say,

“This is a historic moment in America – one that sets the stage for decarbonizing the economy, boosting U.S. manufacturing, creating jobs, and increasing equity.”

Moral of the story: In addition to fabricating hypocritical public statements, global corporations have incredible flexibility and resources to modify production, employment, wages and working conditions. “No forced layoffs” would not put Siemens or Intel or any other global corporation out of business. Instead, there might be a microscopic dip in stock buybacks!

Every single company that is getting a CHIPS grant has the capacity to modify its operations to avoid forced layoffs, just as Siemens has done in Germany. In fact, every company that gets a federal contract should agree to do the same, as well as forswearing stock buybacks. 

The second moral of the story: Wall Street and corporate America are so accustomed to getting their way that they will only pursue national goals when they are bribed. No matter how rich, no matter how large their stock buyback scams, they want our tax dollars with no strings attached. And very few politicians have the nerve to resist. 

There’s only one way out of this non-stop shakedown: expand labor unions and build a powerful mass movement. Until we, the people, rise up and demand it, no one will derail the Wall Street gravy train that runs from our pockets to theirs via stock buybacks and pink slips. 

And we wonder why so many Americans think the system is rigged and that democracy isn’t working for us.

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Les Leopold

After graduating from Oberlin College and Princeton University’s School of Public and International Affairs, Les Leopold co-founded the Labor Institute in 1976, a nonprofit organization that designs research and educational programs on occupational safety and health, the environment, and economics for unions, worker centers, and community organizations. He continues to serve as executive director of the Labor Institute and is currently working to build a national economic educational train-the-trainer program with unions and community groups.

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