(Etsy)
That Equal Pay Day in the U.S. fell on Wednesday, March 24, this year is not random. It is a specific date calculated to reflect the fact it would have taken a period of nearly three months for the average woman to earn the same amount of money the average man made in a year. Because women of color are disproportionately affected by pay inequities, Equal Pay Day for Black women isn’t until August 3; for Native American women it’s September 8; and for Latina women it’s October 21.
Pay equity mattered a lot to the public before the pandemic, and it matters even more now. American women lost one million more jobs than American men did – this report from the Federal Reserve Bank of San Francisco identified mothers leaving the workforce to care for children at home during school shutdowns as a major culprit – and find themselves playing catch up yet again.
To reverse the trend and create a more inclusive recovery, we took a closer look at our universe of roughly 1,000 of America’s largest public companies to see which were best for women across five key indicators of performance: board composition, paid parental leave, pay gap analysis, backup dependent care, and paid time off.
The standout companies were Bank of America, Etsy, General Mills, HPE, and Starbucks, and you can watch a segment produced for CNBC’s The News With Shepard Smith built from our data, and explore the policies in a complementary article on our site.
Interestingly, Bank of America recently published its own comprehensive study on pay gaps across corporations, and estimated that closing the gender pay gap in the U.S. would generate $600 billion in labor compensation, or around 3% of annual GDP.
JUST’s data shows that many of the companies that have disclosed their gender pay analysis have already or nearly achieved pay equity (and these companies often have notable benefits for mothers). In other words, disclosure matters. The problem, as we’ve found, is that only a fifth of America’s largest companies have disclosed that they’ve done a pay equity analysis – and just over half of those share the results. As CNBC’s Rahel Solomon said in her segment, “It’s hard to know the scope of the issue or to really make progress without full transparency.”
When it comes to corporate stakeholder performance, sunlight really is the best disinfectant.
Be well,
Martin Whittaker
Citigroup, Wells Fargo, Goldman Sachs, and Bank of America are asking their shareholders to reject calls to audit and publish racial equity reports put forth by CtW and SEIU, saying they are aligned with its goals but not the specific approach
Etsy aims to achieve net-zero emissions in all aspects of its business by 2030.
GM becomes the only automaker with a board of directors that has a majority of women with the addition of Meg Whitman.
Levi’s CEO writes an op-ed for CNN, saying that it is “inexcusable” for policymakers and business leaders not to mandate paid sick leave for their workers. Levi’s is one of 200 companies urging Congress this week to pass paid family leave.
Mastercard links compensation for its senior executives to environmental, social, and governance (ESG) initiatives, around three specific priorities: carbon neutrality, financial inclusion, and gender pay parity.
Microsoft starts to bring workers back into its offices next week, offering 57,000 nonessential employees the choice to work from the office, home, or a combination of both.
Starbucks’ shareholders, in a rare move, voted against a pay raise proposal for the CEO. .
Thursday, April 1 at 1:00 p.m. ET: Join our latest Quarterly JUST Call with Nicholas K. Akins, Chairman, President, and Chief Executive Officer of American Electric Power (AEP).
We’re at a pivotal moment in our country for transforming our energy generation and consumption, and that’s why we’re excited to be talking with Akins. He leads not only the largest electricity transmission system in the US, but the top ranked utilities company in our list of America’s Most JUST Companies, and top in its industry for workers. We’ll discuss all of this and more alongside Nandika Madgavkar, Head of CECP’s CEO Investor Forum. Sign up to watch here.
Triple Pundit’s Brands Taking Stands and CMC Market’s Opto featured our latest intersectional data analysis on race, gender, and ethnicity demographic disclosure. Our own Catalina Caro explains why EEO-1 disclosure is one of the few tools we have for making sure companies stay accountable to their racial equity commitments.
The Weekend edition of DealBook crafted a compelling case for why companies should rethink wages, especially for low-wage workers, showcasing our Worker Financial Wellness Initiativepartners, PayPal and Zeynep Ton of the Good Jobs Institute.
Richard Heathcote/Getty Images
“Despite all of the wins, I am still paid less than men who do the same job that I do. For each trophy – of which there are many – for each win, each tie and for each time that we play, it’s less.”
“What I look at is, ‘How do I create great jobs and great careers?’ The starting wage is one thing, but is very different in California than it is in Alabama, so having one amount across the nation can cause a little bit of a disparity. So really what I’ve been trying to focus on is how do we design the job so it’s something that people want to do? How do you make people feel a sense of team, so they feel known and valued?”
“We run our diversity, equity, and inclusion business like any other business function. We set goals, we have metrics, we look at the data, we hold ourselves accountable.”
Insider delves into the emerging trend of tying executive comp to diversity and ESG goals, looking at commitments from Microsoft, Starbucks, Uber, Chipotle, Facebook, Intel, and, most closely, Verizon.
In a series of charts, Bloomberg unpacks the latest household wealth study from the Fed showcasing how the richest 1% of households captured about 35% of the extra wealth generated nationwide, while the poorest half of the population received about 4% of gains.
The Wall Street Journal pushes back on the narrative of growing income inequality, arguing that its supposed rise is the result of the Census Bureau’s failure to account for taxes and welfare.
MSCI publishes a new report tracking CEO pay alongside company earnings, revealing that many times, CEOs who receive the highest compensation are not actually those who are dramatically outperforming their KPIs or competitors.
Bloomberg reports that the richest 1% of Americans, on average, hide 25% of their wealth from the IRS.
This chart comes from our Equal Pay Day analysis, and shows a concerning trend that the majority of companies that disclose their gender pay equity analyses tend to be at or near pay parity. To make progress on this critical issue, more companies need to be brave and transparent with their data, even if they don’t yet have a great story to tell.
Each year, we survey the American public to learn their views on business today, and we’ve learned that Americans consistently agree – year after year – that the top priority for companies should be their workers. And the public doesn’t necessarily distinguish between different types of workers – whether full-time, part-time, or contracted – showing that temporary, contract, and vendor (TVC) workers should be prioritized alongside a company’s permanent workforce.
Since 2018, JUST Capital has been working to better understand how companies think about their TVC workforces – and we’ve found that corporate leaders continue to grapple with key questions around these workers. Concretely: are TVC workforces a risk to be managed, or a potential asset that hasn’t been properly explored?
Over the last year, the impacts of COVID-19 have accelerated these questions – with companies asked to carefully consider how to support their contract workforces through the pandemic, and with the world of work writ-large on the cusp of transformation, as companies grapple with whether and how to reopen their workplaces and what a return to “normal” might look like for their employees. With TVC workers an increasingly urgent topic for corporate America, we recently sat down with Teresa Huston, Vice President and Deputy General Counsel at Microsoft, and Tauseef Rahman, Partner at Mercer, to explore their work on these issues.
At the start of the pandemic, #1 Most JUST company Microsoft committed to continue paying its contractor workers – many of whom work on-site at the company’s campus in Seattle – and the company continues to compensate these employees today. Huston explained Microsoft’s journey to this decision, which began long before the pandemic with a path that included a seminal lawsuit and now has led to Microsoft extending key benefits to its temporary employees. “We learned some pretty hard lessons from that case,” Huston shared – and in the years since, Microsoft has become a pioneer on these issues, requiring its vendors to offer paid sick leave and paid parental leave to their workers. With these foundations in place, Microsoft’s choice to continue paying its TVC workforce was a natural next step, and served once more as a model for how corporate leadership can and should support these employees.
Mercer – a consulting firm whose mission serves, in part, to help companies redefine the world of work – often explores the issues of TVC workforces in conversation with its clients. In March of 2020, Mercer learned that about ⅔ of companies say they employ contractors – but also found that the majority did not provide compensation during the pandemic. Rahman explained that the nature of contract work holds significant risk for TVC workers, particularly during more challenging times, but emphasized that this moment represents a significant opportunity to ask “Are there different ways to work for a company?”
Key takeaways are emerging from our conversations with companies – including Microsoft and Mercer – about how corporate leaders should consider their TVC workforces, as we continue to talk about building a more resilient economy in the future:
In recent years, more and more contract workers have become core to companies’ operations – sitting alongside their permanent counterparts as colleagues and taking part in work that is central to their company’s operation and mission. With Americans expecting companies to prioritize their workers, corporate leaders must consider how they support not just their employees, but the contract workers who share space with them and contribute considerably to their collaborative work. Huston emphasized that, while the unique legal and contractual considerations of contract workers can’t be ignored, corporate America needs to move away from the mindset that contractors are “a risk to be managed” and toward a more integrated understanding of how TVC workers contribute to the resiliency of their business, shape the experiences of the permanent workforce, and advance the company’s mission through their efforts.
Before we can truly consider what might need to change for America’s contract workforce, we need to understand the current state of play for these workers. Human capital disclosure – particularly around demographic issues – is becoming increasingly important across corporate America, but TVC workforces present unique challenges when it comes to disclosure and transparency. With many contract workers employed through vendors, Huston emphasized that there are different legal considerations at play – in regards to both the demographics of these workers and even what kinds of jobs they hold – when asking companies to share details on their contract workforce. Furthermore, Rahman shared that contract hiring and human capital issues might not even be centralized with HR departments, making it difficult to collect information about these workers and factor them into strategic workforce planning. In the coming years, a core question for corporate America must be around how we build a clear and consistent portrait of our nation’s – and each company’s – contract workers – so that we might better understand what is working and what is not.
Over the years, our research has shown that treating workers well not only benefits a company’s employees but its bottom line. Understanding, again, that contract and permanent employees are part of the same workforce, the unique challenges faced by TVC workers can negatively impact their own productivity as well as the productivity of their permanent colleagues – and the challenges of retention and retraining contract workers can significantly slow or hamper a company’s operations. Huston emphasized that, for Microsoft, “Making decisions to be responsible and aware has been good for our business,” a guiding principle that led them to set specific contract standards for their TVC workers – like paid sick leave and parental leave – that allow these employees to be more present and effective members of Microsoft’s overall workforce and to contribute more significantly to the company’s growth.
As we look ahead to the reopening of businesses across corporate America, the question of how contract workers are supported today can profoundly impact our eventual return to work. Most tangibly, there are key questions of occupational health and safety – if paid sick leave is not available to contract workers, the risks of outbreak are potentially greater, and the ways that contract and permanent employees share space can impact critical health concerns. But there are also important questions about operational resiliency – if an entire contract workforce has been laid off, corporate leaders face significant challenges to resuming normal operations and scaling back up, needing to rehire and retrain workers across many areas of their business. Finally, it’s critical for companies to recognize how decisions around their contract workforces can have tremendous impact on their communities. Huston shared that, for Microsoft, a major way that the company contributes to its community is by providing jobs to the people who live there. “We really are responsible for how our region emerges from this catastrophic event,” she emphasized – suggesting that support for contract workers shapes not only the future of our nation’s businesses, but the future of our nation’s communities.
Embedded within this question of how we rebuild following the pandemic is the consideration of what the future of work writ-large might look like. Rahman hypothesized that our “full-time-or-bust” mentality might become a thing of the past, as more employees core to companies’ operations are employed on a contract basis and we begin to more deeply question whether there are different ways to work for a company. And questions of flexibility and types of employment are relevant not just to lower-wage, lower-skill work, but must be central in how we think about all our nation’s workers. This moment represents an opportunity for companies to consider, coming out of the pandemic, what groundwork they might lay now to ensure that their full supply chain is resilient and connected to the operations and purpose of the broader company.
Corporate leaders are increasingly seen as societal leaders, responsible for what’s happening not only within their own organizations but within their communities and the world of work writ-large. It’s clear, and becoming clearer, that these issues are not limited to the on-demand economy or to lower-skilled workers, but to TVC employees across industries and the wage ladder who have become deeply integrated in their company’s core operations. In our ongoing conversations with C-suite leaders – focusing on issues like worker financial well-being and racial equity – we will continue to apply this lens of consideration, asking how a company’s TVC workforce must shape strategic decisions around these issues, as well as the future of work overall. There’s a real question about mindset-shift on this issue, where leaders must begin to ask and understand their contract workers. In the meantime, we will continue to contend with the fragmentation of America’s workforce, and the implications that fragmentation has for our nation’s businesses, the communities in which they operate, and the world of work overall.
Explore more of JUST Capital’s work on the TVC workforce here, and watch the full conversation with Microsoft and Mercer below:
The debate raging this week in Congress around the $15 minimum wage – a Biden Administration “first 100 Day priority” – has put worker economic security back in the spotlight.
It’s a huge issue. Our own research shows that, incredibly, up to 50% of workers at Russell 1000 companies weren’t making enough to support a family of three, even with a partner working part-time. And that was before the coronavirus pandemic hit.
Amazon’s vocal support of a federal $15 min wage floor is, as Michelle puts it in a new piece, admirable. But if we’re looking at what Americans want, and what our biggest corporations can provide them, the bar has to be set higher.
“Paying a fair and livable wage” is the top issue Americans care about most when it comes to just business behavior, and that means paying more than minimum wage. It also means taking a wider view of worker financial health. The quality and availability of benefits; the capacity of workers to save for retirement or pay down student debt; worker financial education and literacy; upskilling and training; stock ownership and profit sharing; all of these things matter too.
More and more companies are starting to get it. This week saw GM announce that up to 44,000 eligible hourly UAW-represented employees could receive up to $9,000 in profit-sharing checks this year. The new CEO of Harley Davidson, Jochen Zeitz, a champion of corporate stakeholder performance (and former JUST Board member) announced the company would issue stock to 4,500 workers, including all of its hourly factory laborers, because when employees are engaged, respected, and have a stake in their work, the company benefits. Mastercard is building a major global initiative around financial inclusion.
The broader theme of investing in, listening to, and supporting workers is a bedrock of stakeholder capitalism. It’s good for business, and as our current Chart of the Week shows, it’s good for investors. It’s also why we’re so proud of the program we co-founded with PayPal, the Worker Financial Wellness Initiative, to guide companies on first evaluating, and then taking concrete steps to address, overall financial hardship among their employees. If you run a big company, and you want to get involved, I invite you to reach out.
Be well,
Martin
Citigroup is working with Black-owned investment firms for a $2.5 billion bond issuance.
As reported above, GM’s hourly workers are expected to receive $9,000 thanks to the company’s profit-sharing program.
Here are more details on Harley-Davidson issuing company stock to 4,500 employees, including all of its hourly factory workers.
Salesforce announced a new “Work From Anywhere” policy, offering employees three options for how they can work going forward: flex, fully remote, and office-based.
Tesla skips contributing to its 401(k) match for the 3rd year in a row, despite record stock price increases in 2020.
Wells Fargo makes equity investments in six Black-owned banks as part of a broader $50 million pledge to support minority-focused lenders.
12PM ET Today: Martin joins the NeuroLeadership Institute to discuss the companies that supported their workers, customers, and communities through the pandemic, and how increased scrutiny on diversity, equity, and inclusion disclosures is changing corporate America for the better. Sign up to listen here.
How can corporate America and the government work together to help all Americans? Martin spoke at a Bipartisan Policy Center event: “What’s Next for Stakeholder Capitalism in 2021.” Watch the replay here.
Our researchers Aleksandra Radeva and Molly Stutzman examine why corporate America needs a common standard for demographic disclosure.
The last couple of years have been scary for a lot of people. A good chunk of the population believes that capitalism is not working for them, that the system is rigged against them. There’s so much inequality that people are now in the streets. Business leaders are coming to a realization that this form of just staying with the status quo may not be sustainable for us as businesses. And I think that realization is creating this awareness that we have to lift up the bottom, we have to lift up the wages and working conditions of people for a better functioning society and economy.
– Zeynep Ton, President of the Good Jobs Institute, to JUST
“Predicting the future is hard. Nobody’s very good at it. For example, the Congressional Budget Office’s track record in its area of expertise – forecasting long term budget deficits – has been described in Forbes as “no better than throwing darts.” So when in its report on the Raise the Wage Act, the CBO chooses to model the employment effect of a $15 minimum wage by plugging in an elasticity value 10 times the consensus of experts in the field, it’s a safe bet that the CBO will once again be proven wrong. That said, regardless of its predictably implausible employment forecast, the CBO report actually makes a strong case for a $15 minimum wage. According to the CBO, 27 million workers would see their incomes rise. Nearly a million Americans would be lifted out of poverty. Even accounting for its predicted job losses, the aggregate pay of affected workers would increase by $333 billion. That’s a net gain for American workers and the American economy.”
– Nick Hanauer, Founder of Civic Ventures and Host of “Pitchfork Economics”
“The myth that sustainable investing results in lower returns is clearly just that. The Center for Sustainable Business’ new analysis of more than 1000 academic studies since 2015 finds that a very small percentage found a negative correlation – and in fact, 58% of corporate studies and 33% of investor-based studies found that ESG delivers superior returns. Managing for a low carbon transition appears to drive better performance for both corporates and investors, and sustainability appears to drive more innovation and better risk management, resulting in better financial performance, as well.”
– Tensie Whelan, Director of the NYU Stern Center for Sustainable Business, to JUST
Must-Reads of the Week
The New York Fed releases new research showing that lower-wage workers have borne much more of the brunt of job losses during the pandemic than higher-wage earners.
The Wall Street Journal highlights the latest CBO study saying that a $15 minimum wage would cut unemployment and reduce poverty. Goldman Sachs analysts estimate that about 30% of U.S. workers would benefit, and in some states like Mississippi, it might be as high as 40% of the state workforce.
The New York Times lifts up the plight of grocery store workers in a story focused on how many feel forgotten as the pandemic rages on, and Forbes reports on the food union’s push for hazard pay and more health and safety protections.
NBC reports that President Biden met with CEOs of JPMorgan Chase, Walmart, Gap, and Lowe’s to discuss equalizing the economic recovery and improving the wage gap.
Business Insider speaks with Ray Dalio on the fundamental changes capitalism needs to maketo address the inequities exposed through the crises of 2020.
CNBC shares a new analysis from the National Women’s Law Center, detailing how women’s labor force participation hit a 33-year low this January.
GreenBiz talks about how the “S” in ESG is finally having its moment, particularly around diversity and inclusion metrics, and Fortune adds more reasons why this sudden focus on social goals is not a passing fad for U.S. business. Meanwhile, Fast Company takes a deeper look into why so many corporate diversity reports are misleading.
Our latest Chart of the Week shows companies that don’t pay their workers well need to take up more debt (i.e. more risk) to have the same returns on equity as those that pay their workers well.
This week, in light of Labor Day this Monday, we revisit our Chart of the Week from earlier this summer to reevaluate how companies who fully disclose their EEO-1 reports have performed throughout the trailing three months (the Equal Employment Opportunity Commission requires companies to categorize employment data in these reports by race/ethnicity, gender, and job category).
Looking once again at the Russell 1000 companies we rank, we compared the 32 companies that fully disclose their workforce demographics to the 558 corporations that don’t disclose any data. We saw a continued relative outperformance of 22.5% over the trailing one year through Aug. 31 by the companies embracing transparency on employee diversity and wage breakdowns.
This Labor Day, this type of data takes on particular relevance. Social issues have risen to center stage as companies begin to address their own systemic inequity and how they treat and advance workers across ethnicities and gender. Publicly disclosing EEO-1 data is the first step to employee wage equality as it not only produces better results for shareholders but makes for a healthier, more sustainable company.
While the stock buyback freeze has thawed and S&P 500 companies have reduced the number of their outstanding shares in Q2 by an average of 0.3 percent from the previous quarter, per Credit Suisse, we hope to see our largest companies continue the push to embrace workforce transparency and redirect free cash flow towards addressing systemic pay inequity.
If you are interested in supporting our mission, we are happy to discuss data needs, index licensing, and other ways we can partner. Please reach out to our Director of Business Development, Charlie Mahoney, at cmahoney@justcapital.com to discuss how we can create a more JUST economy together.
If you have questions concerning the underlying analysis, please reach out to our Senior Manager for Quantitative Research, Steffen Bixby, PhD, at sbixby@justcapital.com.
