The JUST Report: Corporate America Looks Beyond Minimum Wage
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.
This Week in Stakeholder Capitalism
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.
What’s Happening at JUST
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.
Chart of the Week
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.