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This week, Chipotle made news when it revealed that it had raised prices by 4% to compensate for its recent wage raise to an average of $15 an hour, a decision it says it made in response to the labor shortage. CEO Brian Niccol told Yahoo Finance that not only was his team confident the wage increase was the right move for the company, it was seeing customers returning to stores. Shareholders were pleased, and the stock price rose 1%.
Why is this news important? Because as the debate rages over why millions of jobs, especially low-wage ones, have been left unfilled (the U.S. still has 7.6 million fewer jobs than prior to COVID) the idea of lifting wages and providing good jobs has gotten relatively little attention.
We know from our polling that the public considers “pays a fair, livable wage” as the most important action a company can take for its stakeholders. We also know that investing in workforce training – the third highest priority action for companies – is an important way companies can compete effectively for labor as the pandemic recedes. The New York Times noted recently that IBM, for example, is using apprenticeships to tap into job candidates without bachelor’s degrees, providing them with attractive career opportunities (we feature this in our latest breakout report from our Corporate Racial Equity Tracker).
On top of all that, it’s becoming increasingly clear that the pandemic has caused millions of Americans to expect more from their jobs.
As our chief strategy officer, Alison Omens, cowrote with Katie Bach in Newsweek, how we choose to frame the problem of the labor shortage will drive how we think about solutions. If we see it as a knock-on effect of overly generous unemployment insurance payments, that takes you down one path. However, if like the leaders of Chipotle and Costco, we see it as an opportunity to lift wages while creating better business outcomes, then an entirely new set of solutions come into view (Nick Hanaeur tackles this question in his May 25th Pitchfork Economics podcast).
Lifting wages isn’t a panacea, and we know it’s not possible for every business. There are many ways to invest in workers. As each of our partners in the Worker Financial Wellness Initiative – PayPal, the Good Jobs Institute, and the Financial Health Network – have said: right now is the perfect time to do so.
This Week in Stakeholder Capitalism
Ally Bank ends overdraft fees, making them the first U.S. bank to do so.
Boeing and Alaska Airlines are teaming up to improve the sustainability of air travel by co-testing new airplane technology designed to cut down on ozone emissions and improve recyclability of plane materials.
Facebook is expanding remote work to all employees post-pandemic, but may reduce compensation for those who move to less expensive areas.
JPMorgan Chase is freezing donations to politicians who contested the 2020 election.
What’s Happening at JUST
June 24th at 1PM ET: Join JUST Capital and the Brookings Metropolitan Policy Program to discuss how private sector leaders can advance racial equity within their companies, communities, and regional economies, featuring speakers from CenterState, Cincinnati U.S. Regional Chamber, and Brookings Institute. Sign up to attend here.
Alison Omens teamed up with Kate Bach to pen this op-ed for Newsweek: A Style Guide for a Good Jobs Economy.
ICYMI: We’ve been unpacking different datasets within our Corporate Racial Equity Tracker, and this past month we did a deep-dive on mass incarceration and second chance policies among the companies we track, a look at the urgent need for pay equity analysis (and which orgs are leading), and a look at why apprenticeship and training models are driving racial equity.
“We learned from the pandemic that everything is interrelated… and we know that climate change is upon us. What happens in Boston impacts Rio De Janeiro, and what happens in Beijing affects Mumbai. This is a global problem that we have to solve together. What we’d like to see coming out of the G7 Summit is an extremely strong commitment to the Paris Agreement.”
- Mindy Lubber, President of Ceres (and JUST board member), speaking to CNN about potential climate outcomes of the G7 summit.
“We are considering right now what we have to do with our wage rates going forward. Candidly, we have folks that are right around the corner from Amazon distribution centers and Amazon is not afraid to pay $20 an hour.”
- Chip Bergh, CEO of Levi’s, speaking to Insider on how Amazon has changed the calculus for wages for the company and potential hires.
“Employers seeking to attract workers need to offer livable compensation, address problematic working conditions, and demonstrate empathy and respect for the people who make their businesses run.”
- Maureen Conway, head of the Aspen Institute’s Economic Opportunities Program, writing in a recent newsletter.
Must-Reads of the Week
The New York Times reports on many of the new incentives corporations are rolling out to attract new employees – like college education for workers and their children or free hotel rooms for summer hospitality staff – and how for many sectors, it’s still not enough to fulfill their roles.
Pew Research reveals that teen summer employment was the highest this year since the Great Recession thanks to a hiring crunch for many hourly positions.
Heidrick & Struggles reports that Black appointees to Fortune 500 boards have increased to 28% of all new appointees in 2020, almost triple the 10% of 2019.
Chart of the Week
This week’s chart takes a look at veteran supplier policies at the 928 companies we ranked in 2021. Digging into the data around various profitability ratios, we see higher return on assets, return on equity, and return on capital across the board for companies with these policies in place. Learn more here.