This week, JUST convened a virtual gathering of current and former corporate leaders to explore, in part, our Worker Financial Wellness Initiative.
While the discussion was under the Chatham House Rule, I can share some of the biggest takeaways from this highly impressive group, which are that CEOs must be courageous enough to take a short-term hit in order to create value for stakeholders in the long term, and that investing in the financial security and overall well-being of workers is perhaps the single most critical investment a company can make right now.
As you can read in my latest Forbes article, Walmart has seen both sides of the stakeholder vs shareholder debate over the last seven days, losing $25 billion off its market cap after a mixed earnings call. What made Wall Street especially upset was CEO Doug McMillon’s announcement of a $14 billion investment in operations – which included raises for 425,000 of its associates, from $13 to $19 per hour, depending on location and market. Costco, which followed suit yesterday by announcing it was lifting its hourly minimum wage to $16 per hour, saw similar short term stock declines.
Since becoming CEO in 2014, McMillon has been laser focused on keeping Walmart competitive with its rivals – notably Amazon, Target, Costco – in a rapidly changing retail landscape. Having the courage to invest in their workforce is a key part of this. When he raised wages for 1.2 million workers in 2016, the stock took a hit then too. It took two days to recover, and six months later was up 23%.
The key point is this: Building value for investors – and for all stakeholders – takes time, but the rewards for shareholders and society at large are much greater. CEOs need our support when they are punished in the short-term for their foresight.
This Week in Stakeholder Capitalism
Costco will raise its starting wage to $16 an hour, officially paying higher than their competitors at Amazon, Best Buy, or Target.
Glassdoor launches a new product feature that reveals employee provided company ratings and salary reports broken out by specific demographic groups, specifically, salary data is broken out by gender identity and race/ethnicity.
JPMorgan Chase announces new investments as part of its $30 billion commitment to lift up Black and brown communities, including $350 million to support underserved small businesses, a $42.5 million to a “Entrepreneurs of Color Fund,” and new “lounges” serving entrepreneurs.
Nielsen announces that they will begin tracking diversity and inclusion on TV.
A Collaboration with AARP
Throughout the coronavirus pandemic, companies faced new challenges in maintaining employee well-being. We teamed up with AARP to create a set of guides focused on three critical issues – paid sick leave, dependent care, and work from home – to help explain the current state of play, best practices, as well as benefits to employers and employees for implementing expanded programs. We hope they are a helpful resource.
A Corporate Guide to Dependent Care: By creating sustainable dependent care options for both eldercare and childcare, companies can greatly improve quality of life for their employees and their families and see significant savings and reduced turnover.
A Corporate Guide to Paid Sick Leave: By implementing paid sick leave policies, companies are not only protecting their workers’ health and financial security, but also the health of customers, communities, and their supply chain.
A Corporate Guide to Working From Home: By creating greater flexibility and better work-life balance, companies can reduce costs and turnover, and increase productivity and happiness.
What’s Happening at JUST
JUST’s Yusuf George highlights nine Black women who are championing stakeholder capitalism across America’s largest companies, including Rosalind Brewer and Thasunda Brown Duckett, who will be the only two Black women CEOs of Fortune 500 companies.
The Reimagining Capitalism newsletter on LinkedIn featured a sit down with Martin exploring ideas for designing a more fair, inclusive, and sustainable capitalism. Explore other great interviews here.
Jennifer Tescher of the Financial Health Network invited JUST Board Member and National Urban League president Marc Morial onto her “Emerge Everywhere” podcast to discuss Economic Justice for All.
JUST Board member Arianna Huffington penned a byline in Thrive talking about new S.E.C. guidelines on human capital reporting, demonstrating a growing recognition of employee well-being as a key driver of business performance.
“Addressing stark disparities in income and wealth doesn’t just benefit Black families and marginalized populations. It benefits our neighborhoods and our entire economy. It is our collective responsibility to address this challenge and break down structural barriers to opportunity.”
- Thasunda Duckett, CEO of Chase Consumer Banking and newly announced incoming CEO of TIAA, in a recent LinkedIn article
“Thinking about employees shouldn’t be a function of human resources – it’s a competitive differentiator, and it’s needed now more than ever. …By advocating for internal safety measures, effective policy, and racial equity, companies can put purpose-driven leadership into practice to protect their workers and fuel an inclusive recovery.”
- Darren Walker, president of the Ford Foundation and Chuck Robbins, chairman and CEO of Cisco Systems, from their latest opinion piece in Fortune.
“I want to note this isn’t altruism. At Costco we know that paying employees good wages … makes sense for our business and constitutes a significant competitive advantage for us. It helps us in the long run by minimizing turnover and maximizing employee productivity.”
- W. Craig Jelinek, CEO of Costco, announcing a minimum wage raise at a Senate Budget Committee hearing on Thursday
Must-Reads of the Week
A Financial Times opinion piece explains why businesses should not be afraid of the calls to raise the minimum wage: “Almost all Americans, whether they live in Texas or California, admit that it is impossible to live on $7.25 an hour.”
In their State of Working America 2020 wages report the Economic Policy Institute shows that wages grew historically fast in the last year because the bottom fell out of the low-wage labor market: “Wages grew largely because more than 80% of the 9.6 million net jobs lost in 2020 were jobs held by wage earners in the bottom 25% of the wage distribution. The exit of 7.9 million low-wage workers from the workforce, coupled with the addition of 1.5 million jobs in the top half of the wage distribution, skewed average wages upward.”
The challenges of child care is getting the attention it deserves with an in-depth feature in The Lily explaining that a full economic recovery will only be possible if we invest heavily in our nation’s patchwork dependent care systems. Also a new report from the think tank Third Wayexplains that the costs of child care centers have gone up nearly 50% since the onset of the pandemic and that lack of child care is now the third-most cited reason for not working, behind layoffs and furloughs. CBS reports that the Marshall Plan for Moms is picking up steam in Washington.
Meanwhile, The New York Times believes that, no matter what, an economic boom lies at the end of the pandemic.
The Stagwell Group hosted a webinar featuring some of the most interesting findings from The Harris Poll’s survey work on CEO reputation. One of the most interesting insights? Ethical standards are the highest valued quality in a CEO.
Chart of the Week
This week, we look at Morningstar’s most recent analysis from Jackie Cook, diving into the C-suite Gender Pay Gap analysis that explores pay data of corporations’ named executive officers (NEOs).