Blog ahead... So it almost impossible to talk about economic policy without people bringing their passions to the debate, because almost nothing is more important, frankly to the well being of all Americans. Jobs, wages, market performance. It’s all tangled up with values, work ethic, and how we view the role of the individual as it pertains to the good of society. And there can be legitimate differences in what we think is best for the country, and what we think is best for individual citizens. I am interested in understanding where we have common ground. I am also interested in seeing if folks can step away from the orthodoxy of their political ideology to consider the arguments of others. Not interested in this experiment? Don’t engage. Personally? I think the discussion around the minimum wage is missing the point. According to the Bureau of Labor Statistics, 3.6M Americans make minimum wage or less. Thats 2.2% of the workforce. Of that, 55% are 25 years old or younger (31% are teenagers). SO workers over 25 years old making minimum wage account for 0.8% of the workforce. And even those workers are often second or third earners in their households. Do I wish that the all head of households had better paying jobs than McDonalds? Yes. But I also recognize that inertia is a powerful force. Entry level jobs are entry level for a reason. What prevents a 40 year old fast food worker from moving to a better job? Let’s address THAT issue, rather than paying them more to stagnate where they are. It’s not about whether an industry or an individual employer can “afford” to pay more. They should pay in accordance with the value of the service received. The problem today is that many companies don’t do that. More on that in a moment. The real problem that I see is not that a small percentage of the workforce is poorly compensated. The issue is that for the first time in 100 years of recorded government statistics, the bottom 90% of workers earn less than 50% of the countries income. Effectively, the American middle class is shrinking alarmingly, and neither party has a real strategy to address that. A strong and vital middle class is key to a nation’s economic success. These are the consumers in a consumer driven economy. The purchasing power of the 50% of the country in the middle, is what supports production of goods and delivery of services. So setting aside ideology, what is weakening the middle class? Corporations are experiencing record profits as a percent of sales, but wages as a percent of the total economy are at an all time low. Real income is diminishing for the working class, as the owning class gets fat. In effect, companies are not paying workers the real value of their work...they are diverting that value to inflated profit for shareholders. Forget about comparisons to Finland, or whatever…focus on the growing divide here at home. I’m not waging class warfare here…just pointing out the reality that when countries see this imbalance, economies collapse. This worship of the shareholder is what has changed in this country since the 80’s. It was in the 80’s that executive compensation began to be more closely tied to stock price, at the expense of other economic attributes with long term value. I think most of us know the difference between working for a company that wants to pay as little as possible for as long as possible, and a company that invests in people and gets their best. I hope you have all had that experience. I get that not everyone does. I am reading a book called Conscious Capitalism right now. It is an interesting perspective on incorporating values into corporate decision making. Companies like Costco, UPS, Whole Foods, Southwest Airlines, Google, The Container Store, and others embrace this philosophy. These are successful companies that place economic value on stakeholder integration…a view that includes passionate team members as a vital contributor to financial performance. So when you see that Costco pays their managers twice what Walmart does…it’s not out of the goodness of their hearts (although it IS linked to their core values). It is because it makes economic sense to do so. Unions were built in this country because companies failed to treat workers with dignity, as human beings with value to the employer. Conscious Capitalism seeks to provide a worker experience that competes with what a union would offer. And let’s be clear…private sector union membership is less than 7% of the workforce today. Encouraging companies (by supporting them) to support workers is a smart strategy no matter what your ideology. I choose to support companies that choose to support workers, union or not. Summary…competition is good. Supporting workers to move beyond low wage entry level work and into the middle class is good. Supporting companies that support workers by paying them for the value they help create, and by supporting a sustainable middle class is good. Taking away the OPTION for workers to organize…not good. Companies should compete with unions for the hearts and minds of their working stakeholders. Friction in the system? Good. Done.
Posted on: Wed, 10 Sep 2014 05:23:10 +0000
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