These days, American workers could well be saying, as Richard Fariña wrote and Nancy Sinatra sang, “Been down so long it looks like up to me.”
Widespread labor shortages are forcing many companies to pay a bit more, offer additional training, expand their hiring pools and provide steadier shifts, greater flexibility or improved work environments.
The modest improvements come after decades of erosion in the economic fortunes of lower- and middle-income earners. By last September, those in the bottom half of U.S. wealth distribution, on average, had barely recovered the level of wealth they had at the end of 2000.
Such widespread stagnation puts investors at risk as well, by slowing economic growth, deepening recessions and exacerbating political polarization.
Inclusive prosperity, then, depends on further enhancing the power of workers to defend and expand on recent gains and demonstrate the logic of driving economic growth from the bottom up. Put bluntly, such power means the ability to secure an increased (or at least restored) share of corporate profits for workers, rather than shareholders – and to make the ‘S’ in ESG stand for ‘Share the Wealth.’
“We believe that we will have a healthier economy — one that is better for employees, businesses, and society — only when working people have greater power, agency, and voice at work, individually and collectively,” the Omidyar Network writes in Our Vision for the Future of Workers and Work.
A presidential Task Force on Worker Organizing and Empowerment, chaired by Vice President Kamala Harris, is looking for policies, practices and programs to promote the Biden administration’s “policy of support for worker power, worker organizing, and collective bargaining.”
As part of our Capitalism Reimagined partnership with Omidyar Network, ImpactAlpha is taking up the challenge of enhancing worker power in Agents of Impact Call No. 29, “Rewriting rules and designing policy for the stakeholder economy,” Tuesday, June 29 (RSVP). A few of the ideas in play:
Treat workers as assets, not liabilities
Changes in balance-sheet accounting could correct distortions such as the provision for tax deductions for companies that replace humans with robots but not for companies that upskill their workers. “While CEOs say ‘People are our most important asset,’ most treat employees as costs to be reduced, instead of capital that can appreciate, not depreciate, via experience, training, and collaborative teamwork,” HIP Investor’s R. Paul Herman told ImpactAlpha. The Securities and Exchange Commission is encouraging disclosure of “human capital metrics,”, and there’s even a new global standard, ISO 30414. “The asset value of people, or at least their future productivity, can be calculated,” say Herman and Kristin Dougall, authors of “The Global Handbook of Impact Investing.”
Codetermination and equitable compensation
The logical extension of the public benefit corporation structure is stakeholder representation on corporate boards (see, “A stock market test for stakeholder capitalism as public benefit corporations go public”). Planks calling for board seats for workers are part of both the “Reward Work Act,” introduced by Sen. Tammy Baldwin, and the “Accountable Capitalism Act,” from Sen. Elizabeth Warren. A more modest proposal: “Revise the mandate of board compensation committees, which have presided over inflating executive pay and diminishing returns to other employees, to make them responsible for overseeing a more equitable pay distribution for the entire company workforce,” suggests Leo Strine, former chief justice of Delaware and a guest on The Call next week.
Ban, or at least tax, stock buybacks
Corporations, flush with cash, are rewarding shareholders, not workers. Last week, Apple announced $90 billion in stock buybacks, Google $50 billion and JPMorgan Chase $30 billion. Buybacks and dividends starve capital as well as human investments. “The most direct instrument for reallocating the nation’s economic resources to create employment opportunity for Americans is to stanch the flow of corporate cash to shareholders,” economist Bill Lazonick argues (see, “Stakeholders stake new claims on corporate cash to finance an inclusive recovery”). Legal scholars Daniel J. Hemel and Gregg D. Polsky estimate taxing stock buybacks like dividends could raise $500 billion over a decade.
Don’t mourn, organize!
Collective bargaining is not the only way to advance worker power, but it’s an essential one (see, “Why pension funds and other Amazon investors are backing the workers in union battle”) The PRO Act, passed by Congress in March, would strengthen union organizing efforts and ability to secure a contract. Omidyar Network also is exploring worker centers, portable benefits, certification and labeling, new enforcement models and multi-employer bargaining. “We’re looking at new forms of worker organizing, and extending work and organizing to sectors where you can’t have unions, sectors like care and other parts of the economy that labor law has excluded,” Chris Jurgens said on ImpactAlpha’s podcast this month (see, “Mobilizing policies and power for an economy that works for all”).
Drive growth from the bottom up
The head of the Federal Reserve, Jerome Powell is arguably the most pro-worker Fed chair in memory, though activists are pressing for even more aggressive action. “What is needed is to rewire the economy for the 21st century: a boost in both public and private investments in order to give everyday people and future generations the tools they need to thrive in the modern economy,” says Center for American Progress’ Andres Vinelli, a guest on next week’s Agents of Impact Call. Paid family leave policies and investments in early childhood education and childcare could increase labor force participation and thus economic growth, Vinelli says.
