Repair the American Dream for Workers

Repair the American Dream for Workers

by Michelle Bhattacharyya Living Wage Blog

“The American dream is alive, but fraying”. On August 19, 2019 Chairman and CEO of JPMorgan Chase & Co. and Chairman of Business Roundtable stated what many Americans already understand. It is increasingly difficult for U.S. workers to achieve economic mobility. But rather than being a harbinger of trouble, this statement is a beacon of hope. U.S. companies are beginning to understand that providing opportunity for workers and supporting communities is a fundamental tenant of how a business must operate to achieve long-term success.

Business Roundtable, a group of 181 CEOs that has issued principles on corporate governance since 1978, has finally changed tune on upholding shareholder primacy as the principle corporate purpose. For the first time since its formation, the group stated that the purpose of a corporation is to serve all of its stakeholders. Nearly 200 CEO’s have committed to a corporate purpose that:

  • delivers value to customers;
  • invests in employees;
  • deals fairly and ethically with suppliers; and
  • supports the communities in which they work

That’s great news for Americans. The question that follows such a grand statement is how do these CEOs put tooth to this commitment? Living Wage For US has been developing a solution since August 2018 that adapts the UK Living Wage Foundation model of living wage accreditation to the U.S. context and provides every American with the ability to hold companies accountable and incentivize good behavior with their consumer dollars.

We’ve begun by engaging employers, unions, community groups, academia, and worker representative groups in a conversation that explores both the business impacts of voluntary living wage payment, and the changes that it makes in the lives of workers and their communities. We are swiftly progressing toward launching a nationwide living wage certification and member community that will pursue a shared standard, agreed by all stakeholder groups, on what it means to pay a living wage based on the wide-ranging costs of living across the U.S.

This work is the beginning of creating transparency on the single issue of living wage payment. It simplifies an understanding of the impacts to workers, communities, and companies of paying a living wage to all workers, and creates a path that will remove barriers and reward a growing number of American companies that deliver on Business Roundtable’s newly stated purpose for American corporations.

But what does earning a living wage mean? And why is it important?

For Nishad Sayem, a Bangladeshi immigrant who moved to the U.S. to support his parents. It means the ability to care for them as they age and pursue a better future by taking IT classes. Before working for a living wage employer he worked two full time jobs. And that meant no money or time to improve his situation no matter how good the training programs available to advance his career.

For single mom Ciara Cody in Colorado, it means having the time and energy to care for her daughter. “I’m a much happier person when I leave work.  I’m more engaged with my kid at home.  I wake up everyday and enjoy coming to work. I don’t feel as stressed on bills and rent.”

Both of these American workers are better equipped through living wage jobs to contribute to their communities and the next generation of Americans. And their employers are seeing benefits of raising their pay as well. At Living Wage For US we’ve collected stories from employers likes Nishad and Ciara’s in unexpected industries like fast-casual food. They showed that increasing wages for their workers to a living wage, actually increased profits, as American communities and consumers rallied to support the voluntary move. But it is not just consumers that are looking for clear signs to reward companies that understand the importance of growing beyond shareholder primacy, investors too want to identify and reward living wage employers.

Together with the Economic Policy Institute, Living Wage For US has worked to estimate and then aggregate and align cost of living calculations in the U.S, with global principles on living wage that many companies are already applying in their supply chains. Creating wage levels that employers can understand when operating across the country and can implement for all of their employees.

We are working not only in lower paying industries, but also with employers that typically have higher paid employees, to help them understand how their commitment to workers extends beyond their own staff to the subcontracted workers essential to their operations, such as building maintenance, catering, and security staff. Extending their own living wage impacts to the wider community.

We have established a living wage standard with multi-stakeholder input that transparently defines what paying a living wage means, as well as how dropping benefits or hours to achieve living wage payments is to the detriment of living wage efforts.

The culmination of this work is the creation of a new living wage community that drives the case of why keeping the American Dream alive is the only way to ensure corporate success long-term.

Labor groups in the U.S. have long been working hard to raise wages for Americans as income inequality has grown to its highest level since the U.S. government began tracking data more than 50 years ago (US Census Bureau). Now that more companies are signing on to the idea that workers are valuable stakeholders in corporate success, it’s important to have metrics that are transparent and measurable to allow companies and consumers to publicly benchmark how employers are actually progressing against this commitment.

Living Wage For US is working to provide just that, through our national living wage certification program, so that consumers and investors can have the confidence that a Living Wage For US seal means all workers at a Living Wage For US Certified Employer, both employees and subcontracted staff, are on a tracked path to earn or already earning enough to support a decent standard of living for themselves and their families. We’re providing the tooth that the 181 Business Roundtable CEO’s, and every employer across the U.S., needs to support workers and their communities.

Voluntary Living Wage Payment – The issue where we all agree

Voluntary Living Wage Payment – The issue where we all agree

by Michelle Bhattacharyya Living Wage Blog

I come from a family of opinionated conservatives, where debate at the dinner table is a way of life. I live in a city and work in a sector that tends to be dominated by liberals, where debate at any friendly gathering is equally essential. And I work on living wages, the one issue where I can get everyone to come together. I imagine I am getting some eyebrow raises with that statement about now. But give me a moment to explain why supporting voluntary living wage payment and living wage certification offers an opportunity for all Americans to come together to help solve an issue that has in the past divided rather than united us — the rising wage gap and income inequality.

Let me start by defining a living wage. At Living Wage For US, we adhere to the Global Living Wage Coalition’s widely accepted definition for living wage as “the remuneration received for a standard workweek by a worker in a particular place sufficient to afford a decent standard of living for the worker and her or his family. Elements of a decent standard of living include food, water, housing, education, health care, transportation, clothing, and other essential needs including provision for unexpected events.”

Now take a look at Just Capital’s 2017 Roadmap for Corporate America. It’s a compelling presentation of results from their large survey of Americans across political parties, ideologies, and demographics that shows Americans believe that the most important part of just business behavior is putting workers first. And among the different ways of putting workers first, Americans highlight living wage as the most important. But to make it even more clear, Just Capital has put together the chart below that shows how the issue is prioritized across the political spectrum.

It seems with some slight variation, living wage rises near the top in every group. So, if we agree living wages are important, is there a way for us to come together to make this a reality? The answer is yes!

Living wage certification is a bipartisan solution, and this is why: Minimum wage hikes concern many republicans who worry about damaging small business or costing jobs, or feel that wages should be set by the market. Tax incentives cause the same sort of worry from many democrats who have believe trickle down economic theories fail to meet the needs of working people.

But there is another way to approach the issue. This is where we at Living Wage For US propose a solution to pull Americans together — a living wage certification program under development that informs consumers and investors about businesses that have decided to pay a living wage to all of their workers, including those working on site but often subcontracted, like janitorial or security staff. Such a certification would create transparency about what a living wage is in a given area of the country, based on the changing costs of living, and be updated annually. The amount needed for a decent living in Tuscaloosa, Alabama where I grew up, is very different than the amount needed to sustain my family in Sleepy Hollow, a suburb of New York City, where I currently live.

A living wage certification with published rates provides a clear indicator to American consumers and investors of how they can make a difference on the issue, by simply choosing to shop, eat, or support with their dollars and investments the employers that pay a living wage. Living wage pay structures are already providing well-documented benefits to companies that choose to take this path. And I can attest to the fact that no matter which loved one I consult, everyone seems to be onboard with supporting companies that voluntarily support their workers, just as Just Capital’s research shows. Ta da! A nonpartisan way to solve one of the most pressing issues of concern for Americans.

OK, so now let’s look at the case of Amazon’s widely publicized recent wage increase to a minimum of $15/hr for workers to see if both parties do, in practice, rally together to support voluntary pay increases for workers.

The liberal perspective of this decision might be best summed up in the words of Bernie Sanders. On CNBC, after the announcement of the wage increase, Sanders stated “It is no secret that I have been a harsh critic of the wage and employment practices of Amazon and its owner Jeff Bezos. It has been my view that the middle class and working families of this country should not have to subsidize Mr. Bezos, the wealthiest person on Earth, because many of his Amazon employees earned wages that were so low that they were forced to go on government programs like food stamps, Medicaid and subsidized housing.” He then went on to say that “what Mr. Bezos has done is not only enormously important for Amazon’s hundreds of thousands of employees, it could well be… a shot heard around the world.” A pretty glowing endorsement from the liberal side.

Now to the conservative perspective. Conservative think tank American Enterprise Institute (AEI) and The Heritage Institute both published endorsements of Amazon’s decision while still broadly criticizing government mandated minimum wage increases.  According to AEI “we can be confident that Amazon boss Jeff Bezos, the world’s wealthiest person, has coolly calculated that it makes ample business sense for Amazon to raise the minimum wage it pays its U.S. workers to $15 an hour. The logic seems obvious. The boost would give the trillion-dollar retailing giant an edge over rivals such as Walmart and Target in the competition for increasingly scarce workers.” The Heritage Foundation published its 3 reasons to celebrate Amazon’s $15 minimum wage alongside 3 reasons to fear a $15 minimum wage. They firmly appreciated the voluntary increase in wages for the following stated reasons:

  1. Amazon’s move reflects a strong economy that benefits all Americans.
  2. Higher wages means more money and more opportunity.
  3. Higher wages reflect increased productivity.

I acknowledge that Amazon has also suffered some criticism about how it achieved targets to raise wages. Living Wage For US’s certification system and accompanying tools, with multi-stakeholder input, will provide clarity around how to reach living wage goals without inadvertently lowering incomes for some employees, thus avoiding critical backlash.

The point here is not to pass judgement on policy solutions presented by either side of the political divide, but rather to provide a path toward living wage that everyone can support. The point is to build a living wage certification that allows Americans to reward employers that do the right thing by paying their workers a living wage based on cost of living across the country. The point is to give you a way to support the businesses that get certified through investments, contracts, and consumer spending. The point is to create a community to help businesses figure out how to overcome the barriers that prevent them from paying a living wage. The point is to work together, across parties and ideologies to build a better America.

And if, like me, you are someone looking for a way to bring your loved ones together across our growing political divide, then consider this a path forward. And please, let us know if you would like to pay your own workers a living wage or support the effort we are working to launch this year. We need everyone’s help to address this monumental issue together, not as Democrats and Republicans, but as Americans.