Living wages across the whole supply chain: focusing at home in the U.S.

Living wages across the whole supply chain: focusing at home in the U.S.

Living Wage Blog

‘Living wages’ has become a topic that is regularly and widely discussed, with increasing momentum behind initiatives across the globe. Stakeholders from different backgrounds and ideologies are coming together around the shared conviction that profit gained at the detriment of workers is simply unsustainable.

I recall the first multi-stakeholder living-wage meeting that I attended in Amsterdam in 2013, in the early part of this global movement. Sustainability leaders, certification systems, companies and ministries from three European countries were in attendance (U.S. policy makers were noticeably absent!). The purpose of the meeting was to begin building a common agenda to advance on living wages, with a focus on European procurement policies and supply chains in developing and transitional countries. But nobody was really discussing the need for living wages in “developed countries”. I remember asking a ministry representative if they planned to roll-out a living wage strategy domestically as well as internationally. The answer was no. Needless to say, this narrow view of the supply chain struck me as inadequate and has helped fuel my own work on living wages ever since.

Across the globe, individual companies and entire sectors are making major commitments to living wages, and some are putting real effort toward progress. Much of this effort has focused on workers at the bottom of supply chains – those working to produce raw materials or at manufacturing sites. Without a doubt, these supply chain workers are grossly underpaid and deserve living wages. Freedom from poverty is a human right, and many of the countries where these goods are produced are among the poorest in the world. And chronic poverty is a significant driver behind many other social problems – from food insecurity, physical and mental health issues, and poor academic achievement to child labor and bonded labor.

But we mustn’t forget that poverty and income inequality pervade even the richest countries in the world. Here in the United States, 50.8 million U.S. households struggle to put food on the table or pay for adequate shelter, routine medical attention, childcare, or transportation. 40% would find it difficult to cope with an unexpected expense of just $400. And low-income individuals in the U.S. have a lower life expectancy, and families suffer psychological consequences (JAMA, BMJ Open).

Over the last six years, my work has taken me to leading banana, cocoa, coffee and tea producing countries. When I talk about living wage, I am always dogged by a feeling of hypocrisy. And this is not lost on my international counterparts. Producer associations, growers, and unions alike have inquired whether living wages are paid in my home country. And the fact remains that most of those working on the front lines with American consumers – cashiers, grocery clerks, baristas, servers, etc. are not earning a living wage. Not to mention the people that care for us, our children and our elderly, keep are communities clean, and make life generally better – those that make up the fabric of our society.

What are we signaling to people of other nations when we push for living wages in their (often poorer) countries while failing to pay living wages in our own? And what are we saying to our neighbors when we focus on the wellbeing of people farther away while seemingly blind to those in front of us?

It is time for us all – employers, consumers and civil society – to look at living wage from a truly global perspective, including its imperative across entire supply chains, from production through consumption, and across every industry, whether consumer goods or services. Workers everywhere should be able to feed their families without sacrifice and afford a decent, if basic, standard of living. For employers – private, public, and non-profit – this starts by getting our own houses in order.

Peter Georgescu, Chairman Emeritus of Young and Rubicam, said it well:

What we desperately need now is not to abandon free market capitalism, but to correct its vision: to restore its broader sense of responsibility to multiple stakeholders, to our society as a whole.

Despite strong and well-intentioned advocacy and policy efforts, few places in the U.S. today have minimum wages that approach a living wage. Yet, according to Just Capital (2018), Americans rank living wage and worker benefits as the top considerations for U.S. companies. And while some employers have made living wages a top priority, there is no easy way for consumers and investors to identify which ones pay living wages, and how to support them.

Until now.

Living Wage For US is building a nonpartisan, market-led certification system that will focus on the entire supply chain, starting with U.S. employers that pay living wages to their own workers and contractors. Starting at home, we want to ensure that American workers are fairly compensated without prejudice. From there, we help certified employers build practical, global living wage policies that extend across supply chains and across the world.

This is an issue that affects us all and threatens our economy and international stability.

Are you concerned about living wages? Do you know if you pay living wages to your employees? Need help creating and implementing a strategy to improve worker wages, starting with your own U.S. operations?  Living Wage For US is here to help!

Voluntary Living Wage Payment – The issue where we all agree

Voluntary Living Wage Payment – The issue where we all agree

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.