One year ago, the Business Roundtable, an influential lobbying group of over 200 CEOs — from such companies as American Express to The Coca-Cola Company to Goldman Sachs — released a statement on the “purpose of a corporation” articulating that stakeholders should matter as much as shareholders:
“Americans deserve an economy that allows each person to succeed through hard work and creativity and to lead a life of meaning and dignity ... While each of our individual companies serves its own corporate purpose, we share a fundamental commitment to all of our stakeholders.”
This sounded like a bold commitment at the time and embodied the kind of corporate leadership we need to support America’s workers. That day, the S&P 500 was trading at $3,000 and unemployment was 3.7 percent.
Millions are living with economic, health, shelter, food, and child care insecurity. That doesn’t sound like a life of meaning and dignity for these stakeholders. Many schools are reopening primarily with distance learning, sending working families scrambling for scant child care. The $600 additional unemployment assistance was allowed to expire in July without Congressional action. And, in a one-two punch to the solar plexus for working families, the federal eviction moratorium expires next week, putting 40 percent of US renters at risk of eviction. As of June 30, almost 16 percent of Federal Housing Administration loans, mortgages generally extended to lower-income borrowers, were delinquent. Many of America’s essential workers face embarrassingly unkind treatment in their day-to-day work life.
Millions are living with economic, health, shelter, food, and child-care insecurity. We hear these heart-wrenching stories on Jobcase.com every day. Yet, the S&P 500 is at $3,400, almost 15 percent higher than one year ago. Stakeholders in crisis. Shareholders doing just fine.
So, today, I appeal to the members of the Business Roundtable. I speak as a fellow capitalist. I grew up in a middle-class family and, through a combination of hard work, luck, and privilege, earned an MBA from Harvard Business School and went on to spend 10 years in private equity where I helped build companies that treat workers with dignity and respect. I believe in capitalism. I believe in you — the CEOs and board members who truly want to value stakeholders as much as shareholders.
But I’m disappointed that I don’t see CEOs and board members stepping up enough. They are enjoying the security of stable stock prices, while around us, workers are in crisis. Instead, they must take concrete action to support workers. The future of America depends on it.
Here are just a few first steps business leaders should take:
Chart a path to pay your entire workforce a living wage. Use MIT’s Living Wage Calculator to analyze how many employees make a living wage in their geography. Build a plan to transition your workforce to ensure all are paid at that level or provide flexibility and resources to build their skills to earn living wage roles.
Acknowledge the child-care crisis and support working parents. Stand up safe, on-site child-care facilities for those who need to work outside of the home. Expand the benefits provided by the Families First Coronavirus Response Act, which pays only two-thirds of salaries for 10 weeks of leave, and ends on Dec. 31. Programs like this reassure employees that they don’t have to choose between their kids and their jobs.
Boards need to get involved. A Harvard Law School study recently found that only 2 percent of Business Roundtable companies interviewed had their board approve the decision to adopt their new statement of purpose. This suggests perhaps this statement had more to do with public relations than an actual commitment to action. To change this, devote one hour at your next board meeting to talk about compensation, benefits, and working conditions for hourly workers, and secure your board’s support and guidance on plans to prioritize them in concrete ways.
These steps won’t be easy, and they do take time and money. But that doesn’t mean it will hurt companies’ bottom lines and share prices. When consumers see a company doing the right thing, they reward it with loyalty. Jobcase is poised to publicize these actions to our tens of millions of members who are not only your employees but also your customers.
Capitalism can drive change and help all workers lead lives of meaning and dignity, free from the anxiety that comes with financial insecurity. If we truly believe that stakeholders matter as much as shareholders, we don’t have any other choice.
Beth Clymer is the CFO of Jobcase.