Corporations in our country are doing quite well. They are benefiting from a growing, healthy economy. Evidence of this is a stock market that is trading near all time highs. For most corporations, management is being rewarded with growing compensation packages. Similarly, stockholders have benefited with capital gains and dividends. Clearly, when a corporation does well its stakeholders should benefit and both management and stockholders are stakeholders. Uniquely missing in this common logic, however, is labor. I would argue that labor is also a stakeholder, and should have the same status as the other stakeholders.
There was a time when labor held a higher status than today. This was a time when we have a vibrant middle class in this country. It was also a time when unions were strong and government policy treated labor fairly. Conspicuously, this was also a time when wealth disparity was nowhere near what it is today. Bottom line we enjoyed a voting citizenry in our democracy that had common interests and much less disparity – a critical requirement for a healthy democracy.
Looking forward we have a compelling need to increase the status of labor in our democratic society. This is essential if we are to ensure adequate and rewarding jobs for all. Jobs that will bring back a healthy middle class, reduce the polarization of our society, and generally improve the quality of life for most, if not all. The current outlook is not good. Technology and automation are increasingly destroying jobs. New jobs will be created but with different skill requirements and likely different geographic locations. Wealth is increasingly migrating to the top few percent of society, creating a financial elite with interests and motivations at odds with those of the majority. We must find a way to elevate the status of labor.
Solutions to this problem will take time and a lot of discussion. It will be politically very difficult. The positive is that the majority still vote. The majority can elect representatives that are able and willing to take on the challenge. I am not sure what the detailed answers are, but I think that there are 3 things that can help. First, labor should have a role in corporate governance. Labor should be represented on corporate boards so that their voice can be heard. This is not a new idea, it is the case in Germany for example. It works. Second, technology is changing the nature of jobs and at an ever increasing rate. Life long learning and training must be come a part of the fabric of society. One way to help this is to incentivize corporations to train and retrain their labor pool as jobs evolve. This can be done, for example, by making the cost of job related training and education a tax credit (not a deduction). Third, we must address health insurance. Currently, we expect corporations to provide health insurance to employees. This worked in the past but any more. People change jobs. Potential loss of insurance is a disincentive to change. Also, the cost of insurance motivates corporations to hire part-time workers or contractors, to avoid the benefit costs. This issue would go away if we had single payor, government provided basic healthcare for all. Just remove health benefits from the equation.
What are your ideas? I invite you to comment.
Photo by WARDJet