I was startled by a New Yorker article last week called “A Fair Day’s Wage.” It said that corporations that pay their workers a decent wage are more profitable than those that don’t.
This news didn’t faze my finance students, so I hope I’m not telling you the obvious.
I think I was surprised due to my prolonged exposure to right-wing media. Apparently, I’ve been brainwashed. Conservative commentators are always saying that corporations should maximize their profits by cutting costs.
They say that CEOs are beholden to their shareholders, not their workers. These same CEOs should also make the highest salaries they can. After all, they are the “job creators” and their wealth eventually trickles down to the rest of us.
OK, I’m waiting for the trickle. Pope Francis has described trickle-down theories as “crude and naïve.” He also rejected the “absolute autonomy of markets.”
What? Doesn’t he watch Fox News? Why that’s heresy to proponents of unrestrained market-driven capitalism.
Paying workers a living wage is also heresy. Opponents of raising the minimum wage always argue that it will raise the price of cheeseburgers. The CEOs would never consider taking home a few less million; they would pass the costs onto customers.
The CEO of Aetna Insurance, Mark Bertolini, isn’t like that, although he did pocket $8 million last year. He gave his lowest paid workers substantial raises and better health insurance. This wasn’t because of his big heart, or business ethics. It was to slow the employee turnover that costs Aetna more than $100 million a year.
Henry Ford famously came up with this idea in 1914. By giving his workers big raises, they not only stayed on the assembly line, they could afford to buy the cars they were building. This was once a prevailing attitude at most American companies; that if you worked all day, you should be paid enough to support your family.
Corporate culture has certainly changed. Greed has become the driving force. I always steered clear of the corporate world, but somehow it found me.
I was the risk manager at a local hospital. For decades, I handled all claims and incidents, from the parking lot to the operating room. I received a monthly stipend but wasn’t an employee, requiring health coverage, etc.
A corporation bought the hospital. Their first order of business was to get rid of John Rice. My boss argued that they wouldn’t be saving money, that I knew every department of the hospital and provided full-service claim investigation.
After I was downsized, I waited a year before returning to visit the old gang. The old gang was gone. Fired. I asked to meet the new risk manager and learned that I had been replaced by an entire department. Some cost cutting!
We have examples of the two different corporate mentalities right here in town. Starbuck’s pays good wages, provides health insurance and donates to local charities. McDonald’s pays minimum wage but does cover health insurance. Guess which company is watching their earnings soar, while the other is seeing profits slide? Apart from responsible corporations, we have small businesses that are supporting Forest Park families.
Corporate culture must change. If not, as a Walmart executive once said, “We’ll all be wearing smocks and selling hamburgers to each other.”
John Rice is a columnist/private detective, who has seen his business and family thrive in Forest Park. He thoroughly enjoys life in the village and still gets a thrill smelling Red Hots, watching softball and strolling through cemeteries.