Important New York Times op ed by Allstate CEO Tom Wilson entitled Save capitalism by paying people more. What makes this so important is the explicit call from a big company CEO that corporate America needs to pay higher wages.
The need for higher wages and benefits is the core of the Michigan Future new state policy agenda. Our recommendations––paraphrasing President Regan––start with the conviction that a good-paying job is the best social program.
This is what has been sorely lacking in American for decades. As real wages at best have stagnated, particularly for non-college educated adults. In Michigan 58 percent of jobs are in occupations with median wages below the national median wage of $38,640. And that has led to 43 percent of Michigan households––in a strong economy––unable to pay for basic necessities. Which should be––but hasn’t been––unacceptable.
In previous posts we explored the calls by mega hedge fund manager Ray Dalio and venture capitalist Nick Hanauer to reform capitalism. That today’s American capitalism is leaving too many Americans behind and that must change. In many ways Wilson goes even further in his call to reform capitalism. Making higher wages the centerpiece of his agenda. Wilson writes:
I write this at a time when most Americans are struggling. Sure, the unemployment rate is near a record low, but that figure masks the fact that many families are not financially secure. A 2017 survey by the Federal Reserve Board showed that 40 percent of Americans do not have $400 for an emergency. We all have relatives, friends and acquaintances who are struggling to keep up. Being broke while working is not an American value. Poor financial health creates stress, reduces hope and undermines capitalism. It is a cancer waiting to metastasize. Americans need higher-paying jobs. Businesses have the resources and capabilities to make this a reality.
… Let’s create more high-paying jobs and restore faith in capitalism. Corporate leadership and boards, put jobs on your agendas. Investors, ask companies how they are helping Americans prosper while creating a profit. Demand more of management. Delivering higher income through better-paying jobs would be the best tribute to American workers and will restore prosperity to every family and community in America. For American businesses, that is our history. That is our role. It must be our future.
Wow! Exactly right. We need, first and foremost, income––not low unemployment––to be the mission of state and national economic policy. No more defining success as low unemployment. What matters is whether households with working adults can pay the bills, save for their retirement and the kids education and pass on a better opportunity to the next generation.
For too long the American economy––and even less so in Michigan––has failed to provide enough good-paying jobs to meet that mission. It is far past time that Michigan political and business leaders make Wilson’s call for higher wages a reality