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Op-Ed: How America's business leaders can restore faith in capitalism

Joe Biden’s “Build Back Better” agenda puts the American worker front and center. His experienced nominees can make his aspiration to “reward work” a reality. But to do that, they need business and investors to work together with labor and engage with the government to restore a level playing field and give workers their just share of the prosperity that they create.

For too long, the people most important to the success of our capitalist economy — the workers — have not received their fair share as companies became more subject to the power of investors demanding immediate profits. For the past 40 years, worker productivity increased 70%, the S&P 500 grew more than 700% in value, CEO compensation skyrocketed by 940%, but the hourly wages for average workers rose by only 12%.

Wage stagnation, growing economic inequality, the reversal of gains for Black Americans, and sharp increases in economic insecurity resulted. When the pandemic hit, American workers bore the brunt of the impact. Most of our unprecedented government support addressing the pandemic’s economic effects went to holders of capital and the wealthiest Americans. Worst of all, broad-based economic insecurity opened the door to nativist appeals dividing Americans on lines of race and ethnicity, with disastrous results for our nation’s democracy.

Profound inequality in the U.S. economy

To address these problems, a diverse, bipartisan group of business, philanthropic, community and academic thought leaders has crafted a “Framework for Inclusive Capitalism: A New Compact Among Business, Government and the American Worker.” We recognize that unless our capitalist system again treats workers respectfully, the American economy cannot function in a fair, inclusive, and sustainable way. The killing of George Floyd and the pandemic’s unequal effects deepened our resolve to address the profound inequality in our economy, and by doing so, not just reduce racial inequality, but increase the well-being of all struggling Americans — the best way to build common ground among our diverse citizenry.

Ursula Burns, Chairman of the Supervisory Boar of VEON, gestures during the World Economic Forum (WEF) annual meeting in Davos, Switzerland January 25, 2018. REUTERS/Denis Balibouse
Ursula Burns, one of the authors of this op-ed, gestures during the World Economic Forum (WEF) annual meeting in Davos, Switzerland January 25, 2018. REUTERS/Denis Balibouse

This week we released our report, strongly endorsing increasing the federal minimum wage to a living wage level and keeping it there, an issue President Biden has made an early priority. Our plan goes further, doubling the Earned Income Tax Credit on top of the minimum wage and employer-provided benefits so that companies don’t transfer their duty to pay employees fairly taxpayers. Our report calls on government to strictly prohibit companies from retaliating or interfering with workers’ right to join a union. We recommend board-level committees focused on the best interests of the workforce and experiments with worker voice along the lines of the successful EU works’ council model, to supplement a fairer chance to engage in wage bargaining.

By enabling more workers to be heard, fairer conditions of employment are likely for all workers. We endorse protections for contracted workers and those in the “gig economy,” because all workers deserve fair treatment, and we should not allow competition on the basis of undercutting worker pay and rights. We support investments in the skills of American workers and the inclusion of existing workers in corporate transformations, recognizing that American workers have never been more educated and capable of taking on the new roles that their companies need them to fill.

We also ask our capitalist system to tackle racial inequality, and the needs of all lagging communities. We need to pass a transformational infrastructure bill, tackle climate change, ensure national broad-band access, make our economy more productive, and create jobs. We support Congressman Clyburn’s 10-20-30 proposal that 10% of the funding go to counties where 20% of the community has lived below the poverty line for more than 30 years. If companies invest in these communities, support their school systems, and recruit at the schools and colleges where minorities and less wealthy white people are more likely to attend, more Americans will share in the blessings of our economy. Alongside a living wage and fairer gain sharing, these measures will disproportionately benefit Black Americans, while helping all Americans hurting from our economy’s failure to share its gains equitably with the workers most responsible for creating them.

The U.S. needs a bold Congressional agenda

We look with hope to the Biden Administration, which has ambitious plans along all the dimensions of worker progress we endorse. We don’t pretend our ideas are novel, but we bring to the table something all too rare: a commitment to encouraging business leaders, institutional investors and labor to work together. Our own consensus was hashed out among conservatives, liberals, and moderates, by resolving our differences by putting first our shared recognition that our capitalist system needs to do better by workers.

We ask all business, investment and labor leaders to work together with the Biden Administration, and members of Congress who care about working people, in enacting a bold Congressional agenda to make the American economy not only more competitive, but one that we can be proud of again, because it treats workers fairly and gives all Americans the chance for a better future. No action these leaders could take now would do more to strengthen our democracy in these troubled and challenging times.

This is an opinion piece by Ursula Burns, Former CEO, Xerox; Lynn Forester de Rothschild, Partner, Inclusive Capital Partners and Founder, Coalition for Inclusive Capitalism; Leo E. Strine, Jr., Former Chancellor and Chief Justice of Delaware; and Darren Walker, President, The Ford Foundation.

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