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WHAT CAN BE DONE
Despite the knee-jerk claims of some employers, increases in the minimum
wage have had little or no negative macro-level effect on the employment of
minimum-wage workers. 356 Goldman Sachs economists found that increases
in the minimum wage are unlikely to result in significant job losses because of
the resulting increase in consumer demand. 357 Wage increases offer benefits
to business as well; for instance, they often lead to lower worker turnover,
which can constitute a significant cost. 358
Ending excessive pay at the top
If a key cause of the widening wealth gap is labour’s declining share of
national income, an obvious solution is a more equitable sharing of wealth
within companies.
The idea of restricting income at the top is not a new one. Plato recommended
that the incomes of the wealthiest Athenians should be limited to five times
those of its poorest residents. And since the 2008 financial crisis, MNCs
have faced increasing public pressure to forgo executive bonuses and
cap top incomes.
Some forward-looking companies, cooperatives and governance bodies
are taking action. Brazil’s SEMCO SA, for instance, employs more than 3,000
workers across a range of industries and adheres to a wage ratio of 10 to 1. 359
Germany’s Corporate Governance Commission proposed capping executive pay
for all German publicly traded companies, admitting that public outrage against
excessive executive pay ‘has not been without influence’. Two US states –
California and Rhode Island – have suggested linking state corporate tax rates
to the CEO-worker pay ratio – the higher the pay gap, the higher the tax rate. 360
Shared interest: Giving workers a stake
A growing body of evidence shows that companies owned at least in part
by employees tend to survive longer and perform better. In the UK, they
consistently outperform the FTSE All-Share index. 361 When employees are
given a say in governance, as well as share ownership, the benefits appear
to be even greater. 362
Employee-owned firms have been found to have higher levels of productivity;
they demonstrate greater economic resilience during turbulent times,
are more innovative, enhance employee wellbeing, have lower rates of
absenteeism, create jobs at a faster rate, improve employee retention, and
also demonstrate high levels of communication and employee engagement. 363
And ‘unlike changes in tax policy (which can be reversed), employee ownership
is long-term and sustainable.’ 364 It is a powerful and practical idea for a more
inclusive capitalism.
Productive work will only be part of the solution to out-of-control inequality
if decent jobs pay living wages and workers’ rights are upheld and enforced
by governments. Voluntary action by employers alone is not enough.
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