When I set out to create a Christian investing website, one of the first things God brought to my attention was the disparity in benefits flowing to those at the top of publicly traded corporations versus those at the bottom. In 1980, the CEO to worker compensation ratio was 30. Today, the latest measures put it at 273:
The Benefits Are Flowing, But To Whom?
So, those at the top of the management chain are benefiting tremendously from the productivity increases and technological innovation of the last 30-40 years. But do they really deserve 100% of the credit (and reward) for all of that hard work and innovation? Is more value added to a company by the one guy at the top, or by the 100,000 employees who work under him?
Shareholders have also benefited tremendously. The stock market, on the whole, has performed pretty well since the early 1980s. This calculator shows the average annual total return (dividends reinvested) of the S&P 500 from January, 1980 to March, 2014 to be 11.535%. That was enough to turn $100,000 into more than $4,000,000. So, shareholders have done pretty well for themselves.
Consumers are benefiting as well. We have more low cost goods, services, and technology than people could have imagined 40 years ago. The question is starting to become, “Will there be anyone left to buy those low cost goods and services?”
What About Employees?
That’s because rank-and-file employees, on average, are not benefiting proportionately from their own hard work. According to one measure, real wages peaked in 1972. Further, a report last year by Business Insider showed that corporate profit margins were at all-time highs, while wages as a percentage of GDP was at an all-time low. In short, companies are squeezing every last ounce of work they can out of employees, while paying them as little as possible, and refusing to hire new (much needed) employees. They’re protecting and even inflating those large profit margins at the expense of average workers.
Some large (and highly profitable) publicly traded companies have even been charged and fined by the Department of Labor for denying workers their wages, which were owed to them under the law. Breaking federal law to deny workers their wages indicates something is seriously wrong with the values of an organization. We have a real problem in the U.S. regarding how employees are viewed, treated, and valued.
The Solution Starts By Examining Ourselves
So, what is the solution? I think that part of the solution starts in our hearts. God cares deeply how we treat those entrusted to our care. That means we should also care deeply about this topic. We’ve got to stop viewing employees as liabilities. Instead, business owners, company managers, and investors should view employees as the wonderful asset that they are. Employees should not be treated as an expense line item to be minimized.
Employees are human beings with families, hopes, dreams, talents, abilities, and ideas. When they have good opportunity in front of them, and are shown appreciation, support, encouragement, and rewards for hard work, they will thrive. They will also cause the company that employs them to thrive. This in turn, causes other businesses to thrive as economic growth spurs on further economic growth.
Instead, what we have is a country where most people are either 1) unemployed 2) underemployed or 3) unhappy with their jobs – but working hard because they’re glad to have one at all. Is this really the way to optimize the economic system and resources with which we’ve been blessed? Are fat corporate profit margins really sustainable when such massive numbers of Americans are unemployed? When college graduates are working as baristas?
A Call To Action
I’m calling on Christian business owners, managers, and investors to lead the way in taking a stand for the average worker. The specific solutions will look different for each individual company. But we should all explore the issue of how we are treating workers in this country. Are we doing all we can to help them realize their dreams, achieve work life balance, and provide a comfortable living for their families? It is natural for decision makers to fight, scratch, and claw their way into adding more value for customers and shareholders. It is less natural to do the same for employees. But it can be done. We just have to make the effort.
God gives some of us the authority and influence to affect others that are much lower on the totem pole. He cares very much how we use that authority and influence. We can use those things entirely for selfish purposes, or we can fight hard for the least among us. In looking out for the interest of others, we may find that we ultimately bring massive benefits upon ourselves, and everyone else.
In upcoming posts, Chris will be talking more about how Christians, in their role as investors, owners, and managers can affect positive change for the average worker.
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