My parents lived their version of the American dream. They made an honest living in Toledo, Ohio, moved into the middle class, and raised a family with love. Like many of their generation, my parents benefited from policies and institutions that supported their prosperity. In that economy of unions and shared responsibility, workers had a voice.
Since then, the nature of work has changed, leaving too many working people behind. Four out of ten Americans can’t cover a $400 emergency expense. One-quarter have no retirement savings. Millennials born in the early 1980s hold, on average, nearly eight jobs before their 30th birthday. Union membership has declined precipitously over the past 35 years. And the rich get richer while the salary of average American workers has barely budged, in terms of what they can buy, since the late 1970s.
In response, we’re seeing a growing number of millennials disavow capitalism itself. More than half of them say they would rather live in a socialist society, and 70% say they’d vote for a socialist candidate.
While I understand this reaction, my response to growing inequality isn’t to abandon capitalism. It’s to reclaim it.
As we enter this new decade, we can bolster business and retain the benefits of capitalism—innovation, freedom, and choice among them—while supporting hard-working people. Business leaders and policymakers have tools at their disposal to strengthen the guardrails that have helped middle-class families prosper for generations. Let’s use capitalism to save capitalism and restore balance to our economy.
At Jobcase, the company I lead, we support more than 110 million working people through our online platform that fosters community, provides self-improvement tools, and helps people find jobs. I’m out there listening to my members every day and have distilled three initial approaches companies can implement today.
These approaches benefit not only working Americans but also the businesses they support. If you are looking to improve your firm’s value, boost employee performance, enhance your customers’ experience, and diversify your talent, this blueprint will support you, your company, and our shared economy.
One of the key ways to support employees is to reimagine shareholder buybacks as stakeholder buybacks. Right now, companies pay to re-absorb shares of their own stock for a variety of reasons, ultimately benefiting investors and shareholders. Let’s also use buybacks to re-invest a portion of the wealth with workers, so that everyone prospers from their contributions.
For every dollar allocated to shareholder buybacks, companies could allocate 20 cents to windfall bonuses for the share-makers (employee base). If JPMorgan had pursued this policy in 2019, shareholders would have divvied up a handsome $32 billion buyback (still close to the record $40 billion that was announced during 2019). Meanwhile, workers would have shared $8 billion in windfall bonuses—an average of $31,000 for each employee.
These kinds of windfalls could be life-changing for the average American. They send a strong message that management values the people who create share value—not only the people who hold share value. And by reimagining buybacks, companies recruit talent and engender long-term employee loyalty, providing a win for shareholders as well.
Pathway to a living wage
All companies should provide a pathway to a living wage, not only because it’s the right thing to do but also because it can benefit companies’ bottom lines. Employers should identify which positions are “living wage” positions—those that deliver a total take-home wage (rate and hours) to meet the local cost of living standards—and strive to make these as high a percentage of overall jobs as possible. These wages support working families who struggle to put food on the table and pay medical bills. They raise the likelihood that people like Gabby Alcantara-Anderson, who works at Walt Disney World, does not have to sleep in a parking lot to save money.
For positions not designated “living wage positions,” managers should embed a set of tangible, worker-centered living wage pathways. These include clear promotion opportunities that managers communicate to all employees. If even these higher-wage positions are not possible, employers should provide worker-friendly scheduling. Worker-centered schedules allow employees to pursue living wages externally, via education or other means, without fear of retribution for scheduling difficulties.
Diversity boosts profits. Companies should rethink degree requirements and open opportunities to underrepresented groups by focusing on skills, not degrees. Notably, a full 84% of people in G20 countries have never worn a cap and gown. And yet companies continue to seek applicants with formal degrees, and particularly from a small subset of selective institutions. With the nature of work changing so rapidly, companies would do well to recruit talent from a wider pool.
Formerly incarcerated people provide a strong example of the kinds of people companies should hire in greater numbers. People who have served time face sky-high unemployment, yet the military has found that they performed better and were promoted sooner and more often than their nonconvicted counterparts. Let’s ban the box that asks about an applicant’s criminal records and help these folks move beyond their past.
At Jobcase, we believe that by putting people first, everyone can profit. Shareholder buybacks that benefit employees, pathways to a living wage, and wider applicant pools set the stage for higher productivity, increased employee loyalty, and higher retention rates, which translate to happier customers and, ultimately, additional value for us all.
As we enter this new decade, business leaders would do well to share their prosperity with everyone who helped bring them success—not just with their shareholders and investors. Let’s make this the start of a people-first decade, in which all of us prosper. We are all in this together.
Fred Goff is the founder and CEO of Jobcase, an online platform that helps millions of working people find community support, self-improvement tools, and jobs.