by Professor Dennis Shaughnessy
This year’s Presidential campaign has led to a great deal of discussion about the rising level of inequality in the US. Senator Sanders has effectively built his campaign on an inequality platform, and the response of the public (and especially young people) has been overwhelmingly positive. While I strongly agree that income and wealth inequality is a topic that needs to be addressed quickly and broadly, I don’t agree that an “anti-business” tone or strategy is the most effective way to achieve real and lasting change.
While there are many profiles of inequality that find their way into the public conversation, one stands out for me. That is that 62 people own the same amount of wealth as the bottom half of the global population—3.6 billion people. Of those 62 ultra-billionaires, more than 40 are US citizens. In other words, a school bus full of America’s wealthiest people own as much as half of the planet’s population. This concentration of extreme wealth suggests that the economic path we are currently on is just not sustainable.
But when the political process ends, and the ideological debate that it has intensified inevitably fades, what if anything will actually happen to slow down the accelerating rate of inequality in both income and wealth in the US? A $15 phased-in and flexible Federal minimum wage is perhaps the most likely policy fix, but that alone is not enough to fully address the inequality problem.
I’m optimistic that the business community will show greater leadership on the topic of economic and social inequality going forward. Businesses are the most important source of wealth creation and poverty alleviation, both here in the US and around the world. Businesses create jobs that enable and power people in a way that most government programs can’t match. The past decade has seen the most dramatic decreases in global poverty in history. The job creation engine of American business appears to be back in full gear, though unfortunately many of the jobs that are being created are in service and other industries where both wages and job security are very low.
We need business leaders to step up to the challenge of reducing inequality through innovative, focused and determined actions that create a more inclusive society. Independent of the political process and the public policy arena, businesses have the power to more effectively create and allocate wealth in a fair and just way. The first step in reversing the economic inequality trend today is a renewed commitment to a prosperous and growing middle class, similar to what the country experienced after World War II (though notably the 1950’s and 1960’s were certainly not a model for social equality).
Some specific examples of business commitments to reduce inequality and create a more broadly shared business model of success include: a commitment to a living wage by region or location, greater financial support for employee education and training, more inclusive compensation programs that include broad-based profit sharing and stock grant programs, a more balanced approach to outsourcing and offshoring that recognizes the value of long-term employee commitment, and a stronger community engagement through partnerships and collaborations that enable those left out of capitalism’s rewards to pursue their own path to self-reliance and success.
While we most often think of inequality in economic or financial terms, social inequality is also an area where business leaders can step-up. I’ve been especially encouraged of late by CEO “activism” on the issues of discrimination and intolerance. The response by people like Marc Benioff of Salesforce.com and Howard Schultz of Starbucks to North Carolina’s so-called “bathroom access law” for the transgender community is especially noteworthy. Many business leaders are proving that their company has an authentic set of values that include an open and inclusive view of not only their workplace but public spaces where they do business.
We’ve created a new course for undergraduates this past semester within DMSB called “The Social Responsibility of Business in an Age of Inequality” to explore, discuss and debate the topic of how business can help to reduce inequality, as well as design projects that can specifically contribute to the efforts of specific businesses and industry sectors. For any students reading this note, the course will be offered again in Fall 2016 and Spring 2017.
