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Wednesday, December 28,2011

Support businesses who share the wealth

by Terry Link

Who doesn’t love a discount? Still, I don’t want to balance my retail savings on the shoulders of underpaid help. That’s one reason I avoid Walmart and Sam’s Club. But how do we know if a retailer is paying a living wage or otherwise providing a compensation package that affords their workers a hand out of poverty? This isn’t information I see retailers sharing, so one must look for clues. 

In a society where everyone was guaranteed access to needed health care and a livable pension in old age it might be less of a concern, but we all know sagas of folks whom our system lets fall between the cracks — all the while the top 10 percent accrue more and more wealth. The Occupy patriots have finally helped make sure that this trend does not go unnoticed. 

Ponder this:  The immediate family members of the Walmart family, as last reported, are worth roughly $90 billion, while their employees make wages and benefits that make it hard to live on. If the minimum wage of Walmart employees was raised to a whopping $12/hour, it would only cost the Walton family $3.21 billion of their massive wealth, according to a recent study by the University of California Berkeley, Center for Labor Research and Education.  But even if they wouldn’t share their obscene wealth, it would only cost Walmart shoppers all of $12.49 a year more.

One clue we can look for is whether the workforce is unionized. For all their potential flaws, unions do work for better compensation packages for their members. But most shops don’t even share that information, save maybe the union print shops that exhibit the union bug on their material. Employee-owned businesses or firms that offer “employee share ownership plans” (ESOPs) are yet another vehicle for improving the chances that employees are valued and compensated well.

Perhaps the most obvious hints are co-ops, where more than just profits are shared.  Of course, co-ops don’t all work exactly the same way. The East Lansing Food Co-op pays all employees above minimum wage to start, offers sick-time benefits to all who stay beyond the probationary period, then offer retirement, health care contributions, and vacation time for full-time employees. Beyond that, all employees receive significant discounts and a share of the profits at the end of the year. ELFCO also maintains a small wage ratio between the highest paid and the lowest paid staff.

When Ben and Jerry founded their ice cream company many years ago, they made the wage ratio a basis of their business model, operating at an “8 times” ratio, meaning the owners could not make more than eight times what the lowest paid employee received. Judy Wicks, noted Philadelphia restaurateur and business leader, had a “6 times” ratio in her business. But for some reason, bragging about sharing the wealth doesn’t seem to be a business model anyone around here feels confident in pursuing. 

The U.S. is noted for its huge ratios between CEOs and the average employee. And these symbolize more and more the growing gulf between those who have and those who don’t. A recent report shows that the tax cuts for the richest  1 percent, originally enacted in 2001 and 2003 — and extended for two years in December 2010 — will this year save those  1.4 million taxpayers more ($66,384 average) than the remaining  140.8 million taxpayers (the 99 percent) make annually ($58,506 on average). One study of 365 largest public U.S. companies noted that the average American CEO-to-worker ratio that had been 42 to 1 (1980) grew to 85 to 1 (1990) and to 535 to 1 (2000).

Now, most small businesses in our community don’t pay their owners anywhere near those ratios, but no doubt that ratio varies. Many of us do want to support those businesses that share their success with their employees. It will be a great day when businesses compete to see who shares more.  As the ELFCO example above suggests, there are many ways to share prosperity. In a world where the average annual hours worked grew by 240 hours between 1973 and 2004, time off might make all of us better off. With so many looking for work while some have to work too much, we should be able to create some sharing that could benefit everyone. Perhaps a future column could look at some of those examples from the area, where job sharing and other quality of life benefits are offered by businesses and organizations that aren’t just in it for the wealthy few. 


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