This post was co-authored by Matt Helmer, senior research associate for the Economic Opportunities Program/Workforce Strategies.
At a recent Economic Opportunities Program at the Aspen Institute, CEO and Chairman of Integrated Packaging Corporation Al Fuller discusses moving low-wage workers up the corporate ladder. For more from this event, see the YouTube playlist, here.
In today’s economy, we are creating too few good jobs that pay a decent wage and offer benefits, and even fewer that come with a full week’s worth of pay. Low-wage occupations in retail, food service, child care, home health care, and other service sector jobs make up a growing share of our employment, but most of these jobs offer little opportunity for economic advancement or even stability. Efforts to change this dynamic often focus on improving workforce skills through training and education as a way for these workers to escape these posts and qualify for better ones. While training and education are vital to building a strong workforce, the economic challenges we face suggest we also need to improve our workplaces — especially in the low-wage work sector. To address this need, many business leaders, social entrepreneurs, and philanthropists are exploring different kinds of business models and practices that improve the returns on work and lead to economic stability and opportunity for working Americans.
Al Fuller, CEO and Chairman of Integrated Packaging Corporation, addressed this at the Institute’s recent event Creating Good Jobs: Lessons Learned from Worker Cooperatives, ESOPs, and B Corporations. Integrated Packaging Corporation has created successful businesses and good job opportunities in the inner cities of Detroit, Michigan, and Alexandria, Louisiana. According to Fuller, “What we try to do is make happy customers, but at the same time we try to change lives of a needed employee base.”
Businesses that emphasize the success of the enterprise, alongside the well-being of their employees, are growing in popularity. The benefit corporation — a business created with a dual mission to earn profits and pursue social good — is one model to watch. Maryland State Senator Jamie Raskin championed the passage of benefit corporation legislation in Maryland. “These are businesses that want to pledge as part of their corporate organization to not just make money,” he said, “but also to abide by the highest environmental standards, workplace standards, and social standards.”
Raskin believes companies like these represent a “counterculture within capitalism” and offer an alternative to the corporate trend to emphasize short-term profits over long-term investment in our greatest asset: people.
The Institute discussion also explored the potential of worker-owned cooperatives, which are controlled and owned by the employees. Steven Dawson, founder and strategic advisor at PHI, the development arm of the nation’s largest worker-owned cooperative, Cooperative Home Care Associates, warned that, while this model can make a strong business better from the employees’ standpoint, they are just one piece of the solution. “If your challenge is to create jobs for low-income people at some degree of scale, it’s not going to happen business by business by business by business,” Dawson noted.
To shift the current trend, he suggested we need to invest in, develop, and run successful cooperatives that gain and leverage the industry expertise, reputation, and relationships needed to drive positive changes in job quality throughout an industry. “We (need to) take the learning from that cooperative to help improve other companies’ practices and use in policy advocacy to try and improve jobs of the whole economy,” Dawson explained.
The advocacy and policy efforts of CHCA, PHI, and many others recently paid off as the Department of Labor announced that, for the first time, home care workers would be given minimum wage and overtime protections.
Employee stock ownership programs (ESOPs) are another common form of employee ownership in the US that offer a company’s workers an ownership stake in their company. According to Camille Kerr, director of research at the National Center for Employee Ownership, ESOPs can be a valuable tool for creating stronger jobs and businesses, but work best for companies with a culture that supports employee ownership. “When you do engage employees and have an employee ownership culture along with having a real, financially meaningful ownership stake, you create better companies and better jobs,” Kerr remarked.
Kerr explained that businesses that couple employee ownership with an ownership culture of employee participation in the business are 25 percent less likely to close and experience 2 to 5% higher productivity during the first year the ESOP program is in place. Employees of these companies are four times less likely to be laid off, have two-and-a-half times the retirement assets of other workers, and earn wages 5 to 12 percent higher than workers in comparable non-ESOP companies.
Providing workers with a wage higher than industry standard, benefits, training, skills development opportunities, and an ownership stake in the business does not require an enterprise to be a cooperative, benefit corporation, or ESOP. These practices could easily be replicated or adapted in traditional businesses and corporations. We currently face a dearth of the kinds of good jobs these business models create, and see lower economic well-being and diminished expectations for our economic future as a result. Now is the time for policymakers, philanthropists, consumers, and others to do what they can to encourage the spread of business models and workplace practices that support meaningful and rewarding jobs.