It sounds like the typical left-leaning critique: “income inequality is materially higher and wealth is significantly more concentrated in the U.S.” “Should inequality go unaddressed,” the analysis continues, “social tensions will rise, leading to a more fractious political landscape that increases political risk, and with it a less predictable policy environment.” But the source is firmly conservative. The august Moody’s, the investment and bond rating agency and essential guide to the near and truly wealthy, published these conclusions in an October “Issue in Depth” issuing a warning about likely perilous future unless there is some course change.
There’s an ominous whirlwind swirling toward us on the economic horizon; now is the time for deep change if we are going to avoid it. For far too long, and at an increasing rate, the US economic system pushed progress’ spoils toward the already rich and the very, very rich. Just an eroding stake remained for the shrinking middle class and frontline workers. America’s workers – and the stability of our economic systems – need a different, better deal.
We believe business systems and influencers can be a force to spread economic opportunity more broadly. The current economy yields too many poor-quality jobs and too few good ones. Jobs that offer better wages, benefits, and stability are certainly good for workers. But they are also good for most firms as well. One hurdle to assessing “good job” firms had been that “job quality” was difficult to measure. But that burden is now cut down to size.
Today we launched, in partnership with Working Metrics, a new tool that can help harness the interests of many businesses toward these ends. The Working Metrics cloud-based software system helps recognize “high-road” firms that offer good jobs and boosts workers’ opportunities.
Working Metrics creates a scorecard that shows how businesses are treating workers compared to their peers. Rating criteria include retention rates, job growth, employee pay and benefits, as well as diversity. Akin to credit rating, the scorecard is issued to both the reporting firm and the potential lender/investor or procurement office. This helps all involved measure success and identify opportunities for improvement in people performance and, consequently, the bottom line at the company. With scorecard in hand, high-road firms have a metric that shows what sets them apart from businesses that fail to invest in their employees.
There’s good evidence that “good job” companies tend to outperform their peers in business results and return on investments. That is a winning combination. And knowing which firms produce great outcomes compared to peers is material and critically important to the decisions of lenders, investors, and procurement offices. The value to these firms includes:
- Lending/Investing: High-road firms present lower credit risks and improved performance. As such, the availability and costs of capital can be lower once there’s confidence in the rigorous, data-driven method embedded in Working Metrics. And there is already a huge slug of capital that can tilt toward stabilizing, incentivizing, and growing firms that do good while doing well. Impact investment funds that incorporate environmental, social (including treatment of workers), and governance factors already exceed $9 trillion in the US alone.
- Procurement System: Supply chains look for the best combination of price, quality, and reliability. The capability to maintain great performance across all three depends on many factors. But we know that a supplier with high retention, better pay and benefits, and real opportunity for advancement is better positioned to deliver. Decisions on where to buy goods and services is going to shift – rapidly, we think – to factor in the lowered business risk and community impact advantage of contracting with “good job” firms. The flow of procurement funding that could shift this direction is very large. The potential impact of this is massive: Anchor institutions – institutions such as universities and medical centers spend over $500 billion annually on goods and services. Federal, state, and local public procurements are even larger and exceed $2 trillion per year.
Working Metrics is part of a larger movement. There is a sustained effort unfolding to craft the tools necessary to move this good jobs approach into the mainstream. We’re leading a movement toward incenting better people practices with our Working Metrics system.
Progress toward a more inclusive, equitable economy needn’t be a zero-sum game with winners gaining only at the price paid by the losers. Workers need a better deal and can only get it when their employer businesses succeed. We see Working Metrics – and similar systems – playing a key enabling role for this overdue change.
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Good Companies/Good Jobs encourages and equips business leaders to enact strategies that simultaneously produce outstanding outcomes for their businesses and their frontline workers. Good Companies/Good Jobs is an initiative of the Economic Opportunities Program.
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