[COMMENTARY] Share the Wealth: U.S. Business Needs to Use Dollars to Fill Inclusion Gaps
As the Senate offers its new $1 trillion plan, dubbed the CARES 2 package, to ease some of the economic catastrophes of the past four months, the U.S. continues to find itself in one of the most disruptive and chaotic periods in American history. This is due to the COVID-19 pandemic, as well as the anti-racism protests—and the police and federal brutality in response to the protests–across the country following the killings of George Floyd, Rayshard Brooks, Ahmaud Arbery, Breonna Taylor, Elijah McClain, and many others.
It is time for private businesses, organizations, and institutions outside of the federal government to fill the executive leadership gap and demand inclusion and equity be the norm for businesses—as well as the larger society—moving forward.
While Starbucks and Coca-Cola recently suspended advertising on social media platforms because of hate speech, and cosmetic giant L’Oreal is removing “whitening” and “fair” skin tone descriptions from its products, attempts at remedies for inequities need to go further than simple gestures.
While the June jobs report shows that the national unemployment rate has eased overall, to 11.1% overall unemployment, the Black unemployment rate at 15.4% is still much higher than the White unemployment rate of 10.1%.
The leaders in the business world-–CEOs and their team of C-suite executives—have profited greatly during this administration.
In 2017 Congress passed the Tax Cuts and Jobs Act which reduced the statutory corporate tax rate from 35 percent to 21 percent. Companies that made profits were able to avoid paying federal and state income taxes on approximately half of their profits.
The Tax Cuts and Jobs Act also reduced the taxation rate on capital gains, which are profits from selling assets and should be taxed like any other income. The 2017 law provided half of its benefits to the richest 5 percent and a quarter to the richest one percent of Americans and provided no incentives for top earners to share their wealth with their workers.
The median total compensation for Fortune 500 CEOs who have been in their position for at least two years is approximately $11.5 million. When businesses experience hard times, companies continue to lay off workers rather than reducing CEO salary—despite the extremely high salary, including company stock, that CEO’s earn.
The $2 trillion Coronavirus Aid Package, Relief, and Economic Security Act—the original CARES act–favored the top tier of corporations and firms rather than working people. In contrast, African-Americans are disproportionately represented at the lower echelons of the employed. Individuals have received only a one-time check of $1200, while married couples have received one for $2400. That money did not go far.
In Chicago, for instance, where the median monthly rent for a one-bedroom apartment is $1560 per month; the one-time stimulus check would cover less than two months of rent. Even in a less expensive market such as Des Moines, the average rent for a one-bedroom apartment is $902. The stimulus check for a single person would cover one and one-third month’s rent. Many people who have received stimulus checks are reportedly spending them on basic needs such as food and gas. Finally, compounding their limited impact, the CARES act payments ended July 25th. Currently, the Republicans are unveiling the CARES 2 bill, the Senate’s proposal that would include a second stimulus check of $1200. Negotiations with Democrats still need to be held and details need to be worked out regarding who would qualify for a new $1,200 payment and when payments would be sent out.
The distribution of benefits was imbalanced in the original CARES act, with the lion’s share having gone to industry. There were no provisions addressing the wages and benefits of the average worker but instead focused on the wealth of shareholders, creditors, and corporate executives. Another proposal to bail out individuals, the HEROES act, a $3 trillion relief package that would authorize future stimulus checks to Americans has been passed by the House but is languishing in the Senate, with a very low probability of passing.
To maintain a positive public image now is a good time for companies and firms to give back. Rather than making limited efforts and quietly benefitting from the CARES act, business organizations must do more to support African-Americans—inside their organizations as well as outside.
Inside organizations, and at the most basic level, CEOs need to ensure the provision of safe working conditions for all employees.
The CARES Act provides no explicit protections for worker safety; it does not mandate protection for workers in unsafe conditions—quite an omission in this era of COVID 19. African-Americans are at particular risk for COVID 19 given that they are more likely to work in industries typically requiring crowded workspaces such as foodservice and warehouse work.
Business leaders must also lay the groundwork for truly inclusive workplaces, free of discrimination, that fairly rewards talent and puts no limits on what talented employees can achieve. They must examine organizational processes around talent decisions, root out racial bias in decision-making, and work to fully embed strategic diversity and inclusion efforts into the fabric of the organization.
Recent research reveals nearly one in five (19%) Black professionals feel that someone of their race/ethnicity would never achieve a top position at their companies, compared to only 3% of white professionals who feel this way. And only 40% of all employees of all races report their companies to have effective diversity and inclusion programs.
Diversity and inclusion efforts within organizations have stalled over the years, with little progress to show for within-company programs. Now is the time for corporate leaders to examine whether they are wholeheartedly pushing for inclusion, or just creating stand-alone efforts without full-on leadership support.
Given that organizations are embedded in the larger societal context, and that context is undergoing change, this is a good time for corporate leaders to critically examine their role in furthering systemic inequity. A starting point for business leaders is to come to a reckoning that while recent tax policies have benefitted them personally, they have widened the wealth gap between the 1% and the rest of society, with racial minorities bearing the brunt of inequities.
As well, if companies and firms wish to reach consumers from a variety of backgrounds – the business case for diversity – they need to invest in their workforce and use dollars to create programs that groom potential leaders from a variety of backgrounds. Recently many CEOs have joined efforts to further diversity and inclusion in their workforces, in response to recent events, and include major organizations such as UPS, Marsh and McClennan, and GMC.
External to their organizations, businesses need to contribute to efforts addressing systemic inequities harming African-Americans that, unfortunately, are becoming more and more deeply ingrained in this society. Key areas for attention include the elimination of police brutality, as well as double standards regarding justice for African-Americans.
At a minimum, major business organizations need to follow the examples of the CEO of Walmart who has earmarked $100 million over a five year period to fight racism, Nike’s pledge of $40 million to support the Black community, and Peloton Industries’ $500,000 contribution to the NAACP legal defense fund.
The last several months have seen the United States struggle to maintain a semblance of democracy given these historic crises. If this country is to have a fighting chance of being a truly inclusive society, corporate leaders must step in and do their part to support the country through this time of peril.