Raising wages is the right thing to do, and doesn’t have to be bad for your bottom line – Zeynep Ton

MIT Sloan Adjunct Associate Professor Zeynep Ton

MIT Sloan Adjunct Associate Professor Zeynep Ton

From Harvard Business Review 

The “working poor” are a growing problem in America — one that is increasingly embarrassing to the corporate elite. Business leaders who are morally inclined to do the right thing should and can play a stronger role in solving this problem by raising wages to a level where their employees’ earnings cover the cost of living.

Jamie Dimon, CEO of JPMorgan Chase, was recently stumped in a U.S. House Financial Services Committee hearing when California Congresswoman Katie Porter asked him what advice he could give to a constituent — one of his own bank’s tellers, who makes $2,425 a month and lives with her daughter in a one-bedroom apartment with a $1,600 rent in Irvine. Food, utilities, childcare, and commuting cost about another $1,400, leaving her $567 short every month. Dimon had no good answer.

Yet Dimon is one of a number of corporate leaders — others include Warren Buffett, Ray Dalio, and Paul Tudor Jones — who have expressed public concern that the version of capitalism that has allowed them to be so successful is not sustainable for our society. The data are daunting. Between 1980 and 2014, while the pre-tax income doubled for the top 1% and tripled for the top 0.1%, there was little change for the bottom 50%. In 2017, more than 45 million Americans worked in occupations whose median wage was below $15 an hour. Although wages increases have finally been accelerating, 40% of Americans are living so close to the edge that they cannot absorb an unexpected $400 expense—not much, as car repairs or dental work go.

For business leaders operating in settings like that of JPMorgan Chase, where profit margins are high and low-wage employees are a small driver of overall costs, doing the right thing morally is not even that risky. Some wage increases would even pay themselves by increasing productivity and reducing turnover — employees would be more motivated, less distracted with life problems, and less eager to find a better job. For those leaders compelled by the same moral argument but operating in businesses with low profit margins and a high percentage of low-wage employees, doing the right thing morally is still possible. But it requires a lot more work.

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The links between stagnating wages and buyer power in U.S. supply chains – Nathan Wilmers

Nathan Wilmers, Assistant Professor, Work and Organizational Studies

From Washington Center for Equitable Growth 

Stagnating wages among U.S. workers since the 1970s is well-documented. Also well-known is the outsized—and still growing—market impact of a small number of giant retailers such as Amazon.com Inc and Walmart Inc. What is less known is whether these two trends are linked.

In research I’ve been conducting—detailed in an article recently published in the American Sociological Review—I’ve found that increased pressure from large corporate buyers decreases wages among their suppliers’ workers. The growing influence of these buyers on workers’ wages is significant enough that it accounts for around 10 percent of wage stagnation since the 1970s. My findings show how shifts in market power have affected workers’ wage growth.

Relative to the postwar economic boom, U.S. workers’ pay growth has slowed by around one-half since the 1970s. During that same period, market restructuring has shifted many workers into workplaces heavily reliant on sales to outside corporate buyers. Large retailers such as Walmart and Amazon wield increasing power against manufacturing suppliers and warehousing and shipping contractors. When this happens, big corporate buyers are able to demand lower prices for the goods and services they are buying, and suppliers and contractors must sell at lower prices and try to cut costs. Likewise, companies increasingly outsource noncore functions, including food service, janitorial, and security jobs, a phenomenon known as the fissured workplace. The result is that more and more workers are employed by intermediate employers, which in turn rely on sales to outside corporate buyers.

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What to do when an employee reports sexual harassment – Daena Giardella

Daena Giardella, MIT Sloan Sr. Lecturer

From Quartz

We know from the 2016 EEOC report on harassment in the workplace and other studies that between 25% and 85% of women, and between 11% and16% of men, say that they have experienced sexual harassment.

That means that, if you’re a manager, it’s very likely that you’ll encounter a sexual harassment situation at some point in your career. You may learn about it anecdotally, or it might arrive at your desk as a formal report or notification from HR or elsewhere.

How you react can determine whether you’re able to build open teams that encourage everyone to have a voice. Here are important steps you should take:

Know the process. It is your responsibility to know your organizational policies, protocols, and investigatory processes as well as what you would need to do. If these procedures are unclear, you should take initiative now to make changes to clarify them. Keep in mind that multiple report pathways and strict protocols are crucial. Read More »

Does the amount you sweat predict your job performance? – Tauhid Zaman

MIT Sloan Assistant Professor Tauhid Zaman

From the Wall Street Journal

In a recent study, people who sweated when the stakes were low did the best when stakes were high.

IN “GATTACA,” THE DYSTOPIAN cult classic set in the “not too distant future,” parents genetically program their children before birth, coding them for desirable strengths and skills. For them, biometric data is destiny: A person’s genetic code, tracked through a massive database, determines their career, which, of course, affects everything.

Nearly 20 years after that movie’s release, we are closer than ever to using biometric data as part of the hiring process, specifically to solve one chronic problem: Employers are bad at predicting who will perform under pressure. Each year tens of thousands of new Wall Street hires undergo boot camps that cost up to $6,000 a person, yet finance has a suicide rate 1.5 times the national average and the second- highest voluntary turnover rate (14.2%, after the hospitality industry). And if an industry as well-funded as finance struggles with vetting applicants, what hope do smaller businesses have?

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Making paternity leave pay — Leigh Hafrey

MIT Sloan Senior Lecturer Leigh Hafrey

MIT Sloan Senior Lecturer Leigh Hafrey

From WBUR Cognoscenti

The spring of 1988 lives in my memory in one abiding scene: My son, Nathaniel, aged 20 months, is toddling briskly down a path in Harvard Yard. He is about 20 feet ahead of me. I run to catch up to him, and, when I do, he chortles, maybe because he thinks he has outpaced me, maybe because he knows he hasn’t. I kneel down to tuck in his shirt, and an acquaintance of mine walks by, beaming. “Happy father,” he says.

The previous fall, my wife, Sandra, then an assistant professor at Harvard, and I had returned to Cambridge from New York. I was on leave from my job at the New York Times Book Review and divided my time between a visiting fellowship at Harvard and looking after Nathaniel. Effectively, I was on unpaid paternity leave. At night, when I put him to bed at 8 o’clock and lay down alongside him to help him settle, I was asleep within two minutes of my head hitting his pillow. It was one of the best years of my life.

While the benefits of paternity leave are well documented, few of my MBA students at MIT Sloan discuss the possibility. They are a highly motivated, ambitious and focused lot. When they imagine their futures, they talk about what they want to achieve, how they will rise through the ranks of their organizations or start companies of their own. They plan to make money and/or do social good, and they recognize, without visible ambivalence, the likelihood that they will belong to the “one percent” in five to 10 years — even as, in many cases, they have six figures’ worth of student loans to pay off.

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