Making Labor Part of the Team

"I am a friend of the working man," said famed attorney Clarence Darrow about a century ago, "and I would rather be his friend than be one."

When Darrow made that quip, the lives of most working people were grim - long hours, low pay, no job security, few if any benefits and often dangerous working conditions. In the years to come, organized labor fought terrific battles to gain workers a voice, and gradually forged a new era of labor relations in which working people fared much better than before.

The grievances that gave birth to unions were conspicuous. American industry was prosperous but almost all of the profits went to a few people at the top. Once working people won a bigger piece of pie, and became consumers, industry did even better than before. But the unions have lost influence and today we see the same disparity evolving once again.

One of the most glaring examples of the imbalance between those at the top and those at the bottom is the disparity between pay for CEOs and their employees. Last year for example, Discovery CEO David M. Zaslav raked in 1,951 times the median salary of his employees and other CEOs weren't far behind. The Securities and Exchange Commission (SEC) will soon require all public companies to make public their CEO's compensation. It remains to be seen if that will fire the public imagination.

Certainly, many corporate leaders seem to be going out of their way to annoy their employees. There does seem to be a certain disdain at least in some front offices for people at the bottom of the heap. A survey by Aon Hewitt released last fall revealed that 61 percent of companies in 2009 included people in clerical and technical jobs in their bonus pools, while 83 percent included salaried "exempt" workers who are not eligible for overtime. By 2014, only 43 percent gave bonuses to those at the lower end while 93 percent gave bonuses to white collar professionals.

This is penny wise and dollar foolish. It is in the interests of business to nurture a successful and prosperous workforce that can afford to buy houses, cars, appliances and the full range of consumer products that business needs to sell. We are all in this together and it is working people, after all, who account for the lion's share of consumption. Companies should consider the minimum wage a floor, not a ceiling, and offer generous compensation to their employees even when it impacts profits. Where efficiency and/or job skills are deficient, the prudent business should provide training and education to employees - simultaneously investing in their future and the company's. To give labor a stake in productivity gains, companies should provide profit sharing to everyone on the payroll - not just management.

Business leaders would do well to step up, show some leadership and take steps to ameliorate the income gap before it becomes a lightning rod for a serious anti-business movement. If we keep doing what we're doing, we'll get what we got. In time, we will cede leadership to the demagogues of the left and the results will not be pretty.

Jerry Jasinowski, an economist and author, served as President of the National Association of Manufacturers for 14 years and later The Manufacturing Institute. Jerry is available for speaking engagements. Labor Day 2015