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Thomas Kochan


Here’s How Workers Would Spend the Corporate Tax Cut

In exchange for a greater share of profits, workers are willing to give more to drive performance

Published: Tuesday, March 6, 2018 - 12:02

More than 200 CEOs have said they will raise wages or give bonuses as a result of the large corporate income tax cut passed late last year by Congress.

Some view their plans as simply a public relations move, others as a response to tighter labor markets or worker pressures. Pretty much everyone hopes that it might signal a new era in which corporate leaders share earnings with workers in ways they have not done in the past.

I’m among those who hold such a hope. Only if such profit sharing becomes the norm will the long-term trends in widening income inequality and wage stagnation be reversed.

But why should this decision be left to CEOs? Don’t workers have a legitimate claim and stake in what is done with the profits they help produce? New research I’ve been leading at MIT finally gives workers a voice on these issues and many others.

In search of a voice

So far, apart from some statements by union leaders, the workforce itself has been silent about the new tax law—which among other things cuts the corporate rate to 21 percent from 35 percent—and how the extra money that will end up in corporate coffers should be spent.

Perhaps this is because, by and large, they have lost their voice at work as unions have declined and Wall Street’s voices have ascended and become more dominate in corporate decision making.

That’s one of the key findings of a study we are conducting, which asks a nationally representative sample of American workers how much of a voice they feel they ought to have on workplace issues and the amount of say or influence they actually experience on their jobs. We found that there are large voice gaps across a range of worker concerns and that they are largest on basic economic issues of compensation and benefits, promotions, and job security.

For example, more than 90 percent said they should have at least “some say” on benefits and compensation, but most believe they have little or no say. Similarly, nearly three-quarters said they ought to have “a lot of say” or “unlimited say” concerning harassment protections, yet about two-thirds indicated they have some say or less.

Perhaps this is why 46 percent of all nonunion workers and half of the nonmanagerial nonunion workforce today would join one if given the opportunity, up from about a third for both groups in previous decades. This means 55 million members of the labor force would join the 14.8 million currently in a union if given the choice to do so today.

Of course, that’s not realistic since nine out of 10 union organizing efforts fail if management resists, as managers nearly always do. But perhaps it is time to change this.

Five worker priorities

With that in mind, we asked the students and workers from around the world who have participated in our ongoing MIT online course “Shaping the Future of Work” to vote for their top priorities for how they want employers to contribute to a new social contract at work.

The idea behind this ongoing exercise is to find out what workers think business, labor, government, and education leaders should do to build a more inclusive and productive economy and where they would allocate some of the tax cut dollars if they had the opportunity to do so.

Here is what our 2017 class identified as the top priority actions for employers:

Wages and benefits. Not surprisingly, consistent with the results of our worker survey, their top priority focused on compensation. Key elements of fair pay include a living wage, portable health insurance, some form of profit sharing and a voice on executive compensation. In essence, they are saying they ought to get their fair share because they helped generate the profits in the first place.

Invest in training. Participants’ second-highest priority speaks to workers’ concerns for their future, particularly in the face of coming technological change. They want employers to invest in training for the full workforce—both regular workers and those in temporary or contract jobs—to keep their skills current so they are ready to put new technologies to work. They specifically want businesses to work with educational institutions and unions to support internships, lifelong learning, apprenticeships, and online courses.

Family leave policies. Concerned about the challenges meeting work and family responsibilities, participants said they want businesses to fill the void in national policy with respect to paid family and sick leave and make sure it’s available to people at all levels of the workforce. They also emphasized the importance of flexible work arrangements.

“High-road” strategies. We also found a strong interest in forging better ways to take advantage of employee strengths by pushing companies to adopt so-called high-road strategies that treat workers as assets and sources of knowledge. The aim is to get companies to better utilize their employees to improve operations and build modern, flexible, team-based work systems, which research shows boosts productivity. In other words, in exchange for demanding a greater share of the profits, workers are willing to give more to drive performance.

Workplace respect. A final priority addresses a topic of considerable visibility today: Workers want respect and to inhabit a workplace free of discrimination and harassment. And they suggest that the best way to achieve these goals is to establish workplace councils in which employees and managers work together to build and maintain a respectful workplace environment and to resolve problems or claims of harassment if and when they occur.

Finding a voice

So how do we get there?

As I noted earlier, about half of employees who aren’t in a union would like to join one. Perhaps this is the place to start, by making it easier for them to join one. Beyond that, new ways of giving workers a voice, with mixed success, are also being developed by independent advocacy groups and online startups.

Co-worker.org, for example, helps workers file petitions with employers to change problematic workplace practices. Glassdoor allows people to rate good and bad employers. OUR Walmart uses artificial intelligence and machine learning to track the frequency of different worker complaints and then inform workers about their rights. And most recently working women have been allying with movie stars to demand a discrimination-free workplace via the burgeoning #MeToo movement.

The ConversationAmerican workers are beginning to raise their voices again. CEOS, are you listening?

This article was originally published on The Conversation. Read the original article.


About The Author

Thomas Kochan’s picture

Thomas Kochan

Thomas Kochan teaches and studies work and employment relations at the MIT Sloan School of Management. For the past 40 years he has applied his research by working intensively with leaders in business, labor, and government to update labor and employment policies and practices to catch up with changes in the workforce and the economy. His book, Shaping the Future of Work (Business Educators Press, 2016), focuses on what workers, employers, government, and educators can do to meet the needs and aspirations of the “next generation” workforce.