In my bestselling book “How The Poor Can Save Capitalism: Rebuilding the Path to the Middle Class. The Solution for the 100%,” I unpack the story of how more than 100 years ago, entrepreneur Henry Ford helped to stabilize society, and to usher in what we now call the American middle class.
At the start of the 20th century, Henry Ford decided to double what he was paying his workers at his Ford Motor Company (from $2.50 a day back then to $5.00 a day), and when he did this something magical happened — he began to pay workers enough to buy the cars they were building. And with this bold but practical act of business leadership — the American middle class was born.
We are once again at an important reflection point in America and around the world, as relates to economic inequality, the wealth of those at the top, the pay of those at the bottom, and how we bridge all of this somewhere in the middle (a robust and growing middle class).
In a more practical and immediate sense, how do we support workers who are literally helping to keep American society, and the baseline consumer economy, going. According to the U.S. Federal Reserve, 70% of American workers are living from paycheck to paycheck. Of all races. Black and white, rural and urban. The question becomes, how do we help this group to provide a level of human dignity, as relates to the care and feeding of their families, and value to the enterprise too.
It is on this note that I wanted to take a moment to commend my friend Jamie Dimon, Chairman and CEO of JP Morgan Chase, which has just this week announced that he is giving more than 18,000 workers — at the lowest level within the institution — a substantial ‘pay raise.’ They already pay more than $3 over the minimum wage to its entry level employees and will work to get pay up to as much as $16.50 per hour for many. Here is an article in the New York Times on the announcement from the company.
Bravo Jamie Dimon and the JP Morgan Chase team! He complain when our corporate leaders do the wrong thing. We need to take steps to commend them, when they ‘do good’ also. That is precisely what I am doing here.
The back story on workers pay today.
Today, many employers unfortunately believe that it is somehow a negative to raise baseline worker pay, and as a result, the middle class is stagnant and those at the level of the working class find with even two jobs, they are just getting by. Other employers don’t believe that they can ‘afford’ a pay raise for some of their workers who are most vulnerable. Here is the rational:
If you can only afford to pay your rent, car note and basic food for your children, then there is nothing left to buy that new refrigerator (from a big publicly traded company), or to go on vacation (benefiting many private and public companies), or even to go to dinner at the local cafe or restaurant (which benefits small businesses in community). They don’t enough to move from being a vulnerable renter to being a stable homeowner (which robs local governments of a robust, stable and growing property tax base, which they need for public services).
Finally, consumers who are able to responsibly support all of these businesses, large and small, greatly helps investors and Wall Street, and supports the economic growth for all involved. It is stunning how many leaders don’t get this. Jamie Dimon, does.
For an economy which is 70% consumer driven — helping workers to do better financially is just good common sense, is morally sound, provides human dignity for those wanting to take care of themselves and their families, and ends up boosting overall economic stability — even economic growth.
I hope that other CEOs of major companies find ways to follow Mr. Dimon’s lead here. Doing well and doing good too, are not only not mutually exclusive. They are connected.
John Hope Bryant