It’s easy to see that capitalism is broken. Oil & gas, food, delivery, and online shopping companies have had record high profits shared with their shareholders in the past few years, while the workers in the same companies fight for a living wage. And the gaps get bigger. One thing not always recognized is that even when a ‘decent’ wage increase happens, it often benefits the wealthier employees more.
Here is a simple example of a company giving everyone a 7% wage increase. This is what it translates to:
- A $25,000 a year employee gets an additional $1,750 before taxes.
- A $40,000 a year employee gets an additional $2,800 before taxes.
- A $75,000 a year employee gets an additional $5,250 before taxes.
- A $150,000 a year employee gets an additional $10,500 before taxes.
The end result is that the gap gets bigger.
I believe that there is room in the world for social democracy. That we can lift the wages at the bottom without undermining a company. The only thing stopping this is the expectations of shareholders. Companies need to be beholden to their employees and customers first, and then shareholders.
I don’t see a workable way forward to fix the broken shareholder model, but it is undermining the balance between work and life in a free and democratic society. Surely the well-being of a company’s employees has to matter more than lining shareholder pockets… because it seems to be more and more of an either/or scenario, and the shareholders seem to be winning.
