Workers should be better paid and have “a stronger voice” in corporate decision making, according to Sen. Elizabeth Warren.
The Massachusetts Democrat, a leader of the progressive movement, is sponsoring a bill called the Accountable Capitalism Act. She points out that while corporate profits are on the rise, employee wages are failing to keep up with inflation.
“Because the wealthiest 10 percent of U.S. households own 84 percent of American-held shares, the obsession with maximizing shareholder returns effectively means America's biggest companies have dedicated themselves to making the rich even richer,” Warren wrote in an op-ed for the Wall Street Journal. “For the past 30 years, we have put the American stamp of approval on giant corporations, even as they have ignored the interests of all but a tiny slice of Americans. We should insist on a new deal.”
The lawmaker noted that conservatives, including the late economist Milton Friedman, have long argued that Big Business has a “social responsibility” to amass the greatest possible profits — even if that means harming the environment, endangering workers and threatening public health. As a result, “workers aren't getting what they've earned,” Warren wrote.
Common Dreams explained that the senator's legislation would require a federal charter for businesses with annual income exceeding $1 billion. Warren said the charter would force the firms to “consider the interests of all corporate stakeholders,” including employees and customers.
Under the bill, workers would be allowed to elect at least 40 percent of the members of corporate boards of directors; and businesses could not make donations to political candidates “without the approval of 75 percent of its directors and shareholders.” The government could revoke the charter of any corporation that breaks the law.
“There's a fundamental problem with our economy,” Warren said in a written statement. “For decades, American workers have helped create record corporate profits but have seen their wages hardly budge. To fix this problem, we need to end the harmful corporate obsession with maximizing shareholder returns at all costs, which has sucked trillions of dollars away from workers and necessary long-term investments.”
Though the legislation is likely doomed to fail, especially with Republicans controlling Congress, it has been greeted with cheers from many on the left. MoveOn.org's Ben Wikler called the measure “brilliant, breathtaking, and a huge, huge deal.”
Richard Trumka, president of the AFL-CIO coalition of labor unions, argued that “it's time to rewrite the rules so our economy works for working people, not just those at the top.”
Lenore Palladino, an economist at the Roosevelt Institute, called Warren's plan a “clear step in the right direction.” She added: “Corporations today no longer advance the public interest. That's because they've chosen to use their massive profits to enrich themselves and their shareholders at the expense of workers and long-term, shared growth. Solutions like the proposed legislation would create a more prosperous economy, and ensure greater financial security for workers and their families.”
Vox projected that the Accountable Capitalism Act “would redistribute trillions of dollars from rich executives and shareholders to the middle class — without costing a dime.”
The news site noted that the proposal comes at a time of resurgence for democratic socialism, with far-left candidates defeating corporate Democrats in recent congressional primary elections. If enough progressives are among a new Democratic majority in the House of Representatives next year, bold reforms like Warren's bill could gain traction.
The senator is among the leading early contenders for her party's 2020 presidential nomination. She is counting on the support of those who enthusiastically backed Vermont Sen. Bernie Sanders' campaign against Hillary Clinton in the Democratic primaries two years ago. Political pundits are viewing Warren's legislation as part of a blueprint of the platform on which she might run.
The bill bolsters the lawmaker's qualifications as a champion of the working class, which may be ready to embrace a presidential candidate who thinks low- and middle-income Americans are not getting their fair share of the nation's economic growth.
The Pew Research Center pointed out while the official unemployment rate of 3.9 percent is the lowest in almost 20 years and the job-growth rate is strong, real wages are not increasing. The buying power of workers' income is no greater than it was 40 years ago.
According to the federal Bureau of Labor Statistics, the typical hourly wage for non-governmental employees not in management was $22.65 last month – just 2.7 percent more than in July 2017. Since 2013, wage growth has averaged between 2 and 3 percent.
The major portion of the paltry gains has gone to higher-wage earners. Those in the top 10 percent of the non-management class have seen their paychecks go up 15.7 percent since 2000. That is almost five times the increase for workers in the poorest 10 percent.