What’s the role of business in society???

October 17, 2013 2:17pm
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  • To provide goods and services to the general public?
  • To allow people a means to contribute productively to society in exchange for the economic ability to support themselves and their families?
  • To ensure profit for its key stakeholders and investors in exchange for their own resources and support?

In a perfect world, I would say all three of those things are important, in that order, but we don’t live in a perfect world and at least here in America, where corporate profits are at record highs while welfare, unemployment, and distribution of wealth also cite unprecedented spikes in all of the wrong places, I think taking a step back to examine the true role of businesses in our society shines a bright light on the root cause of many of our problems today…

There’s two ways to look at this arrangement, in my mind – from the perspective of the individual … namely, those who own the business, and from the perspective of the society … or all of us together, whether we have any vested interests in a given business or not.

Society’s perspective is the easy one – we want businesses to succeed, make enough money to pay all of their employees well, and have a little leftover afterwards as profit to grow the business and help compensate any financial investors who make the business possible. Paying its employees well is especially important because if they don’t compensate the people who work for them well enough to be able to support themselves, they either need to seek additional work elsewhere, which is a drain to society because people working multiple jobs don’t have any time to participate in community, or they’re forced to turn to social programs like welfare to fill the gap between their actual income and a livable wage.

The individual’s perspective, on the other hand, is a bit different … although it doesn’t have to be.

Back in perfect world, the individual’s view wouldn’t really be much different than that of society because, well, the individual is part of society, too, of course! And yet the way many business owners see their roles today is quite different – they want their businesses to succeed so that they can maximize profits for themselves and for investors, pricing their services at whatever our capitalistic markets will bear and paying their employees just enough, but not more than they have to in order to keep the ship afloat. They see their employees as resources rather than people, and when the budget needs a little trimming in order to maintain their financial targets, those resources are the quickest way to cut costs … nevermind, once again, that they are actually people.

And of course, I’m not talking about all businesses here – there are plenty of companies doing the right thing that completely contradict what I’m saying here, but there are also more than enough that don’t.

Those don’ts have made themselves quite clear in the last couple of months, whether they’re arguing against raising the minimum wage or they’re reducing employees’ hours to 29 hours/week to avoid healthcare mandates. These are companies that are putting their profits above the general welfare of their own workers, which although it’s great for their bottom line and it keeps their investors happy, to me as a member of society it’s more important to make a reasonable profit and keep your employees happy than make an exorbitant profit despite their well being.

One of the biggest examples that still sticks out in my mind is the Papa John’s blunder over the Affordable Care Act, where founder and CEO John Schnatter expressed his opposition for the new law and said that he believed that many of his franchises would likely cut employee hours to avoid the mandate, then later citing that the mandate could end up costing them an additional 11-14 cents per pizza. Apparently that was a big deal to the investors behind Papa John’s, but to someone who frequently (up until this stink, anyways) bought their pizzas at an average of $10 a piece, an extra 1.4% cost is a steal for being able to ensure healthcare for all of the company’s employees.

If I was running Papa John’s at the time, I’d have made a promotion out of it, raised prices by a quarter a pie, and bragged about how it was the right thing to do because Papa’s puts its employees first … but instead, Papa’s took a beating in the media for it and ended up having to do a lot of backtracking and apologizing, all the while giving away thousands of free pizzas for their annual Super Bowl promotion.

It’d like to think that if you asked the average man on the street, they’d be more concerned about a company supporting its employees than its investors, and those who cite the opposite had better not be the same ones who then turn around and complain about spending for our social programs going through the roof because you can’t have it both ways. If you’re not going to insist that businesses do right by their workers, then you either have to allow the government to step in and help or you have to commit those people to starving.

So whose side are you on?

The math itself seems pretty simple – pay your employees a livable wage and they won’t have to rely on social programs to close the gap. Walmart, among other entry-level service companies, is often under fire for exactly this because minimum wage itself just isn’t enough to cut it in America anymore. Consider where the poverty line currently falls in 2013:

1 person household – $11,490/year
2 person household – $15,510/year
3 person household – $19,530/year
4 person household – $23,550/year

A minimum wage job at $7.25/hour pays $15,080/year, assuming 40 hours/week; if you work for an employer looking to duck the healthcare mandate, 29 hours/week puts you at $10,933/year. So a single person working a minimum wage job can fare ok, but also remember that minimum wage jobs aren’t reserved for high school kids anymore – almost half of those earning minimum wage today are over 25. If you’re a single parent working a full-time job with part-time hours for minimum wage, you’re really hurting at that point, so it should be no surprise when we see how much is spent on welfare programs when we consider just how underemployed a significant portion of the country actually is.

And of course, the poverty line is exactly that – the estimated minimum level of income needed to secure the necessities of life … food, water, some sort of roof over your head, and that’s about it. I know that a very common complaint from the anti-welfare crowd is that they don’t think someone on welfare should have cellphones or nice cars or pretty much any other luxury aside from rice & beans on their plate as a form of punishment for living off the public teat, but really, is that how you would want to live – pulling in the bare minimum needed to survive???

Sure, the original idea of minimum wage was for entry level jobs and that through your career, you would work your way up through the ranks as you strive to achieve The American Dream, but with 10% of the country unable to even find a job and another 10-20% above that underemployed even with the jobs that they have, people are forced to stay at the lowest tier longer and longer, and really, what have we done for ourselves as a society if collectively we can’t enable a system where people can put in an honest day’s work and feel like they’re doing more than just barely getting by at the end of the day?

I’ve said it before – it does no good for society for wealth to accumulate at the top of the scale and leave millions of Americans just scraping with barely enough to survive, let alone pursue any type of “happiness.” I guess that’s my biggest problem with capitalism as a whole because while you can’t force a business owner to be kind to the people that work for him, it sure creates an awful lot of problems when someone’s priorities don’t align with the greater good of society like we’re seeing today. When 10 people are scrambling for the same job, there’s no incentive at all for an employer to do anything in the employee’s favor – they can fight it out among themselves and the losers will just be deemed too lazy to want to work. As a result, society in the form of social programs ends up supporting the other 9 who didn’t get the job in addition to supplementing the one that did because he’s being underpaid, so as far as I see it, we can either have a society free of social support where businesses do more to share the wealth or we can continue to let capitalistic greed drive social support into the stratosphere, but we can’t have both.

Maybe my thinking is a bit Utopian to suggest that employers should care about their workers, but my personal view is that running a business is a responsibility. If you’re going to take responsibility for someone’s livelihood by trading their time for your financial support, just as I think businesses need to be not nearly as quick to let people go to balance costs, I also think that paying them enough is more important than the pile of profit that’s leftover at the end of the day. To me, that’s extra and should be subject to fluctuation based on how well the company is doing. If the company’s employee base fluctuates while its profits remain steady to keep the investors happy, to me that’s a sign that its priorities are out of whack and it’s not really doing a very good job of being an employer.

To me, that’s the definition of how business should work around here. You provide goods or services to the public, then if that goes well you expand and take responsibility for additional workers beyond yourself, and after all of that is done, you share any profits with your investors and stakeholders in the company. Businesses that are purely in it for the profit don’t do anything to serve society as a whole, and if anything here in America today, they’re primarily what’s driving us into the ground.

And no, just leaving the rest behind because clearly they’re too lazy to work in a system that’s very clearly broken is not an acceptable solution. Society means everybody, and if you don’t think that the system is broken, as defined by having a very small few making billions while millions of others rely on public assistance to survive, then I’d love to hear your definition of what our social system is supposed to look like…  😐

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