Speaker 1: Bloomberg Audio Studios, Podcasts, radio News.
Speaker 2: This is Bloomberg Business Week with Carol Messer and Tim
Speaker 2: Stenebeck on Bloomberg Radio.
Speaker 3: All Right, we want to get to something that's certainly
Speaker 3: near and dear to us. I think about our conversation
Speaker 3: with Peter atwater over at William and Mary the case
Speaker 3: shape recovery. We talk about records that we've seen in
Speaker 3: the market gains for a lot of Americans, and yet
Speaker 3: that's not the case for everyone. The gap between also,
Speaker 3: and this is kind of an extreme measure. How much
Speaker 3: execs make versus how much those on the frontline of
Speaker 3: the companies make is something we talk about a lot.
Speaker 4: Check this out.
Speaker 3: According to the Economic Policy Institute, CEO compensation rose by
Speaker 3: more than one thousand percent between nineteen seventy eight and
Speaker 3: twenty twenty three, while the typical workers compensation tim rose
Speaker 3: only about twenty four percent.
Speaker 2: Here's another way to look at that gap. Last year,
Speaker 2: CEOs made two hundred and ninety times as much as
Speaker 2: the typical worker. This is coming from the Economic Policy Institute.
Speaker 2: Back in nineteen sixty five, it was only twenty one
Speaker 2: times as much as the typical worker. So it may
Speaker 2: be surprising to you, not to our next guest who
Speaker 2: says we need to quote pay the people. John Driscoll
Speaker 2: is the former CEO at care Centrics. It was bought
Speaker 2: by Walgreens Boots Alliance more than two years ago. He's
Speaker 2: currently senior advisor at Walgreens Boots Alliance. He's had several
Speaker 2: senior executive positions at a variety of healthcare companies. He's
Speaker 2: also a member of Patriotic Millionaires, which calls itself a
Speaker 2: collection of wealthy Americans fighting against the destabilizing concentration of
Speaker 2: wealth and power in the United States.
Speaker 3: I have to tell you have about an hour's worth
Speaker 3: of questions that we want to talk to you about,
Speaker 3: just because there's so much going on in healthcare, as
Speaker 3: you know right now. But let's talk wages and the
Speaker 3: gaps and how we fix this. I mentioned Peter Atwater
Speaker 3: the case shape recovery. Some people are doing really well.
Speaker 3: There's a lot of Americans who are not, and whether
Speaker 3: that plays out in politics and so many different aspects
Speaker 3: of our society. You know, why is it that we
Speaker 3: continue to see people who don't.
Speaker 4: Make a living wage?
Speaker 1: Well, Carol, I think we've lost the string, you know,
Speaker 1: I'm actually no longer working at Walgreens and focusing on healthcare.
Speaker 1: I'm really focusing on making the case that it's good
Speaker 1: for business and it's good for America if we can
Speaker 1: get to a living wage. You know, we lost the
Speaker 1: string a while ago. Between nineteen the nineteen thirties and
Speaker 1: nineteen eighty, median productivity United States went up by about
Speaker 1: ninety seven percent, and the median wages went up by
Speaker 1: about ninety percent. Since nineteen eighty today to today, productivity
Speaker 1: has gone up another ninety percent, but wages median wages
Speaker 1: have only gone up by nine in the gap. That's
Speaker 1: it's inconceivable that we should sort of push working class
Speaker 1: folks farther and farther away from being able to take
Speaker 1: part in this great capitalist adventure that's working for so
Speaker 1: many of us. But you know, there's forty million people
Speaker 1: in America who aren't earning a living wage.
Speaker 2: Do you think the incentives are misaligned? Because if we
Speaker 2: think about, and you've been part of publicly traded companies before,
Speaker 2: what do investors care about? They care about the top
Speaker 2: line and they care about the bottom.
Speaker 4: We never talk about. Okay, so the you know, whoa
Speaker 4: how much Yeah, how much did you know? The people
Speaker 4: on the front lines make you.
Speaker 2: Know what they cared They care about automation and increasing margins.
Speaker 1: Yeah. But I think though that you're starting to see
Speaker 1: things change you At my own.
Speaker 2: Company, this is twenty eighteen with the Economic Roundtable. Well,
Speaker 2: it's only gotten work.
Speaker 1: I think that the Well, first of all, the trend's
Speaker 1: a bit horrible for the last thirty years, as I
Speaker 1: just pointed out. But at my own company, when we
Speaker 1: froze executive salaries and doubled minimum wage twelve years ago,
Speaker 1: retention went up, engagement went up, but productivity also went
Speaker 1: up by about thirty percent. And you're starting to see
Speaker 1: some of the most successful companies in America. Bank of
Speaker 1: America JP Morgan also raised their wages to a living wage.
Speaker 1: They did it as part of that business Roundtable commitment.
Speaker 1: But what they found is that it it it lowered
Speaker 1: the number of people who were leaving their jobs. Because
Speaker 1: people who are working in minimum wage jobs are often
Speaker 1: working two jobs, they're not as engaged. They found that
Speaker 1: productivity went up with they invested in kind of a
Speaker 1: if you want a fair or social contract, They found
Speaker 1: they had a more successful and profitable business I think
Speaker 1: the most important thing is we get the story out
Speaker 1: that it is a productivity gain and a win for
Speaker 1: the companies, and also that I don't think that capitalism
Speaker 1: can easily be sustained if the bottom third of the
Speaker 1: workforce isn't really part of If the company wins, you.
Speaker 4: Win, So why don't we do it?
Speaker 3: Then you lay out a really good premise and argument,
Speaker 3: why isn't it that more companies don't do that?
Speaker 1: Well, that's what I am focused right now, Carol, on
Speaker 1: selling that story and telling that story, because even for
Speaker 1: the executives that have done it, they're surprised at how
Speaker 1: it increases how long folks stay at jobs, it increases
Speaker 1: their productivity. But that's not a story that many people
Speaker 1: have told, and they certainly have to haven't told it
Speaker 1: with very specific examples. You know, our ability to pay
Speaker 1: claims grew by thirty percent, people stated our company for longer.
Speaker 1: We had fewer people quietly quitting or quitting quitting very quickly,
Speaker 1: And so I think it's selling and telling that story.
Speaker 1: I also think that we're getting the message in a
Speaker 1: lot of different ways. I think the reason why we
Speaker 1: have so much rancor anger and discontentment in working class
Speaker 1: voters of all races and backgrounds is they're not really
Speaker 1: feeling like they're part part of business, of an America
Speaker 1: that works, where business is clearly working and being successful.
Speaker 4: Chaus Johnya.
Speaker 3: One of the things Tim and I have talked about
Speaker 3: a lot, and you write about the restaurant in Association
Speaker 3: and the restaurant industry that I feel like, first of all,
Speaker 3: we feel like there's a tip jar everywhere, and to me,
Speaker 3: it just says we're not paying workers enough.
Speaker 4: And I like, why aren't companies paying workers?
Speaker 3: Why do I have like I would rather pay more
Speaker 3: for an item and just ensure that these workers are
Speaker 3: getting paid. I think about the restaurant industry that you know, right,
Speaker 3: they expect that they're going to be tips, Like.
Speaker 4: How do we kind of rework that? Well?
Speaker 1: I think we have to actually sell this, tell the story,
Speaker 1: sell the story, and then organize. But there are plenty
Speaker 1: of examples. Danny Meyer has been a leader and a
Speaker 1: supporter of the movement that we're working on, which is
Speaker 1: to eliminate kind of the tipped minimum wage, which is
Speaker 1: still at three dollars and twenty five cents. It's unbelievable
Speaker 1: and you start thinking if you're we're not talking about Danielle,
Speaker 1: we're talking about most people are working at Denny's. And
Speaker 1: when you increase the minimum wage and you get to
Speaker 1: a fair wage. You know, California raised the fast food
Speaker 1: minimum wage to twenty dollars an hour. I thought it
Speaker 1: was an odd thing to do, but there was a
Speaker 1: lot of complaints that that would harm the industry. There's
Speaker 1: thousands more fast food jobs.
Speaker 2: Now, why did you think it was an odd thing
Speaker 2: to do?
Speaker 1: Well, I think it was odd to just bring it
Speaker 1: up for one category. For me, the most important thing
Speaker 1: is to eliminate tip, minimum wage across the board and
Speaker 1: get to a living wage. Get to I mean again,
Speaker 1: you've got forty million people where they're working full time
Speaker 1: jobs and one job doesn't afford them enough to live
Speaker 1: independently and pay their bills.
Speaker 2: What do you think of the most wealthy people in
Speaker 2: the world right now? Someone like Elon Musk, for example,
Speaker 2: whose fortune has increased by roughly two hundred billion dollars
Speaker 2: just since the election, certainly took a haircut today with
Speaker 2: the sell off in Tesla. What do you make of
Speaker 2: the concentration of wealth at the very top?
Speaker 1: Well, I think one of the things that we actually
Speaker 1: got me excited about Patriotic millionaires is that we I
Speaker 1: was deeply offended by the notion of the elimination the
Speaker 1: reduction of taxes on the most wealthy, and the reduction
Speaker 1: of the estate tax, because I think the threat of
Speaker 1: intergenerational oligarchic wealth of massive scale, intentionally or unintentionally disdistorting
Speaker 1: the politics of the moment is a real challenge. And
Speaker 1: that was twenty years ago when I started, when I worked,
Speaker 1: started working with patriotic millionaires. But I don't think the
Speaker 1: biggest problem we have is the a is the massive
Speaker 1: accumulation at the top. Because part of that's related to technology,
Speaker 1: it's the fact that we cut off the bottom third
Speaker 1: of workers in America, and that's not going to be
Speaker 1: good for the economy. If more and more people feel
Speaker 1: like they're not part of the American dream. We're the
Speaker 1: only country that dream is associated with the country. Our
Speaker 1: country is held together by this notion that we're in
Speaker 1: it together. If that, if the bottom third of America does,
Speaker 1: from a wages and wealth perspective, doesn't feel like they're
Speaker 1: part of it, I worry about democracy. I think there
Speaker 1: are plenty of things you could do in tax policy
Speaker 1: to increase to certainly make sure that, as Warren Buffett says,
Speaker 1: he isn't paying a lower percentage of taxes than his assistant.
Speaker 1: I think we should have a fair inheritance sex so
Speaker 1: we don't have these massive concentrations of wealth. But the
Speaker 1: urgent problem of today is to pay people who are
Speaker 1: working hard, leaning in people who are at at the
Speaker 1: bottom third of the wage scale, who are really you know,
Speaker 1: running up a down escalator of costs, particularly a time
Speaker 1: of an.
Speaker 3: So how do we get executives to start thinking about it?
Speaker 3: We have many conversations with CEOs. We often do hear
Speaker 3: about having to pay up for talent, but I'm assuming
Speaker 3: they mean executives and folks kind of higher up in
Speaker 3: their company and not necessarily everyone. How do we get
Speaker 3: them to think about that all across all of the
Speaker 3: workers that they paid for.
Speaker 1: Well, yeah, I don't know how we convince them. But
Speaker 1: the voters are already there. You know. The raising the
Speaker 1: minimum wage to a higher level has won in almost
Speaker 1: I think it's I think it's nineteen out of twenty states.
Speaker 1: It's been put on the ballot in the last election cycle,
Speaker 1: raising the minimum wage won by six points in Missouri.
Speaker 1: It went easily in Alaska. Those are both Trump plus
Speaker 1: ten or twenty states. And the Republican attempt to reduce
Speaker 1: the raising the tip minimum wage actually was defeated at
Speaker 1: the ballot box in Arizona. So the voters are already there.
Speaker 1: I think the only way we're going to get there
Speaker 1: today is politically, because if you have to convince one
Speaker 1: executive at a time will be here forever through voters.
Speaker 1: We have to we have to put it on the ballot,
Speaker 1: we have to get it through Congress. And I think
Speaker 1: what's what's what what What's remarkable to me is the
Speaker 1: Republican voters are already there.
Speaker 4: Yeah.
Speaker 2: Is it a zero sum game? Like is it uh?
Speaker 2: If to pay workers more, do executives have to earn less?
Speaker 1: Not? Not at all? I mean there is. I mean
Speaker 1: the most recent example of raising fast food minimum wage
Speaker 1: and creating more fast food jobs is the example of
Speaker 1: the last couple of years. But when the restaurant associations
Speaker 1: we talked about in the book actually pulled its members,
Speaker 1: not its lobbyists, in d C, they found that many
Speaker 1: of them actually wanted to increase those wages. There's a
Speaker 1: there's a Nobel Prize winning economist who studied what happened
Speaker 1: when New York raised its wages in hospitality and Pennsylvania didn't.
Speaker 1: And what found is what they found is that the
Speaker 1: New York businesses actually grew, which means those business owners
Speaker 1: made more money even though the wages that they had
Speaker 1: to pay were higher.
Speaker 2: Well, do you think raising the minimum wage in one
Speaker 2: sector like restaurants does raise minimum wage across other sectors too?
Speaker 2: You don't think so. So you don't think like, if
Speaker 2: you're getting paid twenty dollars an hour to work at McDonald's,
Speaker 2: then the warehouse owner has to raise their wages to
Speaker 2: that or else their employees are going to go work
Speaker 2: at McDonald's.
Speaker 4: When is the burger going to go up?
Speaker 1: I'm really going to go up? I Well, the reality
Speaker 1: is the percentage of labor that goes into the Big
Speaker 1: mac is actually pretty trivial. Probably to pay a living
Speaker 1: wage at McDonald's, it would probably go by four to
Speaker 1: five cents per burger. So I think it's not it's
Speaker 1: deminimous play.
Speaker 4: A little bit Devil's advocate here, No.
Speaker 1: Absolutely and where, But where I was going with is
Speaker 1: it's we're moving too slowly. It's time to actually change
Speaker 1: the laws, change the rules, and make sure that everybody
Speaker 1: starts to be everybody at the bottom end of the
Speaker 1: of the pay scale is paid a living wage, and
Speaker 1: that's true for folks. To eliminate the tip minimum wage,
Speaker 1: I would eliminate the discount for disabled workers. We have
Speaker 1: to get to the point where all of these executives,
Speaker 1: all executives who believe in the dignity of work, start
Speaker 1: paying wages that are equivalent to dignified pay.
Speaker 2: We have this terminal function on the Bloomberg terminal where
Speaker 2: we can look up executive compensation. So forgive me for
Speaker 2: being fresh, but you are part of a group that
Speaker 2: does argue that many people should be getting paid more
Speaker 2: and executives sometimes should be getting paid less than twenty
Speaker 2: twenty three, your total compensation was over eleven million dollars.
Speaker 2: Was that too much? Were you paid too much?
Speaker 1: I have been the beneficiary of a capitalist system that
Speaker 1: overpays the top and isn't paying enough at the bottom.
Speaker 1: But I am absolutely certain and I'm that we could
Speaker 1: we could raise get to a living wage level and
Speaker 1: it would have It would make no big dent on
Speaker 1: the comp at the top. But let me also say
Speaker 1: that as a patriotic millionaire, I am on the record
Speaker 1: as saying I think we should increase taxes on people
Speaker 1: like me and increase the state tax for all of us.
Speaker 2: How high should they be, because if you go back
Speaker 2: in history, I mean, the top marginal tax rate used
Speaker 2: to would shock you know, fifty sixty years ago, would
Speaker 2: shock people today. Yeah, I mean it was insanely high.
Speaker 2: It was insanely high.
Speaker 1: Let's start by not approving, not extending the tax cuts
Speaker 1: that Trump put in place when he was in office.
Speaker 1: Let's start by getting to a level that we were
Speaker 1: paying during the Clinton administration, which was one of the
Speaker 1: greatest periods of prosperity, and we were actually paying down
Speaker 1: the debt. We have a one point seven trillion dollar
Speaker 1: deficit this year. It is not going to be news
Speaker 1: to anyone who can do math that all of us
Speaker 1: are going to be paying taxes. And I think it
Speaker 1: should be very clear that people like me should be
Speaker 1: paying more taxes most Yeah, but.
Speaker 4: We've been hearing this for a couple of years.
Speaker 3: I mean I remember being out at milk And a
Speaker 3: few years ago and people saying, yep, it's time for
Speaker 3: us to pay more taxes, really wealthy individuals, and yet
Speaker 3: here we are.
Speaker 4: One thing I want to.
Speaker 3: Ask you, because we're running out of time, is that
Speaker 3: if we believe in a free market, I'm looking at
Speaker 3: your book about some of the myths that are out
Speaker 3: there that if we pay people a living wage. You know,
Speaker 3: some of the myths that you kind of address, And
Speaker 3: one is this isn't an issue for the government because
Speaker 3: the free market will naturally take care of it. We
Speaker 3: saw wages go up during the pandemic and out of
Speaker 3: it because there was a shortage of workers and so
Speaker 3: supplied demand. Free market it was at work. But I
Speaker 3: don't know that that will continue. Will the free market
Speaker 3: kind of help bring this about?
Speaker 1: Well, I think if you look at where wages are
Speaker 1: right now, even during the pandemic, while there was a
Speaker 1: slight bump in wages at the bottom, costs went up
Speaker 1: at twice the rate that wages went up. And so no,
Speaker 1: the free market has failed. And by the way it
Speaker 1: worked when we actually had a minimum wage that was
Speaker 1: closer to reflecting a living wage, which drove the greatest
Speaker 1: period economic success the world has ever seen between the
Speaker 1: forties and the eighties. We unhooked that the bottom third
Speaker 1: of the workforce at that point. And I think we've
Speaker 1: got a pretty angry, unhappy electorate and a lot of
Speaker 1: people living in near poverty and that's just not fair.
Speaker 3: We just had a conversation with was it the CEO
Speaker 3: of Feeding in America, Yeah, and just talked about, you know,
Speaker 3: the people who just don't have enough food on their table.
Speaker 2: Food and security in this country, insecurity.
Speaker 4: And just incredible the percentages and.
Speaker 1: See one out of three or four kids, one out
Speaker 1: of five households. That is unacceptable. And by the way,
Speaker 1: paying a living wage is not going to cost capitalism,
Speaker 1: it's actually going to improve our markets in business thirty seconds?
Speaker 3: Is a living wage the same in every state, in
Speaker 3: every city. It's got to be depending on the locale.
Speaker 1: No, I think that the FEDS can set should set
Speaker 1: a living wage at the national median, and then you
Speaker 1: can vary it up or down based on I mean
Speaker 1: vary it up rather based on what the true cost.
Speaker 1: The costs in LA and New York are very different
Speaker 1: than the cost in Jackson, Mississippi, or you know, or
Speaker 1: or West Texas. You have to vary it. But the
Speaker 1: minimum is so low right now as to be insulting
Speaker 1: to workers.
Speaker 3: I feel like you're preaching to the choir. John drisc
Speaker 3: will come back soon. This was an important conversations. Of course,
Speaker 3: former CEF care centric his new book, Pay the People
Speaker 3: Why fair pay is good for business and great for
Speaker 3: America