A New Report Says We Should Stop Treating Our Employees Like They’re Paperclips

As Nick Hanauer wrote in the American Prospect,  the American economy today is home to two types of businesses: “those that pay their workers a living wage—the real economy—and those that don’t—the parasite economy.” Put another way, there are employers who invest in their employees, and there are employers who drain their employees of their resources; the two big pairs of examples that Hanauer uses in the article are McDonald’s (parasite economy) and In-N-Out Burger (real economy) and Wal-Mart (parasite economy) and Costco (real economy). Parasite economy employers often write food stamps and other government assistance programs into their business model; the government must step in to ensure that low-wage employees can survive on what their employers pay. What eventually happens is that real economy employers wind up subsidizing parasite economy employers. So as a nation, we want to encourage real-economy employers and discourage parasite-economy employers. A terrific new report from the Center for American Progress titled  “Workers or Waste?”  offers a quick and easy way to reward honorable real-economy employers for their investments in human capital.  We want businesses to train and educate their employees; everyone understands almost instinctually that trained employees earn more, work more efficiently, stay on the job longer, and have better prospects when they move on. A smarter, more employable workforce is not just great for employers, it’s great for the economy. But we currently disincentivize that investment.  As the authors explain : …A $10 million investment in worker training shows up in a firm’s financial statement—not on its own but lumped into selling, general, and administrative expenses, or SG&A, a measure that includes items such as company lunches and paper clips. Companies’ expenditures on worker training and skills show up not as a valuable investment similar to R&D but as an increase in general overhead, a measure that managers have shown a proclivity for cutting and whose reduction is often cheered by investors.
+ Read More