Henry Ford is famously known for increasing the wages of his employees by asking his business critics who do you think buys Ford cars. Consumer demand is crucial to economic growth and that demand depends on people getting paid reasonable wages.
In one of my recent classes at Parsons, a student from Asia said “in America, you are able to sell McDonald’s hamburgers for $1 and cheap clothes at WalMart because you pay people such low wages they need government assistance to buy food or get medical care.” It was shocking and true.
It is one thing for corporations to cut back on wages during times of recession but it is entirely another when they are making good profits.
Companies ranging from WalMart to Boeing are focussing only on shareholders, not employees, in their business models. The consequence is a very weak recovery from our deep recession, with most people still behind even though we’ve had great profits for years now.
It’s time to share the wealth being generated with stakeholders, not just shareholders. It is the only way to boost demand in the economy and get people to buy more. And it is the only right and moral thing to do. And yes, economics is about relationships, not simply markets.