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