Over the past several years there has been a change by some of the larger corporations and their leaders to push for more direction and regulation of companies to meet certain mandates perpetuated largely by political correctness.
It is a troubling movement even if its intentions are well-founded, coinciding with the rising concern about wealth inequality.
The push unofficially started in 2019 with the Business Roundtable, an association of chief executive officers of America’s leading companies, when it changed its principles of corporate governance away from shareholder primacy, meaning corporations exist principally to serve shareholders to serving all stakeholders including their communities.
“The American dream is alive, but fraying,” said Jamie Dimon, Chairman and CEO of JPMorgan Chase & Co. and then-Chairman of the Business Roundtable in a news release in 2019. “Major employers are investing in their workers and communities because they know it is the only way to be successful over the long term. These modernized principles reflect the business community’s unwavering commitment to continue to push for an economy that serves all Americans.”
This change was a largely symbolic and rhetorically hollow gesture when most everyone in the corporate world knows that corporations do not operate in a vacuum. They have to understand, value and invest in their other stakeholders including the communities where they operate and the people they employ. But if they first didn’t make a profit then investing and valuing their communities and employees would become irrelevant.
The push has continued with the effort to increase the federal minimum wage to $15 per hour. Companies like Amazon and Costco have advocated for this increase, which to date hasn’t been successfully passed, but isn’t forgotten.
Now there is a push by nearly 200 companies including Patagonia and Esty to encourage Congress to pass a more comprehensive paid family and medical leave for all working people.
Make no mistake, we are very much in favor of paying workers a minimum of $15 per hour and having a more robust family leave policy for companies, but we are simply not in favor of having the federal government dictate these policies to private companies.
We believe a market economy is best served by less regulation and employees and shareholders can choose to work for and invest in companies that best reflect their values with appropriate employee compensation and benefits.
Adding an additional level of mandates and costs on companies that are just starting to emerge from the COVID-19 pandemic is not only bad for the economy it is bad for their workers who could very well become unemployed or underemployed from the unintended consequences of these policies.
Business leaders should lead by example rather that push these legislative mandates. You never know which new mandate will be next and how it will impact your business. It could quickly become a slippery slope towards a much darker and regulated economy.