Workers used to be seen as critical to the well-being of the economy. Increasingly, however, they are being treated by corporations as liabilities rather than assets, or as a cost to be contained.
Due to technological innovations, advances in education, and better workforce integration, worker productivity grew 72.2% from 1973 to 2014 while wages grew just 8.7%. This trend can be attributed to the confluence of several trends: the primacy of returns on capital over labor, the “creative destruction” of automation, and global economic forces.
In political rhetoric, job creation is still talked of under the same framework that was used in the 1950s. Blame for job loss is placed on robots, globalization, immigrants, rarely looking at how financial actors are a major determinant of the fate of workers. While labor dynamics have always been in flux, there is something special about the current moment: tectonic shifts in the nature of work, combined with a reduced ability to support, retrain, and reabsorb displaced workers. This is leading—both in the U.S. and elsewhere—to a high degree of political change that is rooted in shifting economic realities. How should investors think about this moment? And how should they act if they invest for the long term, and in particular if they care about workers or invest on their behalf?
Transform Finance, in conjunction with NYU Stern’s Center for Sustainable Business, is working on a project to bring attention to the consequences for investors of treating the labor force as a liability, and how the workforce could turn into a stranded asset.
Our research involves looking at the latest data trends, meeting with economists and labor leaders, and tracking investments from asset owner to the work floor.
The research phase will include an analysis of data, meetings with leading scholars, economists, and labor leaders, and a comprehensive review of reports on automation, globalization, labor market trends and data, and the way capital allocations are influencing these dynamics. This analysis will inform questions such as:
- If fewer people will earn wages, who will in 20, 30, 40 years buy what's made by the corporations you own?
- If wealth inequality increases, how will a universal investor's returns be affected?
- How should a labor pension fund take care of its workers today just as it invests to meet future pension obligations?
Ultimately, we want to help asset owners recognize their role in the changing nature of work, and support the development of concrete approaches that take into account worker well-being. We hope that this effort will evolve into an initial framework for investors looking for actionable ways to use their influence to ameliorate the current concerns of workers.
If you are a thought leader on the future of work, an investor who cares about labor issues and wealth inequality, or are curious to learn more about this project, please send us a note at firstname.lastname@example.org. We’d love to hear from you.