Americans agree — companies should invest in workers, including paying employees a livable wage

• Many American companies have increased employee minimum wages since the pandemic. But there's a difference between increasing pay and giving workers a living wage.
• Recent polling shows that 85% of Americans want companies to invest in their workers.
• This article is part of the "Financing a Sustainable Future" series exploring how companies take steps to set and fund sustainable goals.

Starbucks made headlines by announcing plans to spend $1 billion on wage hikes for tenured employees and additional training for new staff. The move comes as attempts to unionize at Starbucks and other large employers gain traction, and as competition to lure workers back to work in a still-tight labor market continues.

In focusing on wages, Starbucks joins companies like Target, which announced in March that it was raising starting wages to $15-24 an hour and expanding access to benefits for part-time employees, and Verizon stated that it would be raising its minimum wage to $20 an hour in April.

Pressure to invest in workers is also growing among shareholders. Public companies face a record-level 529 shareholder resolutions on ESG issues this proxy season, and many of them are focused on human capital issues.

Key economic, labor, and social trends are converging to make the case for investing in workers a powerful one. And while many companies have been doing so by increasing starting pay and adding new benefits, now it's time to tackle paying a living wage.

The business case for investing in workers is strong and covers a myriad of actions. It includes expanding access to training and upskilling, lowering the cost of benefits, providing financial literacy training, helping employees save for retirement, and establishing pathways for sustained wealth creation by, for example, profit sharing or stock ownership. Paying a living wage is a key part of the equation.

A living wage is the amount of money a given employee and their family need to cover the minimum cost of essential requirements where they live, including food, childcare, health insurance, housing, transportation, and other basic necessities like clothing and personal care items.

JUST Capital estimates that, as of 2020, 50% of workers (roughly 10.4 million) at the 1,000 largest publicly traded U.S. companies didn't make enough to support a family of three, even with a spouse working full time. The U.S. Government Accountability Office reports an estimated 5.7 million Medicaid enrollees and 4.7 million SNAP recipients in 2018 worked full-time hours.

There's also rising inflation to consider, which new Brookings Institution research shows is outpacing recent pay hikes. Even if wage growth continued at 2019-2021 rates, additional analysis finds it would take 10 years for a worker currently earning $14.09 an hour to earn $20 an hour. Most hourly employees at major chains are still earning less than $15 an hour, far below a living wage in much of the U.S.

Year over year, a large majority of Americans across the demographic and political spectrum tell JUST Capital in our public opinion research that they want companies to prioritize paying a living wage. In recent polling, 85% of Americans across all political, age, gender, and racial demographics and in every geographic area of the country agreed that America's largest companies can help reduce income inequality by raising their minimum wage to a living wage. Another 80% said the recent wave of worker strikes and the emerging support for labor unions are due to large corporations undervaluing workers for too long.

By working closely with companies on worker financial health, and gathering data on best practices, we've seen that taking action on wages helps improve business resilience over the long term. Speaking on Target's recent wage hike, CEO Brian Cornell emphasized that this move is part of the company's long-term workforce commitment, and not in response to the labor market. "Whether you're talking about physical capital or human capital, under-investing might lead to great-looking results over a very short period, but they're not sustainable over time," Target CFO Michael Fiddelke said during its annual investor meeting.

They're also helping to build a more resilient and engaged workforce. What's notable about Verizon's pay increase, in addition to its amount, is that the decision was taken as a direct result of employee feedback. This is just one example of workers' financial security needs helping to drive corporate action (PayPal is probably the most well known).

Efforts like the Job Quality Measurement Initiative, which JUST Capital is part of, are also looking to better define what workers see as a good job. And understanding every company is on a different journey, our Worker Financial Wellness Initiative helps establish a pathway for companies to listen to their workers, understand their economic situations, determine the proportion of their workforce experiencing financial hardship, and build a menu of options for taking action.

Investing in workers is good for them, their families, their communities, their companies and, ultimately, the country. It isn't about politics, or being "woke." It's about creating the kind of good jobs and pathways to prosperity that we all want. In a time of growing division, it is something that unites us all. It's time we got serious about it.

Martin Whittaker is the CEO of JUST Capital.