Andrew Burton/AP Photo
Toys R Us filed for bankruptcy in 2017. Following a takeover and restructuring, employees have taken on a larger role in deciding the future of the company. This photo shows a store in 2011.
- Erica Smiley is the executive director of the union rights group Jobs With Justice. It has helped successfully push for minimum wage and overtime protections for 2 million home-care workers nationwide, push San Francisco to pass a retail workers' bill of rights, and get New York and Massachusetts to raise the minimum wage.
- In this opinion piece, she argues that America's historically high inequality will never be fully addressed until businesses recognize that their long-term health is linked to workers' rights.
- Smiley points to the ways the Fair Food Program and Toys R Us have recently developed innovative frameworks for letting workers have a say in the direction of their companies.
- Following bankruptcy and a restructuring, Toys R Us employees formed a "mirror board" to meet with the actual board, a model somewhat similar to the codetermination model in Germany that Democratic presidential candidate Sen. Elizabeth Warren advocates for.
- This article is part of Business Insider's project "The 2010s: Toward a Better Capitalism."
- The Better Capitalism series tracks the ways companies and individuals are rethinking the economy and role of business in society.
- Visit BI's home page for more stories.
Recovery is a funny concept. It suggests some circular turnabout, that things were good, then they weren't, then they recovered. But when "economic recovery" language is thrown around in the United States today, it fundamentally ignores the fact that working people were in a bad situation before the 2008 financial crisis - facing stagnant wages, rising healthcare costs, and runaway debt.
While owners of industry are not just doing better, but doing better than ever, the people whose hard work produces their profits are doing worse. In the five years post recession, corporate profits rose at 20 times the rate of worker wages. And bear in mind, corporate profits had already been healthy. Worker wages had been anemic for decades. How did this happen?
Many people expected big business interests and legislators alone to craft a plan that would include all of us - and therein lies the root of the issue. We continue to replicate the business model that excludes the voices and needs of an overwhelming majority of people. The best pathway toward a real economic recovery will only develop with the participation of working people, politically and economically.
Democracy requires a container for the majority in any given situation to consult, deliberate, and decide on the policies and practices of any given community, whether it be a large city or a place of work. Democracy building goes far beyond voting once a year in an election.
Historically, collective bargaining between employers and employees organized into a union has served as a direct mechanism to "practice democracy" by directly engaging working people in the decisions and choices that impact their lives. This ultimately leads to better safety, working conditions, and a fair return on the labor put into building, operating, servicing, and moving the items and ideas that help businesses prosper.
How collective bargaining needs to evolve
That said, collective bargaining in the 21st century requires creativity and risk for establishing a framework that goes beyond the New Deal-era bedrocks. In the modern economy, it is urgent that we expand how working people collectively negotiate together, the types of enforceable agreements they participate in, what is up for discussion, and who they can bargain with to assert their power and voices in the workplace, in their communities, and in the future of our society as a whole - regardless of race, gender, and citizenship. Anything short of this expansive view of our workplace experiences falls short of doing business in a democracy.
The Fair Food Program, launched by the Coalition of Immokalee Workers (CIW) in Florida, is one powerful example of just this. These farmworkers were mostly excluded from traditional labor law protection. However, they still established a framework where farmworkers, together with farm owners and multinational food retailers, could agree on a set of baseline health and safety standards and fair compensation. Already, companies such as Yum Brands and Walmart have been a part of Fair Food negotiations resulting in sustainable wages and worker-driven monitoring of safety conditions in the fields.
More recently, Toys R Us has begun experimenting with employee engagement in business decisions. In 2017, the national retailer declared bankruptcy, shuttering around 800 stores and firing 33,000 workers. But when a new owner restructured, leading to a few smaller, experimental stores being opened this year, remaining workers at the company took on a greater role, not just in producing the company's profits but in deciding how profits are invested.
The leadership of Toys R Us saw worker participation in governance as a path to a better business - for workers, executives, shareholders, and consumers. United for Respect, a nonprofit that supports retail workers, helped create a "mirror board" of employees which, among other things, has pushed the company to prioritize laid-off employees in rehires, helped design the layout of new stores, and instituted a $15 minimum wage company-wide, including for part-time workers. As Rick Wartzman noted in Fast Company, "The Toys R Us theme song begins, 'I don't wanna grow up.' It's time, though, that American capitalism did."
The need for economic democracy
Our economy may look good on paper, using the measures that Wall Street and Washington power brokers like to prop up, but the flames of economic populism will continue to grow because of growing inequality that has not been resolved by the "recovery," but redounded. This also explains, for instance, why an August 2019 Gallup poll found support for unions in the United States at an all-time high. Studies have found that worker pay, for union and nonunion workers, has consistently and drastically fallen as the density and strength of unions has declined.
The financial crisis was caused by corporate greed and corruption run amok. The response - in every way, shape and form - is democracy. We need to not only limit the outsized voice of corporations and the super-rich in our government, but also give more employees voice and power in the workplace. Just as political democracy ensures that our government is of, by and for the people, economic democracy ensures that our nation's businesses work in the best interest of everyone. This includes workers, consumers, communities, and our society, not only executives and investors.
And as we continue to rebuild and reimagine our economy in the wake of a recession that saw taxpayers literally footing the bill for failed corporate leadership, smarter, wiser and more inclusive leadership is needed. It is time for American business to do more than grow up. It's time for business to evolve, and place worker participation at the center of its growth.
Erica Smiley is the executive director of Jobs With Justice.
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This is an opinion column. The thoughts expressed are those of the author(s).