No Mercy / No Malice: Project 2028: Wages

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Speaker 4 I'm Scott Galloway, and this is No Mercy, No Malice. A key question for all business leaders and owners.
Are you paying your people a living wage?

Speaker 4 Project 2028, Wages, as read by George Hahn.

Speaker 4 Democrats need to be the party of ideas, not indignation.

Speaker 4 Our Project 2028 series addresses critical issues facing America through a no-mercy, no malice lens. Today, we shift from housing to wages.

Speaker 4 Before he was sworn in as Treasury Secretary in January, hedge fund manager Scott Besant warned that failing to extend $4 trillion in tax cuts would trigger an economic calamity.

Speaker 4 This is true if calamity means a reduction in the wealth of the richest Americans and large corporations. What bullshit.

Speaker 4 The real calamity is the poverty and inequality that's set to worsen as the Trump administration advances policies that will disproportionately benefit a small number of people.

Speaker 4 See above, the richest Americans.

Speaker 4 The illusion of complexity is weaponized by the incumbents to mask a simple truth.

Speaker 4 The clearest blue-line path to a decrease in obesity, depression, incarceration, gun deaths, divorce, diabetes, homelessness, and crime is, wait for it, to put more money in the pockets of lower and middle-income citizens.

Speaker 4 And the easiest way to do this is to hike the minimum wage.

Speaker 4 Raising the pay floor to $25 an hour would ensure that Americans can afford to have children if they want, feed their families, and pay for housing and health care.

Speaker 4 In 2009, the minimum wage was $7.25.

Speaker 4 Since then, the cost of a Big Mac, the average rent, and the NASDAQ have risen 60%,

Speaker 4 70%, and 800%,

Speaker 4 respectively. Meanwhile, the minimum wage has rocketed from $7.25

Speaker 4 to $7.25.

Speaker 4 Even though many states and cities have raised their minimum wage, one in four U.S. workers still makes less than $17 an hour.

Speaker 4 With the government failing to act and many companies content to sequester record profits at the expense of the working class, leaders of successful American businesses should step up.

Speaker 4 CEOs who are willing to pay as much as they can, not as little as they can get away with.

Speaker 4 The system is broken when 18 million U.S.

Speaker 4 households are struggling to secure enough food and 12 million renter households are severely cost-burdened, spending more than half their earnings on housing and utilities.

Speaker 4 In theory, wages are dictated by the market, but the market is inherently imbalanced, and employers are the ones who have the upper hand.

Speaker 4 The government has the power to level the playing field by setting the floor on compensation at a living wage, what a full-time worker must earn on an hourly basis to cover the cost of their family's basic needs.

Speaker 4 This should be table stakes.

Speaker 4 In a society where one company, NVIDIA, adds $277 billion in market capitalization within five minutes of its earnings release, and one in five households with children is food insecure, we have decided that America is an operating system to optimize the output of the bottom 99% for the benefit of the top 1%.

Speaker 4 Enough already.

Speaker 4 But a living wage means much more than that.

Speaker 4 Vulnerable workers are less likely to defer medical care, suffer from depression and anxiety, or commit suicide.

Speaker 4 Less likely to burden emergency rooms, lose their job due to illness, or get saddled with crippling debt.

Speaker 4 We know increasing family income dramatically improves childhood development, producing better educated and healthier adults.

Speaker 4 It's also a race and genderblind means of redressing inequality in pay and increasing opportunities for women and ethnic minorities who are overrepresented in low-wage jobs.

Speaker 4 This is affirmative action as it was meant to be, focusing on people who need it most versus their identity.

Speaker 4 In Los Angeles, a single adult without children needs an hourly wage wage of $27.81 to cover basic costs, according to MIT's living wage calculator.

Speaker 4 Two working parents with two children must each earn $32.69 an hour. LA is expensive, but the living wage in many parts of the country isn't significantly lower.

Speaker 4 In Kansas City, the living wage for a single adult is $22.75 or $27.55 for two working parents with two kids.

Speaker 4 In Mississippi, the poorest state in America, you'd need to make an hourly wage of $20.75 or $22.43 respectively.

Speaker 4 In his confirmation hearing, Besent said he sees the minimum wage debate as, quote, more of a statewide and regional issue, unquote.

Speaker 4 Elected Elected leaders are big on states' rights as a weapon of mass distraction when it suits their agenda, and indeed many states have stepped into the void.

Speaker 4 By 2027, 19 states and Washington, D.C., covering almost half of the U.S. workforce, will likely have a minimum wage of at least $15 an hour.
But this is a critical federal issue.

Speaker 4 one that Democrats should continue to spotlight. The meager minimum wage has a knock-on effect, keeping pay lower for millions of people.

Speaker 4 The numbers paint a depressing picture. Although relatively few people receive the federal minimum, many are struggling to stay afloat.
Almost six in 10 jobs pay less than $25 an hour.

Speaker 4 There isn't a single state, metro area, or county in the U.S. where a full-time minimum wage worker can afford a modest two-bedroom rental.

Speaker 4 You always hear the same bullshit narrative from opponents of increasing the minimum wage.

Speaker 4 They argue it will hamper the competitiveness of businesses and lead to closures and job losses hurting the workers it's meant to help.

Speaker 4 If employers have to pay workers more, they'll hire fewer of them. These are scare tactics.
Research shows raising the minimum wage would have little to no impact on employment.

Speaker 4 In fact, it can have a stimulative effect as workers spend their additional earnings. When paid well, workers are more productive and they're less likely to leave, reducing costs for employers.

Speaker 4 Some businesses fold and they should. They are the weakest performers and quite frankly, shouldn't be in business.
The lost employment is mostly absorbed by stronger firms.

Speaker 4 Another way businesses adapt to higher wages is by raising prices, but economists find it leads to scant price hikes.

Speaker 4 One analysis of restaurant food pricing between 1978 and 2015 showed prices rose by just 0.36%

Speaker 4 for every 10% increase in the minimum wage. There's rarely a free lunch, and some companies, like McDonald's, Walmart, would register a significant decrease in profits and share price.

Speaker 4 It would be worth it.

Speaker 4 For much of the 20th century, unions played a critical role in trying to equalize the balance of power and obtain higher wages for workers.

Speaker 4 However, unions have struggled to overcome corruption, adapt to innovation, and maintain relevance. The share of U.S.

Speaker 4 workers who belong to a union fell to about 10% in 2023, from about a third in the 1950s.

Speaker 4 Although 70% of Americans say they approve of labor unions, only 28% say they have quite a lot or a great deal of confidence in them.

Speaker 4 The states that need unions the most are hostile to them, and the overwhelming majority of Western nations with unions have shed membership. In sum, unions aren't effective.

Speaker 4 There should be one union, the federal government, and its first act should be introducing a $25 an hour minimum wage.

Speaker 4 The U.S. economy can support a far larger share of wealth going to lower-income workers.
Between 1938, when Franklin D.

Speaker 4 Roosevelt signed the first minimum wage into law, and 1968, the federal minimum wage was regularly increased to account for inflation and productivity. A 2020 study found that if the U.S.

Speaker 4 had continued to increase the minimum hourly wage in line with inflation and productivity growth, it would have reached $21.50 an hour.

Speaker 4 Today, it would be close to $25.

Speaker 4 More than tripling the minimum wage wouldn't be easy. The shift would need to occur in phases.
Some sectors and regions can make reasonable arguments in favor of exemptions.

Speaker 4 The living wage is also not the same in all regions, so some exceptions would make sense, though we're an increasingly national economy.

Speaker 4 The prevalence of chain stores and online platforms with standardized pricing are closing regional gaps.

Speaker 4 We need a system where successful CEOs and founders who demonstrate real talent earn enormous pay, and workers at the other end of the spectrum earn a decent living. That's often not the case.

Speaker 4 Income inequality has gone berserk.

Speaker 4 From 1978 to 2023, compensation for top CEOs exploded 1,085%

Speaker 4 compared with a 24% rise in the typical workers' pay.

Speaker 4 The median pay package for an S ⁇ P 500 company leader climbed to more than $16 million in 2023, almost 200 times the median workers' wages.

Speaker 4 Sue Naby, CEO of beauty products company Cody,

Speaker 4 earned an eye-popping $149 million in 2023, while the median worker at the company earned $39,643.

Speaker 4 Those employees would need to work for 3,769 years to earn what Nabi received in one,

Speaker 4 according to an analysis last year by the New York Times.

Speaker 4 Lowe's, meanwhile, spent $42.6 billion buying back its own shares between 2019 and 2023, enough to have given each of the company's 285,000 employees an annual $29,865 bonus for five years, according to the Institute for Policy Studies.

Speaker 4 While CEO Marvin Ellison received $18.2 million in 2023, the retailer's median annual worker pay was just $32,626.

Speaker 4 Successful independent businesses can't lead the revolution, but should support it. Not only can many companies increase their labor costs, they should,

Speaker 4 even if it takes a modest bite out of the earnings of the ownership class.

Speaker 4 This makes financial and economic sense while generating reputational benefits too.

Speaker 4 Think about companies that carry the fair trade stamp, guaranteeing farmers and workers receive a minimum price plus a premium payment to invest in improving their quality of life.

Speaker 4 Companies are starting to get it. Bank of America has been raising its U.S.
minimum hourly wage and pledges to hit $25

Speaker 4 this year.

Speaker 4 CEO Brian Moynihan expects to get payback in the form of lower turnover. Globally, L'Oreal, Schneider Electric, and Unilever are among corporations that that have committed to provide living wages.

Speaker 4 Democrats shouldn't lose sight of the extent to which this issue resonates with vast swaths of the American public.

Speaker 4 Polling shows the long-debated idea of raising the minimum wage is popular with Republicans and Democrats alike.

Speaker 4 For Kamala Harris, waiting until two weeks before the election to make a case for boosting the minimum wage to at least $15 an hour felt $10 short and several years late.

Speaker 4 Since 2000, corporate after-tax profits have surged roughly sixfold, while wages have only inched higher. An economy that values work below the cost of living is broken.

Speaker 4 An economy that does so while delivering massive profits to wealthy owners is a moral failure.

Speaker 4 Inequality is a choice. We have the power to give all Americans an opportunity to earn a wage that allows them to live a life of dignity.

Speaker 4 What happens next is up to us.

Speaker 4 CEOs and entrepreneurs should be bold.

Speaker 4 Today, I'm making a commitment to pay my ProfG contractors and employees at least $50 an hour or $100,000 a year in total compensation, respectively.

Speaker 4 And I'm challenging other CEOs and entrepreneurs to join me. I make a shit ton of money and I deserve it.
Also, America and the people who work with me deserve great wages.

Speaker 4 A shit ton minus half a million dollars each year, the cost for Prof G Media to become a maximum wage firm, is fine.

Speaker 4 It's not only the right thing to do, it's smart business. If I sound like I'm virtue signaling, signaling, trust your instincts and that's okay.

Speaker 4 One of the biggest unlocks in my life has been recognizing that being a man means adding surplus value, creating more tax revenue than I absorb, listening to more complaints than I make, noticing people's lives, providing more net care and love.

Speaker 4 I have run firms my whole life, and I've always aimed to provide the minimum compensation required such that employees won't leave. No more.

Speaker 4 By the way, this is how nearly all companies work, optimizing for profits.

Speaker 4 This is a result of the incentive system in a capitalist society, as it increases the enterprise value, profits, of the firm, and the likelihood the business survives.

Speaker 4 Our entire society now prays at the altar of shareholder value, prioritizing them over every other stakeholder dramatically.

Speaker 4 If you are blessed with a company that's doing well, why wouldn't you pay more than you need to? Do you love your kids, community, and country just enough that they don't abandon you?

Speaker 4 One of the most rewarding things about running a firm is it mimics some of the maternal or paternal feelings of reward you get from protecting and providing for your offspring. I've worked hard.

Speaker 4 I'm talented, and I made the genius decision to be born in America. The result is I've got a firm that's exceptionally profitable.

Speaker 4 One of the many rewards of that is I get to pay people more than I need to.

Speaker 4 It feels great.

Speaker 4 Life is so rich.

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