WASHINGTON, D.C. – U.S. Sen. Sherrod Brown (D-OH) – Ranking Member of the Senate Committee on Banking, Housing and Urban Affairs – responded today to news that Bank of America Merrill Lynch downgraded Chipotle because the company pays its workers too much. Brown said this is just the latest example of a Wall Street practice that is all too common.
Brown said corporations have become beholden to arbitrary short-term profit reports at the expense of the overall economy. He pointed to a survey that found 78 percent of financial executives from public companies would sacrifice the economic value of their own companies just to meet financial reporting targets.
“This view that American workers are a cost to be minimized instead of a valuable asset to invest in is everything that’s wrong with Wall Street,” Brown said. “The real world doesn’t run according to quarterly earnings reports – it’s school years, 30-year mortgages, and years families have left to save for retirement. Our economy simply cannot grow if American workers don’t share in the wealth they help create.”
The report Brown cited is detailed in a plan Brown released this Spring to make hard work pay off once again for American workers. In that plan Brown writes:
An in-depth report, “The Price of Profits,” describes the corporate culture among publicly traded companies as the Shareholder Value Economy, in which companies respond to increased foreign competition by reducing workforce costs, laying off workers, and restructuring their businesses to “maximize shareholder value.” In the Shareholder Value Economy, business leaders favor short-term profits over long-term investments. Quarterly earnings and stock value are considered top priorities at the expense of everything else. A 2005 survey of financial executives from public companies found that 78 percent of those surveyed would sacrifice economic value of their company to meet financial reporting targets. Long-term investments, such as workforce benefits, that will not yield short-term stock value increases are not pursued. In fact, in a Shareholder Value Economy, companies seek to reduce wages, benefits, and worker liabilities whenever possible to increase profits and satisfy shareholder demands. These decisions lead to the marginalization of the companies’ employees and the declining value of work.
Find Brown’s full report, WORKING TOO HARD FOR TOO LITTLE: A Plan for Restoring the Value of Work in America, HERE.