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Dear U.S. Capitalism: It’s Time to Change Our Economy—and We Need Your Help

How Ownership Shifts, New Incentives, and Social Work Could Fuel Systemic Change

(Photo by NeONBRAND on Unsplash)

Dear U.S. Capitalism,

It’s me, Social Work.

I see you’ve been working toward creating a fairer economy, which is amazing, because so many social injustices are rooted in economics. You have certainly made great strides, but ESG (environmental, social, and governance) investing, diversity and inclusion, and corporate social responsibility initiatives are not enough — they are comfortable improvements. You are capable of so much more, and I hope to help you see that.

So from a social work perspective, I will share:

  • one reason why our economy needs to change,
  • two reasons why we need your help, and
  • three suggestions for creating more systemic change.

One Reason Why Our Economy Needs to Change

Our economy lacks humanity.

It seems ironic that a social construct meant to serve humanity lacks humanity.

Why is it that net worth of White families is 10 times greater than Black families? Why, after stealing their land, have we forced Native Americans into the highest poverty and unemployment rates, and lowest educational attainment of any minority group? Why since the 1970s has the top 5% experienced the greatest growth in income of any class? Why does economic status have to be a risk factor for one’s health, as we see COVID-19 disproportionately hurting our impoverished Black and Latino communities? Why do people with disabilities experience higher rates of poverty, unemployment, food insecurity, and being underbanked compared to adults without disabilities? And why are there more than 23 million self-storage units in the U.S. for extra junk, while over 10 million people are in need of housing assistance and over 550,000 are homeless? Does our economy choose to house junk over people?

As social workers, we know that economic status largely determines one’s access to resources, like well-paying jobs, nutrition, education, health care, and social capital. What’s particularly tragic is how our economy’s inequalities hurt children. Poverty causes toxic stress and has been shown to significantly impact a child’s emotional regulation and neural functioning through adulthood, in addition to putting them at an increased risk of having ACEs (adverse childhood experiences). ACEs predispose children to mental health issues, learning disabilities, substance abuse, trauma, and chronic illnesses, which in turn are often compounded generationally.

Another example of how our economy lacks humanity is mass incarceration. The U.S. considers itself a leader in human justice, yet we imprison more people than any country in the world in total population and per capita (over 2.1 million people incarcerated, a rate of 655 per 100,000). Our economy is instrumental in this injustice because we as a nation have chosen to criminalize poverty. The 13th Amendment was supposed to abolish slavery, but instead it just replaced slavery with incarceration and the convict leasing system, fueled by racism, economic interests, and Black Codes that criminalized Black men for being poor or unemployed.

Ironically, after another civil rights victory — the Civil Rights Act of 1964 — President Nixon began the “tough-on-crime” and War on Drugs era that President Reagan and future administrations continued. Our government and elected prosecutors treated drug use as a crime, rather than a public health issue (especially considering the 1955 mental health deinstitutionalization aftermath, despite good intentions), and they didn’t see that participation in the illegal economy (e.g. drug dealing) is largely the result of people being excluded from the legal economy.

In New York City districts today, research shows that when poverty increases, incarceration increases. Our unjust economy not only affects impoverished communities but all of us. For example, our law enforcement is put at a greater danger every day due to the violence and crime that results from the social volatility and deprivation our economy creates. If Black and Blue Lives Matter, our economy needs to change.

Two Reasons Why We Need Your Help

Democracy.

I love your democratic nature. You decentralize power. With you, we don’t have to rely solely on politics for social change. Dollars are unbiased. $1 = $1. Companies depend on consumers to survive, whereas politicians once elected can be much less dependent on voters or bogged down by bureaucracy. You can be a tremendous advocacy tool for social workers, community organizers, and activists.

B Lab, the nonprofit leading the movement of business as a force for good, has a Vote Every Day campaign highlighting that we don’t have to rely on just our ballot to vote: We can vote every day with our dollar. Whether it’s whom we choose to buy from or whom businesses choose as their suppliers, we have great power collectively. State governments and municipalities can also vote with their large budgets and contracts. We saw an example of this during the Dakota Access Pipeline Protests, when Seattle City Council divested its city’s finances — totaling $3 billion — from Wells Fargo, because Wells Fargo was one of the banks financing the pipeline project.

Socioeconomic mobility and reparations.

You allow for socioeconomic mobility and incentives in ways in which more controlling economic systems cannot. They encourage us to pursue improvements, entrepreneurship, and improve our quality of life. As for reparations, our economy has yet to allow for the flow of resources commensurate with our civil rights victories. In addition to generating public funding and reinvesting tax revenue in communities (like Evanston, Illinois, is doing with tax revenue from recreational marijuana sales), capitalism has the power to unlock the injustices and imbalances bound up in our current economy.

Three Suggestions for Systemic Change

Change ownership structures.

Our economy is feudalistic. Our economy’s tragic flaw is how ownership is structured across the private sector. How the economy is owned creates the massive overabundance, scarcity, and undemocratic exploitation we see. Fortunately, there are alternative for-profit ownership structures that can greatly shift wealth and power within our economy. One of the most proven models is a cooperatively-owned business (aka cooperatives or co-ops). Cooperatives are truly democratic organizations — one vote per employee, with business surplus (e.g. profits) shared equitably. One of our country’s largest worker cooperatives is Cooperative Home Care Associates (CHCA). This Bronx-based Certified B Corporation has over 2,000 employees, over 1,100 employee owners (90% of whom are women of color), around $65 million in annual revenue, and a CEO-to-lowest-paid-worker ratio that peaked at 11:1 in 2006 (versus the average being 405:1 for all other businesses in New York).

There are many ways to create more cooperative models in the economy. When owners of a business are looking to retire or sell, they can sell the business to their workers, as did the founders of day care center A Child’s Place. Owners can convert to a cooperative once they realize the benefit of giving employees a stake in the company, as did Martha’s Vineyard construction firm and B Corp South Mountain Company. There are many organizations helping form cooperatives, like The Working World, and a growing number of municipalities, like New York City and Madison, Wisconsin, are providing funding and support services for cooperatives.

Another ownership option is an ESOP (employee stock ownership plan). Companies with ESOPs are similar to worker cooperatives in that the employees are the owners of the company. Employees of ESOPs have on average more than double the amount of retirement funds compared to workers nationally, and report greater employment stability. In addition, employee-owned companies experience a 4%–5% increase in productivity on average. They also enable workers to gain wealth in the event of acquisition. We saw this with the B Corp New Belgium Brewery, which was 100% employee-owned prior to being acquired — allowing the employees to gain significant wealth from the sale.

Changes in ownership may take time, but an immediate change any company can make is establishing fair compensation ratios.

In 2018, CEOs earned 278.1 times more than the typical worker in their industry. In 1980, this number was only 33.6. By creating a national standard for compensation ratios between the highest paid employee and lowest paid employee of a company, let’s say 10:1, we could see a dramatic shift in wealth that builds a strong middle class again and lifts millions out of poverty.

Create new economic incentives.

We need to evolve how businesses view their bottom line and revenue streams. To start, we must hold businesses accountable for their externalized social and environmental costs—such as product end-of-life landfill contribution, income inequality, unequal representation—beyond talk of a carbon tax. This will involve complex quantification, reporting, and regulation, but is possible. Measuring tools already exist that can assist with this process, such as the B Impact Assessment, which allows us to quantify and qualify a company’s social and environmental performance.

Once we make social and environmental costs relevant, companies will be incentivized to make the appropriate changes or seek entrepreneurs to help them — opening new markets.

Another market opportunity to unlock is government expenditures. Take, for example, housing assistance. In 2018, our federal government budgeted an estimated $19.4 billion for its most popular housing assistance program, Housing Choice Vouchers (serving approximately 2.2 million households). We can encourage entrepreneurs to reduce housing insecurity by having the government compensate them with payments commensurate with annual reductions in housing assistance demand. An example is the U.K.’s Peterborough Social Impact Bond, a program that reduced recidivism rates for people who had been incarcerated while also creating a return on investment for funders of the program commensurate with the recidivism-related cost savings for the government.

Hire more social workers in businesses.

Businesses play a vital role beyond providing products, services, and employment. Businesses have the potential to rehabilitate people and entire communities. They can help people with disabilities overcome societal limitations, help people overcome poverty, and help people reintegrate into society with dignity.

Social workers can help businesses transform into this powerful community resource from the inside out — creating empathic and inclusive workplaces through an understanding of mental health, social justice, human development, colonialism, white supremacy, patriarchy, systemic racism, microaggressions, mass incarceration, histories of oppression, intersectionality, the spectrum of identity, and other important aspects of the human experience (ramble intended).

Every year, U.S. companies spend $8 billion on diversity and inclusion trainings.

Although there’s a place for consults and trainings, having social workers within organizations as daily advocates for employees would enable more durable and adaptive inclusivity practices. They can be in human resources, marketing, engineering, management — it doesn’t have to be an explicit social work role. This will also have a positive impact on the bottom line, as research shows that high sense of belonging in the workplace increases employee job performance by 56% and reduces turnover risk by 50%. In addition, social workers bring a unique set of skills to a business, including individual/group counseling, advocacy and community organizing, policy formation, research, and systems thinking.

U.S. Capitalism, it’s remarkable all that you’ve fostered: economic growth, technological breakthroughs, advances in medicine, incredible supply chains. These accomplishments, however, have come at the cost of injustices, like genocide, slavery, community violence, disease, poverty, and global warming. We can do better; we can progress without injustice if we want to.

Love,

Social Work

Sean David Smith recently completed his master’s degree in social work. Prior to studying social work, he worked for numerous companies in the private sector — from tech startups to organic farms.

B the Change gathers and shares the voices from within the movement of people using business as a force for good and the community of Certified B Corporations. The opinions expressed do not necessarily reflect those of the nonprofit B Lab.


Dear U.S. Capitalism: It’s Time to Change Our Economy-and We Need Your Help was originally published in B The Change on Medium, where people are continuing the conversation by highlighting and responding to this story.

Originally posted on B The Change - Medium by Sean David Smith.


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