The Profitable Progressives

America is awash in bad economic news; the jobless rate jumps to its highest in 5 years, productivity and inflation are up, household income and home values are down, and the government is bailing out more and more financial sector companies. Meanwhile we watch countless American corporations dramatically scale back healthcare coverage, abandon their pension programs and essentially end their commitment to the social contract with the American worker. All the while, Phil Gramm wonders why we’re all whining.

The conservative global economic strategy has failed. And we’re not going to get change if we replace Bush’s far-right Wall Street economic advisors with slightly gentler “middle-of-the-road” Wall Street economic advisors. In the end, they all look at quarterly profit reports first and employee surveys last. Economic change for the better requires a completely different approach.

The good news is that there are some companies in the U.S. that pay a fair wage for a good day’s work. We don’t talk about them much. We often assume that every company shares the same greed ethic as Wall Street. And with pension and health care benefits being slashed every day, it’s easy to be cynical about corporate America. But as progressives, we need to look at creative ways that government, business and organized labor can work together to fulfill their respective roles in upholding the social contract while staying competitive in a global economy. To sharpen a vision of what a progressive America would look like, it is useful to examine some companies that value their employees’ well-being as much as their own bottom line.

When the term “socially responsible” business is mentioned, you probably think of a company that has divested itself of holdings in companies that work with rogue governments or an organic handbag company in Vermont. What you might not think of is a life insurance company or a warehouse grocery chain. American Income Life (AIL) based in Waco, Texas and Costco headquartered in Kirkland, Washington, are two examples of businesses that have proven that they can be both profitable and provide good jobs to American workers.

The common story shared by AIL and Costco is one of investing in the American worker and reaping the benefits. I point to AIL as an example because a large part of their success is based on their willingness to engage and partner with organized labor. Founder Bernard Rapoport and current CEO, Roger Smith, maintain strong relationships with organized labor because of their belief that the American dream should be accessible to every American who is willing to work hard.

It’s no surprise that as the only full union insurance company in the country, AIL enjoys a customer base that includes thousands of union members. Every fulltime employee at their headquarters is a member of the Office & Professional Employees Union and is compensated with good wages, a pension plan, healthcare, life insurance, bereavement leave, bonuses, paid sick and vacation days, and even full pay during jury duty. Labor households understand that investing in and patronizing unionized companies helps their brothers and sisters in labor and by extension, themselves. AIL has built a solid customer base of union households by working with, instead of fighting against, organized labor.

AIL provides coverage to over two million policyholders and represents over $90 million in annual insurance product sales. How many other big life insurance companies are advocating for the Employee Free Choice Act, promote pension reform and oppose social security privatization? They are committed to level the playing field for workers and employers and expanding our shrinking middle class.

Meanwhile, Costco has proven that it can compete with the titan of low wages, Wal-Mart, enjoy growth and profitability, and still fulfill their end of the social contract with their employees. In my hometown of Bremerton, Washington, if you don’t go to college, you try to get a job at the shipyard, UPS, county government or Costco. Everybody knows that’s where workers get a fair shake.

Approximately 11% of Costco’s work force is a member of the Teamsters union. Because of this and the strong leadership of their founder, Jim Sinegal, Costco is consistently commended for providing good wages, affordable healthcare and a healthy working environment. In a Slate article published earlier this year, “Wage Against the Machine,” Liza Featherstone examines both the Wal-Mart/Sam’s Club and Costco business models and concludes that Costco’s generosity results in retaining better employees, a more stable workforce and, in the end, real profitability. Featherstone provides a stark contrast between the two business models:

“A Sam's Club employee starts at $10 an hour and makes $12.50 after four and a half years. A new Costco employee, at $11 an hour, doesn't start out much better, but after four and a half years she makes $19.50 an hour. In addition to this, she receives something called an "extra check"—a bonus of more than $2,000 every six months. A cashier at Costco, after five years, makes about $40,000 a year. Health benefits are among the best in the industry, with workers paying only about 12 percent of their premiums out-of-pocket while Wal-Mart workers pay more than 40 percent.”

Even Wall Street takes notice as their long term projections for Costco remain strong. But stable long term growth doesn’t provide the dividends and quick buck to be made from investing in high risk, profit driven companies. Rapoport, Smith and Sinegal have staked their companies’ success in a culture of respect for their employees. It’s no surprise that even in tough economic times, they continue to thrive.

If progressives are to move from the opposition to the establishment, we ought to have a vision of how American companies can compete without gutting the social contract. It’s not enough to continue to critique conservative corporatism -- we need alternative business models that work. Costco and AIL are two companies we can look to that are doing it right.

Please feel free to add other companies that are doing it right in the comment section below. American Rights at Work has compiled a great list of companies that are doing it right. It can be found here.

http://www.americanrightsatwork.org/labor-day-list/ [1]