CNBC: The Working Person’s ‘Cry From The Heart’
Published on November 17, 2016
The media has explained the election by creating narratives of the two wealthy New Yorkers who had contrasting beliefs on government, race and gender.
A look back at the election reveals something more fundamental. Its clear message is a cry from the heart of working class America. Hillary Clinton, a cabinet secretary, senator and first lady, epitomized the establishment while Donald Trump became a vehicle for Americans’ disillusionment with it.
For two decades America’s working class has worked harder to earn declining incomes just to keep their jobs. They watched as the American dream of a thriving middle class vanished. Many blue-collar workers laid off in the recession of 2009 found themselves taking service jobs that paid just over the minimum wage with no health care benefits.
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Meanwhile, the elite 1 percent accumulated wealth as incomes of bankers and executives escalated rapidly. When CEOs’ compensation averages 400 times their lowest-paid employees, the disparities are no longer acceptable. So they turned out in record numbers and voted to restore their jobs, their lives and their dignity.
The results of this election should not only be felt in Washington. Business leaders ignore its message at their peril.
It is the 99 percent of hard-working workers that enable our enterprises to flourish. The task of executives is to create conditions so they can be successful and reward them fairly for their efforts, not to squeeze employees’ incomes in a quixotic quest to maximize shareholder value. While corporate headquarters may be in urban areas, most factories are in the heartland of America that gave Trump his Electoral College triumph.
At Medtronic I told employees, “You make Medtronic successful by carrying out our mission to restore health to millions of people. You create the innovations in the labs, ensure that every product produced is of ‘unsurpassed quality’ and support doctors and nurses to ensure the patient’s health. My job is to create an environment where you can do your jobs well and be rewarded for it.” Losing sight of this principle endangers the social compact that makes capitalism work.
Wells Fargo former CEO John Stumpf forgot the importance of Wells’ frontline workers. He blamed 5,300 first-line employees terminated for creating 2 million phony consumer accounts. “If they’re not going to . . . put customers first, honor our vision and values, I don’t want them here,” Stumpf said when the crisis became public.
It is inconceivable that these employees, most of whom earned $12-14 per hour, all acted independently without direction from their leaders. When the Wells Fargo board “clawed back” only $19 million of retail banking head Carrie Tolstedt’s departing compensation of $124 million, many people compared this to robbing a bank and netting $105 million.
No wonder people are angry and willing to accept any promise of change. As American companies shutter factories and shift work overseas rather than increasing productivity and innovation here at home, factory workers lose middle class jobs and must choose between low-paying service work or unemployment compensation.
The solution to wage stagnation and unemployment lies not in cutting interest rates below 0 percent nor in erecting walls around our borders. Rather, we must address the root cause: our failure to train people for today’s and tomorrow’s jobs. As technology has advanced rapidly, we find ourselves with an increasingly obsolete workforce. Thus, the paradox of having 7.8 million people unemployed, while 5.4 million jobs go unfilled for lack of skilled workers.
For America to succeed in the global economy, we must train people for the jobs of 2020 and pay them fairly. Too many young people graduate from high school and college without the skills required for today’s jobs. Companies fail to train them to become computer operators, robotics technicians, MRI repair people, as well as skilled carpenters, electricians and plumbers. If we don’t correct this problem, social unrest will intensify as the U.S. loses its competitive standing in global industries.
Contrast this with Germany. It has long recognized its economic future lies with a highly skilled workforce that enables it to dominate high-tech fields like automobiles, machine tools and chemicals. A significant proportion of German students join apprentice systems that guarantee jobs when they complete their training. German workers earn 50,000 euros per year, have assured pensions and comprehensive health care, and enjoy 4-5 weeks of vacation. They are proud and fulfilled, as they should be, and their high-tech manufacturing companies dominate world markets.
States and the federal government must take the lead in building our vocational and technical education systems, which should team with local companies to develop German-style apprentice and retraining programs to ensure their employees earn much higher wages. An excellent example can be found in Charlotte, NC, where Central Piedmont Community College with its 70,000 students is teaming with Siemens and local companies to train workers with the high-tech skills they need to compete in the global market. That’s one reason Charlotte has an unemployment rate of only 4.5 percent.
American companies and their employees will flourish only if we invest in the high-tech workforce that will enable the U.S. to dominate world markets. Business leaders cannot wait for the Trump administration to solve this problem. They need to collaborate with state and local education systems to ensure American workers are the most highly skilled in the world.
Bill George is Senior Fellow at Harvard Business, former Chairman & CEO of Medtronic, and the author of “Discover Your True North.”
This article was originally published on CNBC on 11/17/16.