Of Job Security, Personal Dignity, and Efficiency Wages: ASCSA Trustee Fred Crawford and his Corporate Philosophy

Excerpt from “The Financial Page,” The New Yorker, Feb. 9, 2015.

Recently on the financial page of The New Yorker (February 9, 2015) staff writer James Surowiecki published “A Fair Day’s Wage,” an article about the decision by Aetna, one of the largest U.S. companies, to increase its lowest wage from twelve to sixteen dollars an hour and offer an improved package of medical coverage. In an era plagued by high unemployment and few raises for the majority of the nation’s workforce, Mark Bertolini, the idiosyncratic C.E.O. of Aetna, made the bold decision to increase the lowest salaries at his company by 33%. “It is not fair for employees of a Fortune 50 company to be struggling to make ends meet” said Bertolini. In addition to a near-to-death personal experience, Bertolini claims that reading Thomas Piketty’s influential Capital in the Twenty-First Century (which he also gave to all of his top-executives) made him realize how income inequality had increased significantly since 2000. Surowiecki, moreover, reminds readers that the benefits of US economic growth in the post-war era prior to 2000 had generally been shared broadly, and that “US companies were responsible not only to their shareholders but also to their workers.” Recent studies have, in fact, shown that companies that invest in workers’ training, reward them with “efficiency wages,” and care about their mental well-being also end up flourishing through the efforts of dedicated employees. “It’s hard for people to be fully engaged with customers when they’re worrying about how to put food on the table,” Bertolini told Surowiecki. (For a more recent interview with Bertolini in The New York Times, see David Gelles, “At Aetna, a C.E.O.’s Management by Mantra,” Feb. 27, 2015). Read the rest of this entry »