Taking aim at the heart of America's toxic economic status quo--which has over the past several decades produced soaring corporate profits and CEO pay while keeping workers' wages stagnant--Sen. Elizabeth Warren (D-Mass.) introduced legislation on Wednesday that would "give workers a stronger voice" in the decision-making of major businesses and put an end to corporations' single-minded commitment to maximizing shareholder value at the expense of employees.
"There's a fundamental problem with our economy. For decades, American workers have helped create record corporate profits but have seen their wages hardly budge."
--Sen. Elizabeth Warren "Because the wealthiest 10 percent of U.S. households own 84 percent of American-held shares, the obsession with maximizing shareholder returns effectively means America's biggest companies have dedicated themselves to making the rich even richer," Warren noted in a Wall Street Journal op-ed outlining her new measure. "For the past 30 years we have put the American stamp of approval on giant corporations, even as they have ignored the interests of all but a tiny slice of Americans. We should insist on a new deal."
Tracing what she terms the "shareholder value maximization" ideology to the work of influential right-wing economist Milton Friedman--who argued that corporations have a "social responsibility" to put profits ahead of all other objectives, including public health, worker safety, and environmental protection--Warren argues that corporate America's unwavering prioritization of shareholder returns has produced a system in which "workers aren't getting what they've earned."
To address this fundamental inequity and establish a system in which prosperity is broadly shared rather than hoarded at the very top, Warren's bill--officially titled the Accountable Capitalism Act--would:
- Require American corporations that bring in over a billion dollars in annual revenue to obtain a federal charter, which would force companies to "consider the interests of all corporate stakeholders," including workers, customers, and communities;
- Give workers the power to elect at least 40 percent of corporate board members;
- Ban corporations from making political expenditures "without the approval of 75 percent of its directors and shareholders"; and
- Allow the federal government to revoke a corporation's charter if it engages in illegal behavior.
"There's a fundamental problem with our economy. For decades, American workers have helped create record corporate profits but have seen their wages hardly budge," Warren said in a statement on Wednesday. "To fix this problem we need to end the harmful corporate obsession with maximizing shareholder returns at all costs, which has sucked trillions of dollars away from workers and necessary long-term investments."
Warren's legislation quickly won the support from a wide array of groups, including labor unions, progressive think-tanks, advocacy groups, and legal scholars (pdf).
Applauding Warren's new bill in a tweet on Wednesday, AFL-CIO president Richard Trumka declared, "It's time to rewrite the rules so our economy works for working people, not just those at the top."
Lenore Palladino, senior economist and policy counsel at the Roosevelt Institute, said in a statement that Warren's bill is a "clear step in the right direction" that would "ensure that the voice of working people in corporate decision-making reflects the crucial role they play in their employers' success."
"Corporations today no longer advance the public interest. That's because they've chosen to use their massive profits to enrich themselves and their shareholders at the expense of workers and long-term, shared growth," Palladino added. "Solutions like the proposed legislation would create a more prosperous economy and ensure greater financial security for workers and their families."
