CEO Mark Bertolini offered a host of good business reasons for substantially raising customer-serving employee wages – plus unusual sensitivity to employee economic struggles. Clearly Bertolini was trying to give his company a recruiting and retention edge. But did he instead fire one of those rare “shots heard round the world” (or at least the country)?
The unintended consequences of Bertolini’s actions could be huge for our economy – could be. Back in the recession Ezra Klein wrote in the Washington Post, “…the problem (with the economy) is that indebted employees aren’t spending as they usually do, which means business isn’t hiring, which means consumers have less money to spend, which is creating a vicious cycle of economic stagnation.” Actually, the cycle is worse than Klein described because employers have relentlessly driven wages down to levels we wouldn’t have imagined 30 years ago. But how are we going to escape the cycle? Yes, employment has to keep rising. But even more so, wages have to rise – a lot.
Aetna’s adopting the “Costco compensation model” may stay an anomaly – like Costco, Gap, Starbucks, Shake Shack and others. But coming now – when sellers are impatiently waiting for consumer spending to rise, income inequality is turning the public against business and many more consumers and a few executives realize increased consumer spending and only increased consumer spending can lead our economy out of the wilderness – could the boldness of Aetna’s move trigger a much broader round of wage increases that will finally put some jingle back in buyers’ pockets? In my most recent book I expressed skepticism corporate America would budge, but should we have more hope now?