The CEO of Aetna (AET) recently did something astonishing: He voluntarily gave some of his lowest-paid employees a raise.
He didn't do this because of "market forces." The labor market is weak enough that Aetna could have gone on paying the employees $12 an hour forever.
He did it because it didn't seem fair to have people working so hard for such a profitable and successful company and yet still struggle to make ends meet.
It's too bad more CEOs don't think this way. If they did, the economy would be healthier and growing faster, and most working Americans would be much better off.
One reason the U.S. economy is still weak, after all, is that big American companies are "maximizing profits" instead of investing in their people and future projects.
This behavior is contributing to record income inequality in the country and starving the primary engine of U.S. economic growth — the vast American middle class — of purchasing power.
If average Americans don't get paid living wages, they can't spend much money buying products and services. And when average Americans can't buy products and services, companies that sell products and services can't grow. So the profit obsession of America's big companies is, ironically, hurting their ability to grow.
One solution is for big companies to pay their people more — to share more of the vast wealth that they create with the people who create it.
Big American companies have record profit margins, so they can certainly afford to do this.
But, unfortunately, over the past three decades, what began as a healthy and necessary effort to make our companies more efficient has evolved into a warped consensus that the only purpose of a corporation is to "maximize earnings."
This view is an insult to anyone who has ever dreamed of having a job or company that is about more than money. And it is a short-sighted and destructive view of capitalism.
This view has become deeply entrenched, though. These days, if you suggest that great companies should serve all of their constituencies (customers, employees, and shareholders) and that American companies should share more of their wealth with the people who generate it (employees), you get called a "socialist." You get called a "liberal." You get told that you "don't understand economics." You get accused of promoting "wealth confiscation." You get told that, in America, people get paid what they deserve to get paid: Anyone who wants more money should go out and "start their own company" or "demand a raise" or "get a better job."
In other words, you get told that anyone who suggests that great companies should voluntarily share the value they create with their employees instead of just lining the pockets of shareholders is an idiot.