When we look back on 2020, it will be the moment the challenge of income inequality in the United States became inescapably obvious. April 2020 was the best month for the stock market in 33 years, while for most Americans, it was the worst month in 33 years. But what will surprise many is that business leaders in the United States are worried about income inequality, regardless of their politics. While each business leader comes to the issue with his or her own biases, those who advise them, such as lawyers, get to speak confidentially to hundreds of business leaders and can get a wider picture of what they are concerned about as a group.
As the Chairman of the world’s largest law firm, what I see is a transformation within small- to medium-sized businesses happening right now. As one CEO said, “It’s like lightning hitting dry wood — you can feel the makings of a revolution.” While large company CEOS have written about the challenges of income inequality, with investors calling on businesses to be more socially responsible, now small business leaders are coming literally masked face to masked face with how those challenges are impacting their companies.
What the smart CEO sees is that while white collar workers kept working online at home, blissfully complaining about canceling vacations and having to clean their own house, blue collar workers worried about losing jobs, how to pay the rent and keep their kids in an online school when their computer is old and Wi-Fi connections are struggling as much as they are.
White collar workers buy N95 masks and have food delivered, upset about the lack of their favorite recycled, unbleached, toilet paper, while in poorer neighborhoods, where small business may be the only business, the virus ravages what makes up the very community they rely on.
As USA Today reported: “In the poorest neighborhoods, where median household income is less than $35,000, the COVID-19 infection rate was twice as high as in the nation’s wealthiest ZIP codes, with income more than $75,000. Infection rates were five times higher in majority-minority ZIP codes than in ZIP codes with less than 10% nonwhite population.”
A ten-year increase in employment, wages, and the stock market allowed small business leaders to think that income inequality was someone else’s problem. While they thought a rising tide would lift all boats, it’s clear that a tide going out reveals who was swimming naked, and who can’t swim against the current. It is the blatant obviousness of what is going on that has woken up business leaders all over the country.
Their frustration is that it is obvious, but they don’t understand why they should be blamed by activists on the left or the right.
Small business leaders are not billionaires — and usually not millionaires — but people who are taking money out of their 401k retirement accounts to keep their companies afloat, terrified that by taking a PPP loan they will be subject to witch hunt investigations. While Oxfam told the CEOs at the World Economic Forum in Davos last year that, “the 26 richest billionaires own as many assets as the 3.8 billion people who make up the poorest half of the planet’s population,” the actual massive “capital class” — those who have put up the money and run most businesses — think the challenge is not about bringing their income down but bringing the bottom up.
As one small company owner told me, “We have failed to stop having people make so much money, so let’s stop focusing on dragging entrepreneurs, financiers, professionals income down — no matter their ethics, no matter how good that would make us all feel — and instead focus on moving the income of those at the bottom up.” It is a natural human reaction to blame those benefiting from the current flawed system, and we should continue to focus on fixing that system, but creativity about how to bring others up — when money seems to be free and we are all suddenly willing to borrow to change our todays on the hope that the spending builds a better tomorrow — is the small business rallying cry.
Small business owners are worried that they will be thrown into the same bathtub with big business and thrown out with the bloody bathwater when business brands get damaged. For example, a small business CEO told me, “I’m just as angry as anyone that the Fed is bailing out big corporations who turn around and buy back their own stock. What about the rest of us who really make business run in America?”
That sentiment — “what about the rest of us?” — is what activists have been saying about income inequality for decades. But now the leaders of small- to medium-sized businesses are listening. What they want — and what we need — is to have conversation, to build bridges, so that business groups all across the country can become advocates for programs that help “the rest of us” who depend on small businesses.
Joe Andrew is the global chairman of Dentons, the world’s largest law firm, and a former national chair of the Democratic National Committee.