Gabbie Holland

Emily Kane

RC 2001

Major Issues Op-Ed

4 April 2020
Sustainability in Business Management

Fair wages and compensation are important to ensuring the health and safety of

employees, as well as benefiting businesses with productivity boosts, low staff turnover, and an

increase in revenue. Low wages have also been historically linked to environmental degradation,

so increasing wages is imperative to environmental sustainability.

In 2015, Gravity CEO and multimillionaire Dan Price shocked the world when he

publicly announced that he would raise the minimum wage for his company to $70,000. The pay

raise for his 120 employees came largely from his own salary, which dropped from $1.1 million

to an equal $70,000. It cannot be understated that this was a radical thing to do; he raised the

company’s average salary by nearly 150% (Inc). Although he was praised by much of the

working class, he was faced with immediate backlash by fellow CEOs and conservatives, most

notably Rush Limbaugh, who accused him of practicing socialism and predicted that his

company would crash and burn.

Now, nearly five years later, Gravity’s soaring annual revenue and employee productivity

has proven otherwise. Gravity’s profits and revenue doubled six months after the announcement,

and their customer retention grew from 91 to 95 percent (Inc). In many ways, Price’s company is

living proof that increasing wages is a sound business decision. Not only does it seem to improve

revenue, but it also helps the employees, many of whom were previously just above or at the

poverty line for their state.

 In 1995, the World Health Organization published their World Health Report where they

asserted that poverty is the “world's biggest killer and the greatest cause of ill-health and

suffering across the globe.” A lower socioeconomic status has been historically linked to chronic

stress levels and mental health issues, and how can anyone be surprised? When someone is living

below the poverty line, so much of their brain power is taken up by figuring out what they will

eat and how they’ll cover rent. In terms of productivity alone, how could a minimum wage

worker possibly compare to a comfortable one, when a person who isn’t anxious about money

gets more sleep and can devote more mental energy to a job-related task?

Understandably, businesses have a bottom line; it’s the job of a company to turn a profit,

not to go to extraordinary lengths to look after their employees. However, increasing workers

salaries to a living wage wouldn’t be an extraordinary measure but rather a wise business

decision. A study conducted by three Harvard colleagues back in 2013 found that increased

wages led to “roughly 20 percent higher productivity” than a group that hadn’t been given the

pay bump. There are a few different reasons why, but the largest factor is the easiest; people

work harder when there’s more to lose. While someone might not fight as hard to keep a

minimum wage job, a $12/hr job is much more valuable. There are a few caveats--there are

obviously a host of other factors that increase productivity--but generally the study found that it

would appear that a higher pay makes people work harder.

Taking the above points into consideration, it’s obvious that low wages and high

economic inequality negatively impacts the health of workers as well as the productivity of a

company. However, economic inequality has also proven to be harmful to the environment.

James Boyce, an Economics professor at Oxford that researches the correlation between the

environment and the global economy, argued in his book that “the total magnitude of
environmental harm depends on the extent of inequality. Societies with wider inequalities of

wealth and power tend to have more environmental harm.” (Holmberg). He defends his stance

with two main findings from studies he conducted; first, it was found that in U.S. cities where the

income gaps between people of color and whites are larger, there tends to be more pollution, and

secondly, it was discovered that in a study that looked at the environmental quality of all 50

states, the states that had great income inequalities tended to find larger environmental

degradation. In summary, he wrote that “more equal distributions of wealth and power were

associated with better environmental outcomes.” (Holmberg)

These findings are likely due to a variety of reasons, but the most glaring one is that the

less wealthy a community is, the more they turn to cheap options (which are rarely beneficial for

the environment). Instead of buying from local farms, consumers shop at cheaper alternatives

like Walmart and dollar store chains, neither of which are known for being environmentally

conscious institutions. In fact, in 2014 it was estimated that Walmart’s coal dependence pumped

roughly “8 milion metric tons of carbon pollution” into the air per year (ILSR).

Logically then, it would make sense from both a business perspective as well as an

environmentally ethical one to provide better wages and employee incentives, but due to the

stigmatism around “socialism” and the fact that it doesn’t immediately appear to be profitable, it

will likely be a while before there’s any significant improvement. However, there is hope:

despite all of the harm that the coronavirus has caused, perhaps it will shine a light on the aspects

of the American government and economy that need to be corrected and inspire lawmakers,

CEOs, and business owners to do something about it. Ordinary citizens don’t have to wait on the

government or corporations to make changes themselves; doing something as small as

patronizing small, local businesses will go a long way. Boone already has a thriving “shop small,
go local” community, and not only is this supporting individual people instead of massive,

environmentally harmful corporations, but if they receive enough revenue, it will allow them to

adequately pay their workers.

Works Cited

“Executive Summary.” World Health Organization, World Health Organization, 29 July 2013,

www.who.int/1995/media_centre/executive_summary1/en/.

Fisman, Ray, and Michael Luca. “How Amazon’s Higher Wages Could Increase Productivity.”
 Harvard Business Review, 10 Oct. 2018,

hbr.org/2018/10/how-amazons-higher-wages-could-increase-productivity.

Gregoire, Carolyn. “This Is The Single Biggest Threat To Health and Happiness.” HuffPost,

HuffPost, 7 Dec. 2017, www.huffpost.com/entry/how-poverty-can-impact-

yo_n_4589123

“Here's a List of CEOs Taking Pay Cuts amid the Coronavirus Crisis.” Yahoo! Finance, Yahoo!,

30 Mar. 2020,

finance.yahoo.com/news/heres-a-list-of-ce-os-taking-pay-cuts-amidst-the-coronavirus-cri

Sis-171206258.html.

Holmberg, Susan. “Inequality Isn't Just Bad for the Economy - It's Toxic for the Environment.”

Grist, Grist, 6 July 2015,

grist.org/politics/inequality-isnt-just-bad-for-the-economy-its-toxic-for-the-environment/.

Huddleston, Cameron. “Unemployment Is Low, Wages Are Up - But Cost of Living in America

Keeps Rising.” GOBankingRates, Toggle Navigation Back, 4 Feb. 2020,

www.gobankingrates.com/money/economy/rising-cost-of-living-in-america/.

Keegan, Paul. “Here’s What Really Happened at That Company That Set a $70,000 Minimum

Wage.” Inc.com, Inc., 21 Oct. 2015,

www.inc.com/magazine/201211/paul-keegan/does-more-pay-mean-more-growth.html.
Mitchell, Stacy, and Walter Wuthmann. “Walmart's Dirty Energy Secret.” Walmart's Dirty

Energy Secret, Nov. 2014,

https://ilsr.org/wp-content/uploads/2014/11/ILSR_WalmartCoal_Final.pdf