Investors urge US companies to implement living wage
November 24th, 2023
A coalition of faith-based institutional investors has called on US companies in traditionally low-wage sectors, such as hospitality and retail, to start paying a living wage to workers as inflation continues to eat into incomes.
The Interfaith Center on Corporate Responsibility (ICCR) released a statement signed by 136 institutional investors representing $4.5 trillion in assets, argued that below living wage salaries exposed to companies to financial and reputational risk.
Furthermore, the coalition – which includes Aviva Investors, Legal & General Investment Management and ShareAction – said paying a living wage was critical to closing the racial, gender, and income divides in the US.
According to a study by Just Capital, the US federal minimum wage has remained stagnant at $7.25 an hour since 2009, and given cost of living increases, a worker earning the federal minimum wage today has effectively received a 28% pay cut.
Ivan Frishberg, chief sustainability officer at Amalgamated Bank, said: “While most US companies are focused on how [implementing the living wage] will impact their bottom lines short term, research suggests that paying a living wage is an ‘insurance policy’ that can protect businesses over the long term.”
The statement highlighted evidence that paying a living wage would have broader systemic benefits that trickle down to stakeholders, including an estimate from Tracking Inequality that closing the living wage gap worldwide could generate an additional $4.6 trillion every year through increased productivity and spending.
Angeli Benham, senior global ESG manager at Legal & General Investment Management, said: “For long-term investors, paying a living wage emphasises the positive culture of a company, and its board.
“It is also an indicator that reported profits are more likely to be sustainable over the longer term because the company is actively addressing its human capital risks and is safeguarding against future regulatory risks that may otherwise negatively impact its business activities and bottom line.”Last Updated: 24 November 2023