Experience Stern | Faculty & Research

Donald Trump’s imminent return to power likely will bring the disruption he promised as a candidate. His early selections for cabinet positions foreshadow an administration explicitly devoted to challenging the operating premises of many government agencies. We will not have business as usual in Washington; it appears instead that we will have a fundamental shift in government policies and practices in many areas. I see this as a time when leaders outside of government, and especially in the business community, need to step up to address what I expect will be yawning gaps in governance and accelerating distrust in democratic institutions. Here are three areas where businesses can make a difference.

The first relates to the economy, particularly the pain caused by inflation and the dramatic erosion of U.S. manufacturing jobs which began in the 1970s. This shift to overseas production hollowed out the economies of northern industrial states and has contributed significantly to the economic instability of the working class. It is important to acknowledge the role this widespread economic distress played in the Republican victory. Tens of millions of American workers, many in blue-collar jobs, have concluded accurately that the current structure of our economy is not working for them. One measure of the dysfunction is rising economic inequality. In the last 15 years, working men and women have seen stock values shoot through the roof, even as many of them are living paycheck to paycheck and are unable to buy stocks themselves. In 2009, the Dow Jones Industrial Average stood at just over 10,000. This month it passed 41,000. Dissatisfied working-class citizens are among the 40% of our population and almost 60% of those with only a high school education who cannot afford to buy stocks at all.

Wages for blue-collar workers have been stagnant for some time. This traces back to the flight of good factory jobs, the shift to lower-paying service jobs, the erosion of union muscle, and the failure of many states and the federal government to raise the minimum wage. All of these trends are reflected in the widening gap between corporate executives and rank-and-file workers. In 1965, the average Fortune 500 CEO made 21 times more than a typical worker at the same company. Today the ratio is 290 to one.

Read the full Forbes article.
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Michael Posner is the Jerome Kohlberg Professor of Ethics and Finance, Professor of Business and Society and Director of the NYU Stern Center for Business and Human Rights.