Sec. 2. Findings

935 words·~4 min read·/bill/117/s/1815/is/section-2

A research copy — for the controlling text, always check the official state or federal source. Not legal advice.

Congress finds the following: One of the keys to the 20th century post-war economic success of the United States was the ability to prepare workers over the course of their lives for success through multiple sectors across society. Unfortunately, during the several decades preceding the date of enactment of this Act, there has been a shift in business norms and in society. While Congress recognizes that the technology and job skills required for some jobs has changed dramatically, the private and public partnership to hire workers at different education levels and invest in them for the long-term is broken.

Available data from the 10-year period preceding the date of enactment of this Act suggests that businesses are investing less in worker training during that time period, not more. In the wake of the 2008 global financial crisis, there was a well-documented decline in overall business investment. That decline coincides with the wage polarization of workers and an increase in spending on share buybacks and dividends, leading several researchers to conclude that companies are de-emphasizing investment at the expense of increasing returns for shareholders.

The onset of a global pandemic may make that trend worse, especially with respect to investments in workers. As part of the overall decline in investment described in paragraph (3), publicly traded companies are being provided with incentives to prioritize investments in physical assets over investments in their workforces, meaning that those companies are investing in robots instead of individuals. In fact, there are already signs that automation has increased during the COVID–19 pandemic.

More than ever, the Federal Government, through company disclosure practices, needs to understand exactly how companies are investing in their workers. Over the several months preceding the date of enactment of this Act, companies across the United States have taken extreme actions to adapt and respond to evolving workforce challenges presented by COVID–19. JUST Capital has been tracking the responses of the Standard and Poor’s 100 largest public companies to their workers and has found wide variation in the policies implemented, as well as with respect to the disclosure of those policies.

Through different responses to their workforces, from layoffs to workplace safety to paid leave, the COVID–19 pandemic is exposing the myriad ways that workforce management practices of companies pose operational and reputational risks for short- and long-term financial performance. Even before the COVID–19 pandemic, there was a growing body of research establishing a relationship between measurable workforce management, which is the way that companies manage their employees, and firm performance.

In a study of 2,000 large companies, Harvard Law School’s Labor and Work Life Program found that forward-thinking workforce policies that prioritize workers, such as how companies train, retain, and pay their workers, are correlated with long-term financial performance. Disclosure of workforce management policies should be part of a Government-wide economic recovery strategy. Just as a set of generally accepted accounting principles (commonly known as GAAP ) was urgently adopted after the Great Depression, standardized, comparable metrics of workforce disclosure requirements in the context of the COVID–19 pandemic are critical for investors to accurately measure and project company performance, both in the present and in the future.

Because many companies already track workforce metrics internally, moving towards a transparent disclosure regime would allow investors to better judge whether companies are managing risks and making the investments in their workforces that are needed for long-term growth. Businesses increasingly rely on workforce innovation and intellectual capital for competitiveness. Workplace benefits, particularly paid sick leave, medical leave, and flexible work arrangements, critically support employee mental and physical well-being.

Race- and gender-based workplace discrimination have been tied to negative health outcomes, as well as lower productivity, trust, morale, and satisfaction and higher rates of absenteeism and turnover. Organizational reporting on practices to reduce discrimination can increase employee job satisfaction, performance, and engagement. According to the Centers for Disease Control and Prevention, work-related stress is the leading occupational health risk and, per the American Institute of Stress, job stress costs United States industry more than $300,000,000,000 per year in accidents, absenteeism, employee turnover, diminished productivity, and medical, legal, and insurance costs.

Employee health and well-being is a key asset to delivering long-term value, with 80 percent of public companies that took concrete actions on health and well-being having seen larger improvements in financial performance. Organizational well-being interventions can create cost savings of up to 10 dollars for every dollar invested. Specifically, for every dollar that employers spend on workplace disease prevention and well-being programs, there is a $3.27 reduction in employee medical costs and a $2.73 reduction in absenteeism costs.

Employers that implement workplace health promotion programs have seen reductions in sick leave, health plan costs, and workers’ compensation and disability insurance costs of approximately 25 percent. The Centers for Disease Control and Prevention has found that preventable chronic conditions are a major contributor to insurance premium and employee medical claim costs, which are at an all-time high, and a Milken Institute study shows that employers paid $2,600,000,000,000 in 2016 for the indirect costs of employee chronic disease due to work absences, lost wages, and reduced economic productivity.

The COVID–19 pandemic has severely impacted employee physical, mental, and emotional well-being by increasing stress, depression, burnout, and mortality rates of chronic disease and by reducing work-life balance and financial security, with these challenges likely to persist due to uncertainty and instability even as employees return to work. Before the COVID–19 pandemic, but especially in the face of that pandemic, employers that advance policies and practices that support workforce health, safety, and well-being are likely to outperform competitors and benefit from lower costs.