The inability to hire workers and a labor shortage is an oft-repeated concern of corporate CEOs struggling with the great resignation. includes wages, benefits, and flexibility, as well as how they promote and train their workforce. “Companies that perform better for workers outperform the market,” says Alison Omens, chief strategy officer at Just Capital, a nonprofit that tracks how America’s largest public listed companies stock exchanges are doing on a variety of measures, including how they treat their workers. A basket of 100 equally weighted companies that topped Just Capital’s rankings on labor issues outperformed the
Russell 1000 2.68% last year. Just Capital ranks companies based on factors such as paying a living wage, offering paid family and sick leave, meeting safety and health standards, and workforce diversity employment, training and advancement opportunities for different types of workers and the ability to retain them.
|Company / Symbol||PER before||EPS Growth 2022E||DEER|
|Merck / MRK||14.1||25.6%||22.2|
|Meta platforms / FB||21.0||14.3||31.1|
|BlackRock / BLK||19.4||11.7||16.4|
|PayPal / PYPL funds||27.2||23.6||20.0|
|Conoco Phillips / COP||15.3||37.0||12.5|
|Bank of America / BAC||14.4||16.3||12.4|
|SVB Financial / SIVB||19.5||30.2||17.3|
Poor work practices hurt productivity, adds Omens. Overreliance on part-time or contract labor also gets lower marks, in part because it can lead to lower loyalty levels and higher turnover. Earnings reports from the past year illustrated some of the labor challenges. . Just last year,
(ticker: FDX), which relies on a freelance workforce, cited labor shortages as it reported weaker-than-expected first-quarter revenue last fall. Corn
United Parcel Service
(UPS), which has a unionized workforce and pays a higher wage, fared better than its rivals. Its stock has also outperformed, up 41% over the past 12 months, outpacing the
S&P500rose 17%, while FedEx shares slid 0.9%. The problem is likely to persist. One in 10 people surveyed this month by The Conference Board said they plan to leave their organization in the next six months, with 45% citing better pay and 28% citing the ability to work from anywhere as reasons. Attention to labour-focused metrics among investors is growing and could gain momentum as the Securities and Exchange Commission considers requiring companies to provide “human capital” disclosures. These could include metrics around labor turnover, compensation, benefits, skills development and training, and demographics.Barrons took Just Capital’s list of companies that rank well on a range of these employment-focused metrics, and selected those with earnings growth at or above the average S&P 500 stock at 10%, and cheaper than the market, or less than 20 times in advance earnings. We took a closer look at companies with double-digit return on equity as a quality indicator to surface nine stocks for closer examination. The list includes tech stalwarts such as
), which is among 11% of Russell 1000 companies that disclose intersectional demographics about their workforce by gender, race, ethnicity and job category, according to Just Capital. In the spirit of you can’t fix what you can’t see, this type of disclosure sets the company apart, especially with its commitment to increasing the share of underrepresented groups in senior ranks by 2025.
(PYPL), which posted disappointing earnings that led to weaker growth expectations, tops Just Capital’s list in terms of workers. One reason: The company analyzes the financial health of its workforce using metrics such as employees’ net disposable income and adjusts compensation to ensure they are paid enough to meet needs. basic. PayPal is also focused on financial wellness, providing financial coaching and stipends for remote work and has closed its global gender pay gap and its ethnic pay gap in the US as of 2020. according to analysts at Just. The company might struggle in the meantime, however, as it focuses on fewer users bringing in more money.
Bank of America
(BAC) is also providing more information about its workforce and implementing pay equity initiatives, according to Just Capital. The bank also raised its minimum hourly wage to $21, with plans to raise it to $25 by 2025, and required all of its suppliers to pay a minimum hourly wage of at least $15.
) ranks among the best financial services companies in terms of compensation for its employees and offers quality benefits and initiatives to help with work-life balance, according to Just Capital. In a letter to CEOs this year, Larry Fink, the head of the investment firm whose assets recently topped $10 trillion, highlighted the shift in the relationship between employees and employers during the pandemic, telling chiefs corporate than workers expecting to come into the office five days a week, never talking about sanity, and static low- and middle-income wages are relics of the past.
Write to Reshma Kapadia at [email protected]