US corporate duty of care faces reappraisal
COVID-19 is forcing a reassessment of the role companies play in US society
The mass vaccination efforts now under way in the United States are contributing to a reappraisal of the duty of care that companies owe to their employees. With the advent of President Joe Biden's administration, the country's experience with COVID-19 is becoming part of a new debate over whether healthcare should be a public good and about the role of the company in society.
What next
The United States is the only advanced economy that relies on employers to provide healthcare insurance for most of its working-age population, a practice increasingly being challenged by Democrats calling for 'Medicare for all'. CEOs will find it increasingly challenging to cope with simultaneous pressure to provide both social benefits to employees and financial returns to shareholders.
Subsidiary Impacts
- Efforts to require vaccination as a condition of employment or of returning to workplaces will face legal challenges.
- The emergence of devices and apps for workers to report their emotional state to management will raise privacy concerns.
- Tech solutions, such as 'virtual commutes' for remote workers, will do little unless accompanied by effective support for employees.
- As remote working encourages employee relocation to cheaper locations, it will raise new issues around local pay inequalities.
- The Biden administration needs support from business to achieve its social justice, climate change and sustainability ambitions.
Analysis
The changing norms around a company's duty of care to its workers are being driven by senior executives' concerns about the need to accelerate a safe return to post-pandemic operations while retaining talent, increasing productivity and sustaining company culture. Workers, meanwhile, have a growing expectation that their employers will ensure their health and safety in the absence of government doing so.
These expectations are shared by both front-line workers delivering in-person services and thus at direct risk of infection, and the many workers who are experiencing higher levels of stress and mental health deterioration from pandemic-imposed remote working.
Changing behaviour
Customers and investors are also applying pressures that are changing previous behaviour. Their expectations about business's role in social and environmental issues are evidenced by the rise of environmental, social and governance (ESG) investing (see INTERNATIONAL: ESG investment has strong momentum - January 4, 2021).
Pressure from customers and investors is changing past behaviours
Remote working
Studies conducted before the pandemic suggested that most, though not all, employees like the flexibility and lack of commuting associated with remote working. However, as involuntary isolation at home became a consequence of the pandemic, several recent studies show around three-fifths of respondents reporting higher levels of depression, anxiety and stress in an environment where a sense of belonging and community associated with 'office face-time' was often missing.
Other factors raising stress levels include:
- combining remote working with the additional elder and child care responsibilities that lockdowns have imposed;
- coping within the confines of small apartments or multi-generational homes; and
- one partner, usually female, having to drop down or out of the labour force, reducing household incomes and putting access to employer-sponsored healthcare coverage at risk.
Mental health
A Center for Disease Control (CDC) study in 2016 found that 71% of working-age respondents reported at least one symptom of stress and 20% reported mental illness. Studies conducted after the start of the pandemic by both the CDC and the Kaiser Family Foundation suggest the incidence of mental illness has at least doubled, making it a hidden health crisis.
Since April 2020, 40% of US adults have reported symptoms of depression or anxiety, nearly four times higher than a year earlier, according to Harvard economists Larry Summers and David Cutler, writing in the Journal of the American Medical Association in October. They estimate the cost of treatment and lost output due to additional mental health conditions resulting from COVID-19 to be USD1.6tn.
Long before the pandemic, companies of all sizes were increasingly taking on the cost of offering subsidised health insurance to help attract and retain talent. This remains a primary driver for companies to take care of worker wellbeing, especially that of skilled talent for which there is competition, but the cost of doing so is clearly increasing (see UNITED STATES: COVID will strain healthcare provision - July 31, 2020).
Corporate responses
Some companies are extending existing counselling services and wellness programmes for staff in response to the pandemic. Some of these offer online therapy and emerging devices and apps that track a worker's emotional state. However, privacy concerns around corporate access to employee health information is likely to become an issue, as it has been in other preventive health practices that companies have used to contain their health insurance costs.
So far, companies have been less active in areas, such as eldercare, that have not traditionally been seen as corporate concerns but whose impact on employees has become evident during lockdowns. These are prompting new discussions about where the boundary between government and corporate responsibility should lie.
Bringing workers back
Tyson Foods, Royal Caribbean, Constellation brands and Salesforce are among companies appointing a chief medical officer instead of relying on outside consultancy to manage the reopening protocols for facilities closed by the pandemic. Some large employers of customer-facing staff, notably supermarket chains such as Aldi and Dollar General, are offering their staff bonuses to be vaccinated against COVID-19. Others, including JP Morgan Chase, suggest they should be allowed to procure vaccines outside federal and state distribution to inoculate their workforces to facilitate more rapid economic reopening.
A new survey by The Conference Board finds that CEOs are keen to get their remote workers back into the office, fearing their company's culture and ability to innovate will be at risk if the informal 'water cooler' collaboration of a physical workplace is lost. It is notable that this concern is particular to US companies; the survey does not find that it is as pronounced in the rest of the world. European CEOs, for example, give higher priority to sustainability issues.
Generational change
Younger consumers, like employees, expect the companies they buy from to share and express social values through their core business practices, not just through corporate philanthropy (see UNITED STATES: Firms face growing employee activism - March 6, 2020).
Younger people may expect government to do more on healthcare
However, crises change values. The cohort that is now in the early years of its working life grew up through the 2008 global financial crisis. The expectations these employees have of those for whom they work is likely to be shaped by that experience -- much as earlier generations were shaped by living through the Great Depression -- and this may encourage them to look for a greater role for government, rather than employers, in ensuring healthcare provision.
They will also be aware that, in the long term, artificial intelligence (AI) will automate much low- and mid-skilled work while creating only mainly high-skilled new jobs. Current discussions about corporate duty of care to employees and broader debates about whether healthcare should be treated as a public good in the United States, as it is in other developed economies, may prove to be precursors to serious policy discussion around basic income and social wages in the face of severe AI-triggered job loss in parts of the economy.
