At the outset of the pandemic, Eva was pretty impressed with how the Texas Starbucks where she works sprang into action. It offered $3 an hour in hazard pay for those who came in and “catastrophe pay” for workers who stayed home.
“At first, I think they did really well,” she said.
But things have changed. The pay bump wound down at the end of May, after which workers were offered three choices: keep their jobs at likely reduced hours, take an unpaid leave of absence through September, or take a separation package. Her store has since started back up with “happy hours,” five-hour buy-one-get-one specials that entice customers to pack into the cafe to score a deal.
One of Eva’s colleagues, who spoke on the condition of anonymity, told me the happy hour crowd “throws every safety protocol we have out the door.”
“It feels like now, Starbucks just is really trying to make its money back,” Eva said. “I didn’t expect this.”
When the Covid-19 pandemic took hold in the United States this spring, companies jumped on the opportunity to advertise the ways they were supporting their customers and workers. The commercials became repetitive and indiscernible from one another, but corporate America’s message was clear: We’re all in this together.
Now companies have begun quietly rolling back many of the benefits, perks, and allowances they so loudly announced earlier this year. The state of the Covid-19 pandemic isn’t materially different than it was a few months ago — arguably, it’s now more widespread and worse. But corporations seem ready to move on.
“It’s just unclear that we could point to anything that’s different that would provide a reason to think that companies had strong moral reasons to be taking these steps in March and April, and that somehow those reasons are now gone,” said Brian Berkey, an assistant professor of legal studies and business ethics at the Wharton School of the University of Pennsylvania.
It turns out that “we’re all in this together” was a limited-time offer.
Many industries are quietly sunsetting the “nice” things they were doing
Poking around in different industries and on different companies, I found multiple examples of customer benefits and assistance being rolled back. Thank-you meals from restaurants for health care workers are much harder to find. Insurers such as Progressive and Geico paused policy cancellations for non-payment, but both programs ended in May.
Health care workers and first responders are still in the trenches, but many of the programs meant to thank and reward them have long expired. Many internet companies have put an end to their deals. Verizon’s extra 15 GB of data for its customers ended May 31, and T-Mobile’s unlimited data offer stopped June 30. The FCC’s pledge for companies to ensure customers don’t lose their broadband or telephone connections during the pandemic also ended June 30 — now it’s up to individual service providers to decide.
The airline industry has garnered a lot of attention for its reaction to the pandemic, especially as travelers assess the risk of getting on a plane. This summer, both American Airlines and United Airlines decided to start selling middle seats again, which obviously makes social distancing impossible. Other airlines, such as Delta, are still keeping those seats open.
In some cases, executive pay that was cut in response to the crisis is being restored, even where workers are struggling. Many corporations have ended hazard pay for front-line workers, even as many of those same companies have started to require customers to wear masks — an implicit acknowledgment that the hazard still exists.
In many cases, as I discovered while I was reporting this story, it was difficult to get companies to say what they were or weren’t doing anymore.
“We have a really good understanding of what companies have done, and now the question is, what is being rolled back?” said Alison Omens, chief strategy officer at Just Capital, a nonprofit that tracks and ranks companies on social responsibility. “There was a lot of transparency at first, and now it’s not as clear if those policies are still in place.”
Wells Fargo confirmed it has paused foreclosed property sales and evictions, but it is repossessing cars again. Bank of America has alerted some customers it is ending credit card payment deferrals on August 15, though a spokesperson insisted the company will “continue to have flexibility and will work with our customers as needed to help them throughout the current environment.”
Banks are, of course, taking a hit during the pandemic — during the second quarter, for example, Bank of America processed 1.8 million credit card deferral requests, and the bank has put aside $4 billion to cover credit losses. But it’s hard to see the megabanks as victims here. A repossessed car for an individual can mean a loss of a way to get to work, to school, to buy necessities. For Wells Fargo, it’s the most minuscule drop in the bucket.
“I strongly suspect that Wells Fargo wouldn’t be in danger of going under if they held off on repossessing cars for somewhat longer,” Berkey said. “In other cases, it might be true that a company would really be in danger of insolvency if it didn’t step back on certain policies that it might have adopted for a short period of time.”
“What’s at stake for the people involved in the company is much less morally important than what’s at stake for consumers or others,” he added. “It might be that the company is just obligated to let itself lose out on competitiveness.”
Companies are starting to treat the pandemic as a permanent condition, even as they roll back benefits
It’s not just customers that companies have been pretty vocal about helping during the pandemic. It’s also workers. As Vox’s Anna North outlined in May, a lot of companies were pretty fast getting rid of “hero pay.”
Rob got an extra $2 an hour for hazard pay around the time he started working at BJ’s Wholesale Club in Florida in March — until this summer, when it stopped. A few weeks later, on July 20, the store made masks mandatory for customers nationwide. Hazard: still present. Hazard pay: over.
“It’s only getting worse. Why would they not continue our extra pay now, when things are skyrocketing?” Rob said. “Otherwise, I wouldn’t really speak out, but it seems ridiculous, when things are getting to be worse, they’re going to stop giving the benefits.”
Starbucks, Kroger, and other companies also dropped coronavirus pay bumps and bonuses, even as cases increase across the country. Workers are left to try to implement the policies on the ground, often at low wages. One of the Texas Starbucks workers told me that if a customer refuses to wear a mask, they’re instructed to ask them to go outside and then shuttle back and forth to get the customer their order. “It’s a lot of back and forth,” the worker said. A spokesperson for Starbucks said the company is “actively listening” to what its partners are saying about what’s going on in the stores, and that the health and safety of its workers and customers come first.
Even for the companies that have kept hazard pay going, their workers are sometimes stuck in a constant limbo as they wonder whether benefits will be extended. For instance, Home Depot decides every few weeks whether to continue bonuses. “Basically, we never know if it’ll be extended or not until payday,” Ray, a Home Depot employee in Connecticut, told me.
To be sure, at some businesses margins are tight to the point that it’s hard to sustain extra pay for workers, and the longer the pandemic goes on, the harder it will be for them to stay afloat — let alone provide extra pay for employees. But then you look at businesses like Amazon, which has seen sales soar: It stopped extra pay for warehouse workers, many of whom say they are working in tough conditions.
“At a place like Amazon, one of the most profitable companies in the world, Jeff Bezos himself could personally fund it out of his own wealth,” said Elizabeth Anderson, a philosophy professor at the University of Michigan Ann Arbor.
Amazon spokesperson Timothy Carter told Vox in an email that the company has paid its team members nearly $800 million since the Covid-19 outbreak began, and now — with “demand stabilized” — it’s returned to paying employees the usual $15 an hour. Bezos’s net worth jumped by $13 billion on July 20 alone.
Darden Restaurants, which owns chains such as Olive Garden, Longhorn Steakhouse, and the Capital Grille, has already restored its CEO’s pay cut, even though the restaurant industry hasn’t recovered and many workers in the field are having a hard time getting by.
“Executives are still getting paid the same in a lot of these firms, despite the fact that there’s a bloodbath underneath them in terms of ordinary workers,” said Waheed Hussain, a philosophy professor at the University of Toronto.
This is what happens when we let corporate America decide what’s right
In some ways, companies have stepped up where the government has not — requiring masks, paying some employees more, and working with customers who can’t pay their bills. It’s part of a broader trend of Americans increasingly looking to companies to enact change and be better citizens. Even if it is a bit of a PR stunt, big donations are meaningful, and when used right, companies have the power to influence policy decisions in ways that ordinary people often don’t.
Derrick Feldmann, co-author of The Corporate Social Mind, said firms should think about how to design services and products to take into account the post-pandemic reality. “If you honestly have your pulse on what the consumer is dealing with outside of their own relationship with you, you’ll quite understand that not only is the pandemic going on, but there are other effects that have a little bit of lag time,” he said.
Some firms have made some long-term adjustments. Target has made its extra $2 in pay permanent, bumping up workers from $13 to $15 an hour, though it’s worth noting the $15 minimum was scheduled to happen in 2020 regardless. Many health insurers have extended coronavirus coverage on a rolling basis as the pandemic continues — a spokesperson for Cigna, for example, said it would be extending its July 31 deadline for waiving out-of-pocket costs related to the disease until at least October 31. The oil company BP initially put forth a program in the US giving first responders a 50-cent per-gallon discount on gas; it’s since phased that out and is now providing a 15-cent per-gallon discount for 60 days.
“The offer is not as rich as it first was — it would be very difficult as a business to keep that offer going,” said Jo Brecknock, a spokesperson for BP. The company also plans to cut thousands of jobs in response to the pandemic and what’s going on in the oil market.
“Some of these moves going back to normal may actually be shortsighted for business,” said Nien-he Hsieh, a professor of business administration at Harvard Business School. “There are some studies that show that raising wages during periods like this can be helpful in the long run because they lower churn, improve retention, and improve morale. Similarly, maintaining customer trust can be a long-term benefit. And also, in terms of thinking about a business, when you want to restart, having to rehire people can be difficult.”
Corporations are, of course, motivated by profit, and we’re in a world of shareholder primacy, where they work to maximize making money for their shareholders above all else. Doing a nice thing for a customer or employee pays some dividends, but not a ton.
“Businesses are hemmed in by shareholder expectations, so unless you change that part of the environment, you’re not going to get anything different in terms of corporate policies with respect to ordinary consumers and workers,” Hussain said.
Companies have a choice here, now and always. Nobody is ever forcing them to do stock buybacks or give giant CEO bonuses instead of increasing pay and benefits for workers. And there is an argument to be made right now that the stock market has become so disconnected from economic reality that if there were ever a time to ignore shareholders a little bit, it’s now. Instead of lobbying for Congress to give them liability protections in the next stimulus bill, they could push lawmakers to extend unemployment for the workers they’re forced to lay off.
The problem is, businesses don’t have the motivation to make those choices, at least not in the US. If the government doesn’t compel them, much of the time, they’re going to choose the more lucrative option.
Corporations often follow the news cycle and jump from issue to issue with statements and initiatives that correspond. In June, as the protests over the police killing of George Floyd took over the news, the same brands that were telling us they cared about us in the coronavirus pandemic were saying they’re now all about racial justice. That’s fine, but you have to ask what’s beyond that, and whether projects continue once the hype fades.
In the case of the pandemic, the first wave of corporate responses seems to have dwindled much faster than the disease itself.
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