Some of the noise in the US political debates can be traced to a root cause: the economic growth and opportunity goals of cities, states and countries and the goals of enterprises are not necessarily likely to intersect. Being an earnings leader and fostering innovation are not achieved without regard to where the work is done.
Consequently, even when company earnings are strong, household incomes in many places are weak. Confronted with income inequality, both the Republican and Democrat ‘outsiders’ call for significant changes – different sides of the same coin.
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Global companies navigating these currents are confronted with how to serve at least three constituencies – customers, employees and shareholders – while also being upstanding local and global citizens.
Income inequality is personal. For companies, compensation is an expense; who gets how much is an allocation that reflects the reality of a global marketplace that challenges as well rewards the enterprises that win.
Deciding on where to invest, many companies focus on human resources. To find and retain a knowledgeable workforce, they begin with the local supply (my clients hire people who already have jobs) and the local pipeline. Then, they examine the ability to relocate talent based on the relative attractiveness of a community. However, this is not without difficulty. Recent data indicate that millennials are less likely to move than the baby boomers and generation-Xers who preceded them.
Harder to know is why they are not moving. Are they trapped in their parents’ basements dealing with underemployment and student debt? Do they think that new political leadership will result in better jobs that will come to them?
Both relocating and young companies value communities with compatible interests; that is, strong clusters. But there are only a few, and most strong clusters are not where the basement dwellers live.
Daniel Malachuk works with business and government leaders on global direct investment strategies. He has advised many of the world’s leading companies and served in the public sector as director of White House operations. Email: daniel.malachuk@gmail.com