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1. Freedom of Association as a Key Aspect of Human Capital Management

Author:
Lenore Palladino
Publication Date:
01-2024
Content Type:
Working Paper
Institution:
Political Economy Research Institute (PERI), University of Massachusetts Amherst
Abstract:
Employee freedom of association— the right of workers to form and join organizations of their own choosing— is a fundamental human right that has been consistently disrespected by large U.S. employers (Economic Policy Institute 2019; International Labour Organization 2022). Freedom of association requires employers to refrain from discouraging employees’ right to organize but is routinely violated without meaningful penalty. In over forty percent of union election campaigns, employers face charges for violating employees’ right to organize—which does not include cases where no charges are filed (Economic Policy Institute 2019). The recent wave of well-known companies like Amazon and Starbucks blatantly engaging in practices to discourage their workers from forming unions has seen new challenges from the Biden National Labor Relations Board, but labor law in the United States does not adequately protect the right to freedom of association, and a change in political leadership could give companies carte blanche to override workers' rights (Clean Slate 2022). Companies can choose to establish corporate policies to respect employee freedom of association rights and can engage in behavior demonstrating their commitment to respecting this fundamental human right as part of their approach to Human Capital Management. This article focuses on two aspects of freedom of association as an aspect of Human Capital Management. The first is to examine what kinds of corporate policies exist to clarify corporate standards of conduct when employees are engaged in organizing activity. What kinds of policies focus on compliance with the minimal standards in U.S. labor law, and what policies comply with international norms as enshrined in ILO Conventions 87 and 98? The second prong of the article looks at negative ramifications for corporate value when companies do not respect workers' freedom of association and such behavior becomes public. What is the effect on customer attitudes, how is management behavior becoming increasingly visible, and what ramifications might this have for institutional investors?
Topic:
Political Economy, Employment, Human Capital, Labor Rights, Business Management, and Freedom of Association
Political Geography:
North America and United States of America

2. Inequality and the Decline of Small Business

Author:
Sebastian Doerr, Thomas Drechsel, and Donggyu Lee
Publication Date:
09-2022
Content Type:
Policy Brief
Institution:
Economics for Inclusive Prosperity (EfIP)
Abstract:
The share of income that goes to top earners has reached levels not seen in over half a century, and addressing inequality has become a central issue for policymakers. Designing policies to alleviate income disparities requires a thorough understanding of how inequality affects the economy. Somewhat surprisingly, while several studies investigate the consequences of rising income inequality for households (Auclert and Rognlie 2017, 2020; Mian et al. 2020), much less is known about how inequality affects firms. In a recent study (Doerr et al. 2022), we examine the important link between income inequality and firms’ job creation. Our analysis of US data reveals that a larger top income share hurts small firms, while benefiting larger firms. The reason is that households’ savings portfolios change with their income level. Higher income inequality leads to more household savings flowing into stocks and bonds – which are mostly used for financing by larger firms – rather than into bank deposits. In turn, as small businesses depend on banks for financing, their funding becomes more costly and they create fewer jobs. Complementing our analysis with a theoretical model, we show that by altering the allocation of household savings, rising income inequality not only hurts small firms, but suppresses overall employment. Income inequality has thereby contributed to two important macroeconomic trends: the decline in small business and the fall in the labor share, i.e., the share of total income that accrues to workers (Decker et al. 2016; Autor et al. 2020).
Topic:
Economics, Inequality, Business, and Business Management
Political Geography:
North America and United States of America

3. Returns to Active Management: The Case of Hedge Funds

Author:
Maziar Kazemi and Ergys Islamaj
Publication Date:
08-2014
Content Type:
Commentary and Analysis
Institution:
Board of Governors of the Federal Reserve System
Abstract:
Do more active hedge fund managers generate higher returns than their less active peers? We attempt to answer this question. Using Kalman Filter techniques, we estimate the risk exposure dynamics of a large sample of live and dead equity long-short hedge funds. These estimates are then used to develop a measure of activeness for each hedge fund. Our results show that there exists a nonlinear relationship between activeness and performance. Using raw returns as a measure of performance, it is found that more active funds outperform the less active ones. However, when risk adjusted returns are used to measure performance, we find the opposite results; that is, activeness is inversely related to returns. Still, we find that a few very active managers outperform the moderately active funds and generate higher returns. We conclude that the most active managers use their skills to manage the riskiness of their portfolios and are, therefore, able to provide higher risk adjusted returns. Finally, we find that compared to the least active managers, the most active managers are less homogeneous and, therefore, due diligence is far more important when selecting an active manager.
Topic:
Markets, Risk, Business Management, and Stock Markets
Political Geography:
North America and United States of America