Washington, D.C. — Ahead of an expected new U.S. Securities and Exchange Commission (SEC) proposed rule that would require publicly traded companies to disclose information about their workforces and the quality of jobs at their companies, a new report from the Center for American Progress proposes a framework for what these metrics should look like.
Increased transparency around how companies select and manage their workforces would help investors and other market participants determine which firms are most likely to be profitable and would help make capital markets more efficient and fairer.
CAP proposes that the SEC require registered companies to report on standardized metrics including:
- Baseline numbers of full-time, part-time, and contract workers, disaggregated by race, gender, and ethnicity and separately by occupation and pay band
- Job quality indicators such as pay, benefits, and workplace safety
- Measures of worker voice and empowerment, such as union density
- Measures of expenditures on training and recruitment
Because a company’s workforce is often one of its most valuable assets, investors, lenders, suppliers, and other market participants—as well as policymakers and the public—need reliable, consistent, and comparable information about a company’s workforce to make informed decisions, including to price shares more accurately, inform shareholder voting, make a sale or a loan, and protect workers from racist or other harmful treatment.
The report takes aim at some of corporate America’s criticisms of human capital disclosure requirements. For example, because companies already typically collect this sort of information to comply with the Fair Labor Standards Act and IRS and Equal Employment Opportunity Commission requirements, arguments from corporations that providing this information as part of SEC regulatory requirements would be burdensome are overblown.
“A company’s workforce is its most important resource. Yet as things stand now, investors, lenders, suppliers, other market participants, policymakers, and the public don’t have detailed and comparable information about the workers who drive corporations’ profitability and resilience,” said Alexandra Thornton, senior director of Tax Policy at the Center for American Progress and co-author of the report. “The SEC is uniquely positioned to ensure that companies are transparent about turnover, demographics, job quality, diversity, and union density and should adopt a robust, standardized human capital reporting framework without delay.”
“The proliferation of human capital frameworks and metrics globally demonstrates both the need and the demand for a set of standardized core workforce metrics from the SEC,” said CAP Research Associate and report co-author Zoe Willingham.
Read the report: “It’s Time for a Workforce Disclosure Reset: Why the SEC Should Require More Specific Human Capital Information From Companies” by Alexandra Thornton and Zoe Willingham
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