Financial Services Committee Advances Axne-Led Legislation to Boost Transparency of U.S. Workforce Development Investments
Feb 28 2020
WASHINGTON, D.C. — Today, the House Financial Services Committee voted to advance legislation led by Rep. Cindy Axne (IA-03) to require public companies to disclose information about their management policies related to their workforce, including the investments they make on skills training, workforce safety, and employee retention.
The Workforce Investment Disclosure Act was advanced by a vote of 33 to 25, and now heads to the House floor for consideration by the whole House of Representatives.
A Senate companion version of the legislation was also introduced this week by Senator Mark Warner (D-VA), a member of the Senate Committee on Banking, Housing, and Urban Affairs.
The legislation would require public companies to disclose basic human capital metrics, including workforce turnover rates, skills and development training, workforce health and safety, and compensation statistics.
“When I meet with companies nowadays, they tell me that their people are their greatest asset – but our businesses’ public disclosures don’t cover the investments they’re making in their employees. With this legislation, we can gain a better understanding of what companies are doing to improve and protect their most valuable asset,” said Rep. Axne. “I’m grateful that my colleagues on the Financial Services Committee and Senator Warner have all stepped in to help get us one step closer to making this transparency standard law.”
“As our nation continues to evolve and our economy becomes more knowledge-based, workers are easily becoming the most valuable asset a company can have. In fact, there’s a growing body of research that establishes a relationship between measurable human capital management – the way that companies manage and support their employees – and long-term financial performance,” said Sen. Warner. “When a business invests properly in its workforce, it boosts the company’s ability to innovate and compete. Companies should be required to disclose exactly how they’re investing in their labor force, and I’m proud to partner with Congresswoman Axne on this important effort.”
The rise of service and intellectual property-based businesses has made current asset disclosure requirements insufficient to provide investors needed clarity. In 1975, more than 80% of the S&P 500’s market value was in companies’ tangible assets like real estate holdings or purchased equipment. By 2015, tangible assets accounted for less than 20%.
Disclosure requirements for human capital are supported by notable investment and asset management firms.
Last year, leadership of major investors BlackRock and State Street Global Advisory both emphasized the importance of human capital — and have indicated the need to create standardized reporting. In addition, research from the Embankment Project on Inclusive Capitalism, a partnership between asset managers directing $30 trillion and large public corporations, found U.S. companies that disclose their total human capital costs outperform those that don’t.
The bill is Rep. Axne’s fourth piece of legislation aimed at encouraging good corporate practices and improving public transparency at U.S. companies.
Last week, Axne introduced legislation to create disclosure requirements for large corporations’ use of tax havens.
In January, she responded to the certification of Trade Adjustment Assistance (TAA) for workers in Des Moines who lost their jobs to outsourcing by writing new legislation to help workers laid off due to offshoring get assistance faster through better disclosure of these practices.
Last October, the House passed Axne’s first bill related to disclosures — the Outsourcing Accountability Act — which would require large corporations to disclose the locations of their employees around the world to discourage offshoring and hold companies accountable for laying off U.S. workers.