Charles Dickens and the Modern Labor Relations Dilemma

The core investor question for modern companies is whether they can navigate labor relations without a middle ground. This is not a new dilemma. In 1854, Charles Dickens, writing in his own journal, offered a clear model for such navigation. He argued that in the face of a strike, one need not choose sides. Instead, he wrote, one may be a friend to both and feel that the strike is to be deplored on all accounts. This was not a call for neutrality, but a demand for a more humane calculus-one that acknowledged the legitimate pressures on both workers and management, and sought solutions that preserved the social fabric.

This historical stance stands in stark contrast to the dominant corporate governance structure of today. Modern shareholder primacy dictates that the board's sole duty is to maximize returns for owners. This framework leaves little room for the kind of balanced, long-term thinking Dickens advocated. The 2018 Business Roundtable pledge, where CEOs promised to lead for the benefit of all stakeholders, was a direct attempt to reclaim that middle ground. Yet, as Harvard's Lynn Paine notes, the pledge was largely a PR exercise. Boards were not asked to approve it, and the ultimate objective of most corporations remains shareholder value. The structure of governance has not changed to support a "friend to both" approach.

The central tension for investors is whether modern companies can succeed without this historical lens. The evidence suggests they are trying, but the old guard of shareholder capitalism is resilient. Companies now talk more about employees and communities, and some link a small part of pay to stakeholder outcomes. But the core governance mechanisms remain unchanged. The investor must ask: can a company truly be a friend to both labor and capital when its legal and financial architecture demands it choose one? Dickens' model offers a timeless benchmark for a more sustainable, less adversarial business model-one that modern governance, for all its talk, has yet to fully embrace.

The Modern Labor Relations Landscape

The landscape for corporate labor relations has shifted from a background concern to a direct threat to the P&L and balance sheet. The drivers are clear and quantifiable, translating into tangible operational and financial risks. The first metric is the surge in investor pressure. Since 2019, the number of shareholder proposals addressing labor rights has grown at an average of 22.6% annually. This isn't abstract activism; it's a sustained campaign by capital to force corporate accountability. While median support for these proposals has cooled to 19.2%, the sheer volume of dissent-over half received between 20% and 40% support-signals a persistent and material risk. When institutional investors, who manage trillions, treat labor issues as a core governance matter, it creates a powerful lever for change and a clear channel for reputational damage.

The second driver is the scale of worker action. In 2023, over 428 labor actions involved more than half a million workers across diverse sectors. This isn't a niche phenomenon but a systemic force capable of causing immediate, large-scale operational disruption. Strikes in critical industries like manufacturing, transportation, and services can halt production, delay shipments, and break supply chains. For a company like Expeditors, whose business model relies on seamless, high-volume logistics, such disruptions are a direct hit to revenue and service commitments. The cost is not just lost business; it includes the expenses of temporary replacements, overtime, and the potential for permanent customer attrition.

The third, and perhaps most potent, driver is public sentiment. With 67% of Americans approving of labor unions, the highest level in nearly two decades, the political and social cost of anti-union stances has risen sharply. This creates a dual risk. First, it emboldens organizing drives, as seen in victories at Amazon and Starbucks. Second, it increases the reputational damage from a public relations disaster. A company perceived as hostile to workers faces a backlash that can erode brand value and customer loyalty, a cost that is harder to quantify but deeply corrosive to long-term value.

The bottom line is that labor relations are now a core financial risk. The combination of escalating investor scrutiny, the potential for massive operational disruption from strikes, and a powerful shift in public opinion creates a multi-pronged threat. For corporate management, this means labor policy is no longer just an HR function; it is a direct line item on the balance sheet, influencing legal liabilities, operational continuity, and brand equity. The metrics show a landscape where ignoring these pressures is a costly gamble.

The Governance and Financial Spine

Labor relations are not just a human resources issue; they are a direct line item on the P&L and a test of corporate governance credibility. The financial impact is quantifiable. In the U.S. alone, companies have faced an average outlay of $58.2 million annually in settlements and resolved NLRB complaints, most of it backpay. This is a recurring operational cost that pressures margins and signals underlying workforce friction. For a company like Expeditors, which operates on a modest gross profit margin of 13.68%, such expenses are a tangible drag on profitability, turning labor disputes into a direct financial headwind.

This operational risk is mirrored in a governance credibility gap. The 2018 Business Roundtable pledge to serve all stakeholders was a landmark moment, yet its impact on actual governance structures was minimal. As Harvard's Lynn Paine notes, boards were never asked to approve the pledge, and shareholder value remains the ultimate corporate objective. The pledge was a statement, not a structural change. This creates a disconnect between corporate rhetoric and boardroom reality, where governance mechanisms have not been rewritten to prioritize employee or community outcomes over shareholder returns.

The trend of "hushing" compounds this problem. In an environment of political and social pressure, many companies are choosing silence over engagement. As governance experts observe, the "hushing" trend continues, with firms staying quiet on key issues like DEI and ESG for fear of reprisals. This is governance by default, not by design. It signals a boardroom that is risk-averse and unwilling to take a public stand, even if internal policies remain unchanged. For investors, this creates a credibility gap: the company may talk about stakeholder value, but its governance actions-like avoiding public commitments-suggest a preference for maintaining the status quo and avoiding scrutiny.

The bottom line is a system where labor costs are real and growing, governance promises are hollow, and corporate silence is the new strategy. For a quality transport name like Expeditors, this is a critical vulnerability. The company's operational model depends on a stable, productive workforce. Persistent labor friction, translated into millions in annual settlements, threatens that stability. Meanwhile, the failure of governance to evolve alongside corporate rhetoric means that stakeholder capitalism remains a PR exercise, not a foundation for sustainable value creation. In this light, the financial spine of the business is being tested not just by trade cycles, but by its own internal governance and labor relations.

Investment Implications and Scenarios

The investment case for companies like Expeditors hinges on executing a dual mandate: delivering operational excellence while navigating a rising tide of stakeholder expectations. The evidence points to a clear bifurcation in outcomes, where success in labor relations creates tangible value, but failure to implement genuine stakeholder capitalism exposes companies to escalating costs and reputational risk.

The value creation from successful labor relations is direct and measurable. Companies that proactively address workforce concerns avoid the significant financial outlays seen in the U.S. labor system, where annual settlements and resolved complaints led to an average outlay of $58.2 million in backpay. More importantly, they cultivate a more stable and productive workforce. The 2023 data shows a powerful shift in public sentiment, with 67% of Americans now approving of labor unions, the highest level in nearly two decades. This creates a reputational moat; businesses that foster positive employee relations are better positioned to attract and retain talent, reduce turnover costs, and insulate themselves from the disruptive strikes that affected over half a million workers in 2023. For investors, this translates to a lower risk profile and potentially more predictable cash flows.

The primary risk, however, is the failure to move beyond performative ESG commitments to genuine stakeholder capitalism. The evidence reveals a growing, if now more selective, investor engagement on labor rights. While the median support for labor-related shareholder proposals has settled at 19.2% after peaking at 40.5%, the sheer volume of proposals-up 22.6% annually since 2019-signals persistent discontent. The key catalyst here is the shift from broad, symbolic votes to individual scrutiny. Proposals that fail to clearly link labor issues to shareholder value creation are now less likely to gain traction, as seen by the decline in majority support. This means companies can no longer rely on vague promises; they must demonstrate how fair labor practices, such as pay equity or safety compliance, directly contribute to operational resilience and long-term profitability.

The critical catalysts to monitor are thus twofold. First, watch for the emergence of specific, high-profile labor disputes or regulatory actions against a company's peers. A major NLRB settlement or a high-profile strike can trigger a wave of investor engagement, as seen in the data. Second, monitor the quality and focus of shareholder proposals themselves. A surge in proposals specifically targeting human capital management or pay equity, backed by institutional investors, is a clear warning sign that the market is demanding concrete action, not just reporting.

The bottom line is a market that is rewarding quality but demanding accountability. For companies like Expeditors, the operational and financial strengths provide a foundation. The investment implication is that these strengths must be paired with a credible, integrated approach to labor and social issues. The scenario for success is one where the company's existing operational excellence is reinforced by a stable, engaged workforce, creating a durable competitive advantage. The scenario for failure is one where the company is forced to defend its practices, faces escalating legal and regulatory costs, and sees its premium valuation erode as the market questions its long-term resilience. In this environment, stakeholder capitalism is not a cost center but a necessary investment in corporate survival.