Former Chairman, President & Chief Executive Officer, Consolidated Edison
John McAvoy on Bloomberg TV
John McAvoy appeared on Bloomberg TV's In the Loop program.
About John Mcavoy
John McAvoy, former Chairman, President, and CEO of Consolidated Edison, has spoken publicly about his personal history and his work at the utility. In a 2021 podcast appearance, McAvoy discussed his past as a convicted armed robber and his subsequent transformation into an Ironman triathlete. He stated that he believes any successful individual has a "moral obligation to reach back and help other people," and described his own journey as involving "small incremental steps" toward change. During his tenure at Con Edison, McAvoy discussed the company's sustainability initiatives and hiring practices. He stated that the company had reduced its carbon footprint by 48 percent and advocated for energy efficiency programs, noting that the utility had provided $350 million in rebates and incentives to customers since 2009. McAvoy also described the company's smart meter program as "transformational," and said Con Edison was hiring, having added 3,500 employees over five years. He emphasized the importance of a STEM-capable workforce and noted that the company partnered with organizations like the Energy Tech School in Queens.
Transcript (31 segments)
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Interviewer0:01
And on this all-important Jobs Day, we're taking an even deeper look into America's hiring picture with the people who make those decisions at the very top. We're joined by three business leaders from three very different industries: retail, energy, and banking, each with their own unique perspective on the state of US employment. Well, Tom Stenberg is the founder and former CEO of Staples; he sits on the boards of CarMax, Lululemon, PetSmart, and others, and is currently the chairman of the venture capital firm Highland Capital Partners. Also joining us here in our studio is John McAvoy, the CEO of Con Edison, one of the nation's largest utilities companies. And last but not least is our friend of the program, a longtime banker, the CEO of Bank United, which lends to consumers as well as businesses, John Kanis. It's great to have all of you here this morning on this huge day. So let me just kick this conversation off, guys, with a very simple question. John, I'll start with you here. Uh, are you hiring and why? Why or why not?
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John Kanis1:00
We are. We continue to hire both in Florida and in New York. The bank is growing at a billion dollars every 90 days, and we're fortunate to be sitting right in the middle of two of the big growth engines on the East Coast of the United States: New York metropolitan area and South Florida. So yeah, we're continuing to hire. We hired about 200 new people last year, and we will probably do about the same this year.
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Interviewer1:25
Okay, how about you, John?
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John McAvoy1:26
Well, I have to start by telling you I'm incredibly proud of the 15,000 women and men of Con Edison who have a tremendous commitment to our customers and operate our complex energy systems. We are hiring. We hired 900 new employees last year, 3,500 over the last five years. And those fall into different types of jobs: with our high school graduates with the right aptitudes, who we then develop into professional customer service professionals and crafts like splicers, welders; we hire those with associates degrees who come in as technicians, as designers; and we hire college graduates with various levels of experience, including our leadership development programs.
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Interviewer2:05
Okay, so it's a rosy picture from you guys. Tom, what about you? And the boards of the companies you sit on, are they hiring?
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Tom Stenberg2:11
Well, we invest in fast-growing companies, so naturally they're hiring. But I think you have to look at the texture of the jobs. Wages have not grown. A lot of jobs now, because when you hire somebody for more than 30 hours a week you have to provide them healthcare, which could cost $7,000 to $12,000. You're seeing a lot of these new jobs at 28 hours a week or 25 hours a week, and they're not the same quality of jobs you'd want to have in a booming economy.
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Interviewer2:37
Okay, because as you've talked about, Tom, before, Obamacare, you say Obamacare is going to be a big negative when it comes to hiring. That too. And also bank regulation. I mean our friends from the banking industry are overregulated. Every time they make a loan to a fast-growing business that's remotely risky, they've got to create more reserves, and that's the lending flow is not what otherwise would be. John, you weigh in on that. What about bank regulation? I mean has that had a negative impact? I mean I know your bank is smaller than the big Wall Street firms, but has that had an impact for you?
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John Kanis3:12
It has had an impact. In fact, many of the jobs that we've been adding over the last two years have been to answer the call for better regulation and better compliance with comprehensive regulation that we've never seen before. So you're hiring people in risk? We are hiring people as risk managers every day. And as the company grows, that segment of our company will continue to grow as well.
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Interviewer3:36
How about you, John? I mean, is regulation? I mean that's obviously a big factor in your industry.
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John McAvoy3:39
We're a highly regulated industry, but our employment is really more related to customer usage of our products. Electric usage is growing modestly for us, 1.4% per year over the next five years as forecast. Natural gas is a real growth area, 2.8% per year over the next five years, driven by the environmental advantages and the price differential between natural gas and other alternatives. Those are really the driving factors as compared to regulation for us. But I think you know one of the points, and Tom mentioned this just a moment ago, but Mike was really talking about this, says yes you might be hiring guys, but are you really paying more than you were before, or are you paying less? In our case, we're seeing some wage pressure on the upside, particularly in the risk areas that we just talked about. Yeah, I mean high demand now aren't they? Very high demand. And to be frank with you, I expect that will continue at least another year.
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Interviewer4:36
How about you?
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John Kanis4:38
We continue to offer competitive salaries and benefits. Our competition is in the STEM field, and so we're competing against others including Google and other high-tech companies for the talent that we need to operate our company.
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Tom Stenberg4:50
Tom, most of our retailers are in high service segments of the business and therefore pay well above the prevailing minimum wages. But as the various local governments and now attempted the federal government to raise the minimum wage, there's further upward pressure. And frankly, over time you're going to see less entry-level jobs because at $15 an hour or whatever they're talking about in Seattle, you're just not going to give the young kid a chance the way you used to.
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Interviewer5:18
What do you mean less entry-level jobs? What does that mean?
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Tom Stenberg5:19
Well, if you have to pay $15 an hour for somebody because that's the new minimum wage in some jurisdictions, where normally you'd hire a 16-year-old kid and give him a chance to learn the business and you make an investment in him at $9 an hour, you might have made that investment at $15 an hour. Many of the retailers I'm involved with just can't afford to make that investment.
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Interviewer5:43
Let's step back and talk about that for a moment. What do you make of his argument, John? Where do you stand on? We not able to hear him, so you're going to have to tell me what he said. Oh, you can't hear him? Okay, we should fix that. We were talking about the minimum wage debate and what he's saying is that essentially if companies have to pay more, I mean obviously you've seen the minimum wage protests across the country, if they have to pay more, they're not going to be making that same kind of investment in entry-level jobs as they were before. Where do you stand on the minimum wage debate?
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John McAvoy6:08
That's a very difficult argument. We have that discussion all the time. It's such an enormous divide in the United States now, and the world in fact, between the top 1% and everyone else. It's of course going to have an impact on unemployment at some level, but it is very difficult to make the argument against the higher minimum wage in most cases. It is because as you've heard with some of these leaders of this protest, they look at guys like you and I – don't want to put you guys in the hot seat on this – but they say look, you are all making millions and millions of dollars, the very bottom of the workforce are making just $9, $10 an hour, you should be spreading the wealth a little bit more. Yeah, it is an argument that's getting louder and louder in this country.
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Interviewer7:00
I suspect will do you the hot seat when you look at your pay? I don't think I don't think this no I mean I don't think that the CEO comparison is particularly relevant. But the argument that lower income employees have about the cost of living today and their need to survive and in fact take care of their families and grow in this expensive world that we live in certainly is loud and clear. Tom, every large company now is going to have to hire a whole bunch of analysts to figure out the pay ratio between the CEO and the average employee. This is a Dodd-Frank regulation that's probably going to finally kick in this year. And again, having people figure out that ratio is not going to add much to the productivity of the country. It'll make some unions happy but won't do much for productivity.
How about you, John McAvoy? I mean have you noticed any kind of disruptions within your own company or people saying that they feel like they're unfairly paid or that you're seeing some more activity on the lower scale of workers who are paid at your companies?
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John McAvoy8:04
Certainly the salary gap is an important debate that's going on in the country. In our company, we focus on highly skilled workers. Some come with the skills, others come with the right aptitudes and we develop those skills with them. So we don't really rub up against the minimum wage argument as much as some others. Are you worried about the unions? So we've had good – the last two contracts we've had really good collaborative relationships and negotiations with our unions and we've ended up where we think we're at a good spot. We're keeping bills down for our customers but being fair to our employees.
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Interviewer8:39
Okay Tom, I want to – so I know this is a hot issue for you. Tom, I want to play for you one piece of a conversation that we had earlier this week with one of the leaders of these labor protests and this is what he said about that pay ratio.
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Labor Activist8:51
These workers understand that franchise owners don't have enough money to pay them $15 an hour. However, the fast food industry is a $200 billion industry, one of the fastest growing industries in the country, and they're paying one of the lowest wages in the country. So I think that there's plenty of money and plenty of power to go around and that's what these workers are fighting for.
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Interviewer9:12
So Tom, why is he wrong here?
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Tom Stenberg9:14
Because I'm not sure he's right that there's that much money to go around. I know a lot of people who want franchises, some are doing pretty well, some aren't. But if you add up the costs of Obamacare which is a new cost to many of them, you add up a new minimum wage, you're just not going to have as many jobs. You're not going to have as many stores open, and that's going to hurt employment over the long term in my judgment.
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Interviewer9:41
John, on the banking front, what is going to be the biggest negative impact for you on hiring?
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John Kanis9:49
Remember that technology has dramatically changed the banking industry and our need for personnel. So to run a bank our size, we have about 2,000 employees today. To run a bank our size 15 years ago it would have probably taken 5,000 employees to do the same thing. So we're seeing a dramatic difference in the needs and the talents that our people come to us with. So our biggest issue is the quality of staff that we're able to attract and being able to find people with proper training coming in the door. And looking ahead, what's going to be the biggest factor for you in hiring even more than you are now? Obviously our growth. We continue to grow in both markets. If the underlying economies where we live continue to stay healthy and grow the way they are, we'll be getting more.
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Interviewer10:36
How about you, John?
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John McAvoy10:36
So one of the most important factors for us is the availability of a STEM-capable workforce, highly skilled workforce, very much so. And so we've partnered with other organizations. I'll tell you about one: the Energy Tech School in Queens is a collaborative between us and New York City which develops a six-year program – high school diploma and an associates degree – with a focus on a curriculum we help develop. We coach and mentor the students. We think that's a really good way to make sure we have a steady stream of highly talented employees in the future. And I've heard a lot about STEM research and graduating kids who have a good background in that, but isn't part of the problem also getting kids engaged in it? Very much so, and that's why we reach out to the high schools and the universities to tell them about what we do. Our business is really interesting, it's an exciting place to be. There are tremendous challenges and you get responsibility very early in your career. We have to make sure the youth of today and the workforce of tomorrow are aware of that.
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Interviewer11:36
Tom, you get final word here. What's going to have to happen in the next 12 months for you to see more hiring? That companies will get more comfortable with hiring again.
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Tom Stenberg11:45
We're very fortunate that we invest in companies like David's Tea and J. M. Smucker which are growing very, very rapidly, so therefore they are hiring. I think you really want to get a broad scale aggressive employment growth. And you know right now our employment picture is such that we are now back at the same level of employment we were before the recession, while at the same time the workforce has grown. So while we're making gradual progress, we're not nearly where we want to be. And I think frankly, getting out of this over-regulated, trying to get in everybody's business attitude from Washington has to change if you really want to have true growth.
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Interviewer12:24
All right, Tom, thank you so much. Great to see you. Tom Stenberg, the founder and former CEO of Staples. Also John McAvoy, the CEO of Con Edison. And John Kanis, thank you so much for joining us, the chairman and CEO of Bank United.