PayPal CEO says corporations are obligated to fight for equality
His firm is committed to closing racial wealth gap
Corporations have a moral obligation to stand up for racial equality and social justice inside their own organizations and in the nation at large, PayPal CEO Dan Schulman told USA TODAY.
From the moment George Floyd died on the South Minneapolis pavement under the knee of a white police officer, Schulman knew his company must act. More than a year later, he says PayPal has embraced a new brand of corporate activism.
On his watch, PayPal committed $535 million to support Black-owned businesses and to fight economic inequality, part of Schulman’s goal to close the racial wealth gap.
Inside the company, Schulman noticed some employees were struggling paycheck to paycheck, so he linked employee pay to a new metric called “minimum net disposable income,” or how much a person or household has after paying income taxes and living expenses. Since his company spun out from eBay, Schulman says, he also has focused on increasing the representation of women and people of color at PayPal, starting at the top.
“Values cannot be words on a wall,” he told USA TODAY. “Values need to be actions you publicly stand up for.”
The interview transcript has been edited for length and clarity.
How George Floyd’s murder affected PayPal
I don’t think that businesses have the luxury to think of themselves as disassociated from the communities that we live in, from the economies that we’re a part of. The leaders of companies have an obligation to step up and to help address so many of the frailties of our system and the issues that have plagued us for so long.
With the death of George Floyd, in particular, there was an outpouring of emotion inside PayPal and throughout our country. It was a combination of anger, of despair, of frustration, of determination. I felt like we have a long history at PayPal of standing up for our values and taking real action and that we needed to do something to address the inequities and the lack of social justice when it comes to racial equity in our country and around the world.
PayPal’s $535 million commitment
I personally needed to listen. I needed to learn more. I spoke to Black leaders across the country and Black colleagues inside PayPal to get their insight and their input, and really that changed dramatically the way that PayPal and I felt we needed to react.
The big takeaway was that we needed to somehow make a declaration that this was going to be a movement over time and not a moment in time.
As a financial services company, we were going to do our part to reduce the racial wealth gap, which is exactly the same today as it was back in the last civil rights era, and how to do we that not just over the short term but really commit to being part of the fight over the long run. And that’s why we committed $535 million to do our part to battle for social justice and to be a part of the ongoing fight against racial inequality.
How PayPal distributed racial justice funds
I felt like we needed to address some issues immediately and also address issues over time.
For instance, Black-owned businesses, small businesses, during the pandemic were folding at a rate of 41%. That was almost two times the average of small businesses across the country.
There were a lot of reasons why that was happening, like limited access to capital and equity financing, and I felt we could make a real difference right away, not by doing loans but by doing outright grants to Black-owned small businesses.
We decided we were going to do $15 million of grants. We gave grants to just about 1,400 Black-owned businesses. Here’s the result of that: Today, over 90% of those businesses we gave grants to are still in business.
We also put in $100 million into 19 venture funds that were led by Black or Latinx founders who were really disproportionately investing into Black and Latinx startup founders so they could create and help to fund generational wealth. We put in over $200 million into community banks and credit unions that are really focused on underserved communities.
We’ve already put to work $510 million. And so, we really felt like words and commitments are really good, but real action is what makes a difference. We have so much work yet to do. The country has yet so much work to do. But I am hopeful that our commitment and the actions we have taken are inspiring to other corporations.
Increasing Black and Hispanic representation
At the heart of our values is diversity and inclusion. We know that this work needs to start on the inside, and we try to implement both policies and programs to truly live that value.
When we first spun off from eBay, our board was 10% diverse. Today we are 50% diverse, including gender and people of color. My direct report team is 65% diverse. I feel like you need to start at the very top of the house to show that you’re serious about diversity and inclusion.
Since we spun off from eBay, we’ve seen a 13% increase in our U.S. ethnic diversity at our director level and 15% increase diverse representation at our VP plus. But we are far from where we want to be, and there is so much work ahead of us to get to where we want to be but we are fully committed to it. It will make us a stronger company.
Those companies that embrace inclusion values, that pay equally across gender and ethnicity, that don’t tolerate any pay differentials inevitably will be more successful.
Why corporations should stand up against racial inequality
Every company needs to think about what they stand for and where they want to take public stands. We try to be very thoughtful about all the issues that face us as a country and we try very hard to not be involved in partisan politics.
But I do feel like values cannot be words on a wall. Values need to be actions you publicly stand up for.
And, if we are truly part of our communities, if a company’s success is inextricably tied to the health of communities we serve and to the financial health of our own employees, we need to stand up when we feel those values are under attack.