A radical idea to guarantee U.S. workers a cut of their company’s profits could one day force employers to cough up more of the wealth.
Americans are working hard, but employers aren’t necessarily working for them. Now a radical idea to guarantee U.S. workers a cut of their company’s profits could one day force employers to cough up more of the wealth.
This dream of a fund that gives money and power to American workers is imported directly from the U.K., where it’s gained considerable traction. The U.K.’s minority Labour Party soon took up the charge. In September 2018 it endorsed a policy requiring U.K. firms with more than 250 employees to transfer 1% of company stock into an inclusive ownership fund for workers every year for 10 years, giving the fund 10% control of the company after a decade. Dividends from company profits would be capped at 500 British pounds annually , with the British government collecting any surplus to help pay for social services.
“Shares are a familiar, nonpartisan, capitalist mechanism,” said Rutgers University professor Joseph Blasi, director of the university’s Rutgers Institute for the Study of Employee Ownership and Profit Sharing and a leading expert on worker issues. “Workers get fair wages and a fair share of the profits, in equity or profit shares or both.”
“You don’t need to have 100% employee-owned firms to have capital shares improve the middle class,” Blasi said. “What you need is an expansion of the reasonable, recognizable share programs that exist in a lot of American companies.” Many U.S. companies have gotten the message. Almost half of U.S. private-sector employees, about 59 million workers, have access to ownership or profit-sharing where they work, according to a survey taken by The Rutgers Institute for the Study of Employee Ownership and Profit Sharing. About 25 million Americans own company stock, roughly 14 million of them through an estimated 6,600 ESOPs.
In addition to ensuring voting power, inclusive ownership funds, with their guaranteed share of a company’s wealth, pledge to do for workers what a universal basic income — a guaranteed share of a country’s wealth — promises the general public: Ease the financial insecurity many people confront day-to-day, paycheck-to-paycheck.In the U.S., for instance, unemployment is historically low, but wage growth for the average worker pales against upper-management’s gains.
CEOs and corporate directors, not surprisingly, have a different take. In a companion Rock Center survey of 107 CEOs and directors of Fortune 500 companies, 73% said CEO compensation isn’t a problem. Furthermore, 84% of CEOs believe they are paid correctly compared to the average worker, while only 16% of the general public said the same. Limiting CEO pay was opposed by 79% of chief executives, and 97% of CEOs and directors opposed government intervention in CEO pay practices.
‘A life of meaning and dignity’ “Americans deserve an economy that allows each person to succeed through hard work and creativity and to lead a life of meaning and dignity.” That’s the opening sentence of the Business Roundtable’s “Statement on the Purpose of a Corporation,” signed in August by 181 CEOs of America’s biggest and richest corporations, including the leaders of Apple AAPL, -1.94%, Bank of America BAC, +1.69% and Walmart WMT, +0.44%.
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