Employee Ownership Needs Worker Owners
Ownership is the new black, orange, blue and green – socially cool in “new economy” advocacy circles with an economic justice edge, growing in corporate and cooperative numbers, and claiming superior sustainable practices. Divided into land, home, individual, and workforce “communities of practice,” ownership appeals to historically admired American values. Cooperatives (member-based, worker and union affiliated) and companies with varying degrees of employee stock ownership plans (ESOPs), individual proprietorships and partnerships connect ownership with cultural ideals of freedom, innovation, self-reliance, civic commitment, democratic decision-making, wealth-building through risk-taking, and equality-grounded opportunity and mobility. Incentivizing workers as owners in “doing well by doing good” projects and companies reflects core principles and practices as ineluctable components of the historical American Dream’s original civic promise.
On the east coast, New York City’s Mayor and City Council unanimously proclaimed Saturday, June 21st, as “Worker Cooperative Day” and promptly backed their words with a $1.2 million appropriation. On the west coast, Seattle’s Mayor and City Council unanimously approved the nation’s highest municipal minimum wage, $15 per hour that doubles the current federal standard. Clearly, momentum to transform stakeholders into shareholders is on the rise in America’s most progressive cities to combat the public sector taxing, private sector productivity-depressing, and neighborhood regressive inequality triad (wealth aggregation, mobility, and opportunity).
It appears that a new formula for American private sector competitiveness is staring the country in the face if the nation’s collective “ownership economy” can just check its privilege at the door on behalf of a growing populist movement that wants in. Furthermore, majority employee or worker-owned companies are more sustainable because worker owner shareholder-stakeholders are more open to eliminating environmental and hierarchical injustice that leads to performance degradation and resource waste.
A growing body of empirical evidence proves that positive employee and company performance over time correlates directly to high impact management participation on all levels by worker owners combined with the broadest possible equity distribution among workers and the largest possible emphasis on worker education and training. Employees with some form of worker ownership accumulate more savings than employees in non-participating firms, companies with some form of capital sharing perform better in the competitive marketplace than those without, and workers with profit sharing or employee stock ownership and stock purchase plans are higher paid and have more benefits than other workers (ESOPS hold $870 billion in retirement plan assets which, divided by 11 million employee-owner plan participants, equates to an average dollar value of $79,000 per person). ESOPs help preserve manufacturing and help moderate business cycles because they hire slowly, but lay off people far more rarely during recessions.
Low to zero turn-over through widespread ownership principles and practices lowers costs and increases profitability. By eliminating vulture investors and outrageous c-suite pay scales (“8 reasons CEOs make 300 times as much as their employees” – Salon.com; “Big bucks for the big boss” – The Washington Post), more capital can be distributed to worker-owners in the form of higher salaries, better benefits, and equity valuation. A return to a true market-based economy based on level playing fields and “one worker, one vote” transparency will allow stakeholders to equate with shareholders and find common ground in an America that invests in itself through quality production and democratic principles. Today, America disinvests via tax havens, global labor arbitraging, the small print on special interest legislation, and the outright purchase of election results.
Steps are being taken which merit nationwide attention but much remains to be done. The American Sustainable Business Council (ASBC) which has recently surpassed the 300,000 member mark after only three operating years is launching the “Ownership4All” campaign to find common ground among all ownership silo communities to reach critical impacting mass and to proclaim a consolidated ethos. Continue reading Michael Peck's blog.
Michael Peck is the Founder of the MAPA Group and Board Member of the American Sustainable Business Council Action Fund.