Rebuilding the post-recession economy will require more than simply putting people into jobs or ensuring they receive a living wage. We also need to support business models and legislation that enables more workers to actually own a piece of the company they work for. For many, worker ownership will be essential to building a sustainable economy and restoring the American Dream.
In the past 30-plus years, the link between productivity and reward has grown more fragile for many employees, depressing the entrepreneurial spirit that makes companies grow and thrive. Worker-owned companies allow more Americans to share in a firm’s success, rather than concentrating the gains at the top executive level.
Worker-owned companies can take a variety of forms; all expand opportunity and smartly allocate the rewards of productivity to create broad-based, sustainable economic growth and prosperity. They can strengthen retirement savings and the finances of middle-class families. In addition, they enable workers to earn higher wages and continue to work during economic downturns, like the recent Great Recession.
The ranks of worker-owned companies have grown briskly over recent decades. In 1975, workers owned around 1,600 companies in the United States. Today, roughly 14 million employees in 7,000 companies own some share of their company through an employee stock ownership plan, or ESOP. Another 7,000 people are employed at 300 plus worker cooperatives, with $400 million a year in revenues and an average annual profit margin of 6.4 percent.
A worker cooperative is a business that markets the products and services of its members, who also own the business. Its profits are allocated among the members on the basis of how much labor they put into the co-op. Members elect the board of directors on a one-person, one-vote basis, and the board hires the management.
Extensive analysis shows that companies with employee ownership, like ESOPs and worker cooperatives, have far lower turnover and generate significantly greater shareholder value than others. From the dock to the executive suite, employees with a direct stake in the company’s success tend to be more productive, and that’s good for the company’s profitability. ASBC has a number of ESOPs among its members, including New Belgium Brewing, Eileen Fisher, Dansko, NRS, and Clif Bar. It also has worker co-ops among its members, including South Mountain Company and Union Cab of Madison.
ASBC supports the growth of worker-owned companies as part of the mix for building a sustainable American economy. Worker-ownership benefits the company, the workers, and the community: the company benefits from greater worker commitment; the workers benefit from better compensation, greater advancement opportunity, and improved job security. Communities are rejuvenated by stable employment. That’s what true sustainability looks like.