Why Don’t Politicians and Pundits Think Employee Ownership Matters?
Employee ownership works for companies, communities, and employees. And there is a lot more broad-based employee ownership than most people realize. There are about 6,500 ESOPs in the United States with about 14 million participants, and another 11 million or so employees in companies that give everyone some form of equity and/or give them significant discounts on shares they purchase.
Data on all these plans show that employees are paid better, are laid off much less, and accumulate much more wealth than they would if they worked for a non–employee ownership company. Companies do better as well, growing faster in sales and employment and retaining their workers at higher rates.
At a time when trust in the economy is fading, where half the population cannot put its hands on $1,000 in an emergency and half the private sector workforce has no retirement plan assets, and where just about every employer is saying that attracting and retaining employees is their primary or one of their most important challenges, you would think that an idea that addresses all these problems and has essentially no political opposition would be getting a lot of attention from political leaders and pundits. But when is the last time you heard a candidate for office talk about employee ownership, or saw a talking head on a news channel mention it? Working as much on this issue as we do, we have come across some true champions—Representative Dean Phillips (D-MN), for instance, has become a valuable champion, and Senator Bernie Sanders (I-VT) has been a longtime leader. Both are leading legislative efforts that could bear fruit this year or next. There are a few others, from both parties, who also consider the idea essential. But these people are exceptions. Employee ownership never comes up in a presidential race and almost never in any other election.
John Case and I wrote our new book, Ownership: Reinventing Companies, Capitalism, and Who Owns What to argue that employee ownership needs to be a priority, not just an idea that gets lots of pats on the head but does not make it on almost anyone’s list of top 10 ways to fix the economy. It is a tough sell.
So what’s going on here? I have a number of theories:
It Is Not Controversial Enough
It always seemed to me that the fact that the right and the left, that Democrats and Republicans and everyone in between liked employee ownership was a strength. The concept’s very popularity should make it a no-brainer for any politician to campaign on and an interesting idea for pundits to discuss. About two years ago, I was disabused of that notion. I had an interesting call with someone who wrote a good op-ed on employee ownership (it would not be appropriate to say who). I talked with him about this very issue. He had been part of the 2016 Clinton campaign team. Employee ownership was explicitly advocated in a long policy paper developed for the campaign by the Center for American Progress, a progressive think tank. That policy paper strongly endorsed employee ownership and profit sharing and had a number of ideas to promote these practices. But Hillary Clinton never once said “employee ownership” out on the campaign trail. “Why not?” I asked. “Because,” he said, “it is not controversial enough. You can’t campaign on an idea your opponent likes too.”
Plan Rules Are Complex
Imagine you are writing a 650-word column or giving a campaign speech and you want to talk about employee ownership. Most people will understand that term to mean worker cooperatives or employees buying stock. Some will think of stock options in tech firms. But you want to talk mostly about ESOPs and a little about broad-based grants of various kinds of equity. It is hard to briefly describe how these work in a way that allows people to see why they are so effective. You could mention tax benefits, but then will people think, Is this just a tax dodge? You could say employees get the shares free, but then it seems there has to be a catch. Sure, you could explain all the nuances—but by then you would have lost people. There are ways to communicate the value of ESOPs succinctly, but they are not obvious to someone not well schooled in these ideas. By contrast, if you say, “Cut taxes and regulations” or, “Tax the super-rich and use the money for climate change and schools,” you don’t need to say a lot more.
What Needs to Be Done to Move the Idea Forward Does Not Involve Major Changes
Say you are out on your stump speech or writing the column you hope will get a lot of eyeballs and you say something like, “The best things we can do to create more employee ownership programs are to provide funding for outreach and education and to include ESOPs and worker cooperatives in federal and state loan support programs. None of this will cost much money.” One the one hand, that sounds terrific, but on the other it hardly makes you sound like a big-picture thinker who has game-changing ideas.
These barriers are tough to overcome. The good news, though, is that the changes can happen even if employee ownership is not seen as a big part of the economic reform agenda. Legislation at the state and federal level is in process that could get us a long way toward where we want to be. With enough advocates in the community making their voices heard, these changes can happen.