The Employee Ownership Update
July 7, 1995
Delta Pilots Want OwnershipThe pilots at Delta Airlines have become the latest union group to ask for stock in return for concessions the company wants the pilots to accept. Delta management said it was not in favor of giving more stock to the employees (Delta has a small ESOP), but might consider giving the pilots stock options, as Southwest Airlines did last year.
Malaysia Pursues Employee OwnershipIn late August, a conference will be held in Kuala Lumpur to discuss employee ownership as a business and privatization strategy in Malaysia. Malaysia now joins Jamaica, Argentina, China, and Zimbabwe among non-Western counties looking at this option.
Productivity/Pay Linkage Seems Broken LatelySeveral recent reports have noted that during the last decade, real total compensation (wages and benefits) have been stagnant while returns to capital have soared (remember the Dow in the 1980s and how analysts wondered if it could ever top 3,000?). Yet productivity has increased steadily during that time. Usually, pay follows productivity. Economists suggest world competition, a less educated workforce (a result of more immigration), and sheer randomness may be the cause, but followers of Louis Kelso, the creator of ESOPs, would point to his argument that capital, especially as imbedded in technology, would eventually replace the need for labor faster than the greater prosperity it created could generate demand for new jobs. Labor's share of the wealth would thus decrease, while capital owners would flourish. The solution, of course, was to create more capital owners.
First Federal Employee Ownership Privatization InitiativeThe Clinton administration promised to give a high priority to privatizing government operations through employee ownership. The first such effort is now underway for the Office of Federal Investigations (OFI) in the Office of Personnel Management. The OFI performs personnel background checks for federal agencies.
If the office is privatized to employees, it could employ several hundred people and could compete for doing background checks for the private sector as well. Employees at the office are not enthused about being privatized, but seem to prefer to do it through employee ownership if there is no other choice.