The Employee Ownership Update
June 20, 2005
Thomas Friedman, Progressive Policy Institute Endorse Employee OwnershipThomas Friedman, the influential columnist for the NY Times and author (most recently) of the best-selling book The World Is Flat provides a ringing endorsement for broader employee ownership. Quoting Will Marshall, head of the Progressive Policy Institute, the leading centrist Democratic think tank (it was strongly associated with Bill Clinton), he writes:
"In addition to a simple, portable, and universal pension program, Will Marshall, president of the Progressive Policy Institute, proposes legislation that would make it much easier and more likely for workers to obtain stock options in the companies for which they work. Such legislation would give tax incentives to companies to give more workers more options earlier and penalize companies that do not. Part of making workers more mobile is creating more ways to make more workers owners of financial assets, not just their own labor. "We want a public that sees itself as stakeholders, sharing in the capital-creating side of the flat world, not just competing in global labor markets," argued Marshall. "We all have to be owners as well as wage earners. That is where public policy has to be focused -- to make sure that people have wealth-producing assets as they enter the twenty-first century, the way homeownership accomplished that in the twentieth century."
"Why? Because there is an increasing body of literature that says people who are stakeholders, people who have a slice of the pie, 'are more deeply invested in our system of democratic capitalism and the policies that keep it dynamic,' said Marshall. It is another way, besides homeownership, to underpin the legitimacy of democratic capitalism. It is also another way to energize it, because workers who are also owners are more productive on the job. Moreover, in a flat world where every worker is going to face stiffer competition, the more opportunities everyone has to build wealth through the power of markets and compounding interest, the more he or she will be able to be self-reliant. We need to give workers every stabilizer we can and make it as easy for them to get stock options as it is for the plutocrats. Instead of just being focused on protecting those with existing capital, as conservatives so often seem to be, let's focus instead on widening the circle of capital owners."
Accessing Work Supports for Low Wage Workers: Opportunities for Employee-Owned BusinessesMany employee ownership companies employ people who meet one or another definition of a low-wage worker. A new project is working to help employers make sure these employees can access the many benefits available to them, usually at no cost to the employer. There are a growing array of public benefit programs (Earned Income Tax Credit (EITC), Child Tax Credit, Children's Health Insurance Plan, Food Stamps, Medicaid, Low Income Heating Assistance Program (LIHEAP), Section 8 Housing Vouchers, transportation subsidies) that low wage workers can receive based on eligibility and income. These benefits can add up to over $10,000 a year for low wage households and can make a huge difference in income that can be used to pay pressing bills and provide child care, education, housing and other basic needs. Additionally, the income can be used towards savings and asset building leading to increased economic independence for low income households. Many low wage workers do not know how and fail to access benefits for which they are eligible for due to lack of information, fragmentation of services, complicated forms, different locations, and language and cultural barriers. A new project funded by the Mott Foundation is looking for ways to help companies make sure eligible employees know what benefits they can receive. For more information about the study, contact Robert Zdenek, lead consultant to the project at (301) 263-2715, email email@example.com.
Chair Nominee Could Change SEC Direction on OptionsChristopher Cox (R-CA), President Bush's nominee to head the Securities and Exchange Commission (SEC) was a cosponsor of the "Broad-Based Stock Option Plan Transparency Act," a bill that would limit options expensing to the top five officers of a company. Cox will no doubt be grilled on this issue in his confirmation hearings, and his ability to change the momentum for the new rules may be limited, but he certainly adds a important voice to the anti-options expensing position on the commission.
DOL Increases ESOP ActivityIn 2004, the Department of Labor closed 220 cases with ESOP violations, up from 187 in 2002. In October of this year, the Department launched a special investigation of ESOP abuses. Some of these cases were relatively minor administrative problems, but the increase is clearly due to the post-Enron fallout and concern about employer stock in retirement plans.
Author biography and other columns in this series