Bernie Sanders, one of the leading Democratic candidates for the presidency in 2020, recently revived his push to give American workers more ownership of the businesses they work for. The Vermont senator told the Washington Postlate last month that businesses should be required to put some of their stocks into employee-controlled funds, so workers get dividends.
Two other Democratic presidential candidates, Sens. Elizabeth Warren and Kirsten Gillibrand, have also joined Sanders in sponsoring legislation to make it easier for people to set up employee-owned businesses.
There’s a big debate to be had about whether companies should be forced to go down the employee-ownership route. Warren and Gillibrand have not suggested that, for instance. But the basic idea being floated in the U.S. is very similar to what an increasing number of company owners are doing voluntarily in the U.K.—handing over their pride and joy to the people who work for them.
Around 350 businesses in the U.K. are now employee-owned, with their bosses having made the decision to gradually transfer their shares into an employee ownership trust. Whoever is working for the company at the time gets to pocket dividends from the shares, though they don’t get to benefit once they’re gone. That’s different from the most common equivalent U.S. system, the employee stock ownership plan (ESOP), which sees employees retain their shares after they leave a firm.
The model is clearly gaining popularity in the U.K., with around 250 of those British businesses having adopted it in the last five years or so. According to the employee-owned John Lewis Partnership, the operator of the John Lewis department store and Waitrose supermarket chains, such businesses now account for 4% of British GDP. But why would a business owner take this step?
The feel-good factor
The employee-ownership model is not exactly new—the John Lewis Partnership has been using it since the 1950s and the engineering giant Arup since the 1970s. However, more and more examples have been hitting the headlines recently.
Last month, Julian Richer, the founder of home electronics retail chain Richer Sounds, announced he was selling 60% of his company stock to a trust for his workers. And Petra Wetzel, the founder of a Glasgow-based brewery called West, put a tenth of the company’s shares into a similar fund, with the promiseof more to follow.