By that we simply mean sharing some of the profits and even ownership with the men and women who are fundamental to their companies’ success.
Most Americans say they want it. A recent government survey found that vast majorities of respondents across the political spectrum prefer to work for an employee-owned company than an investor- or state-controlled business.
Perhaps that’s one reason why the idea is gaining steam on Capitol Hill and on the campaign trail, with several plans being floated – including ones by Sen. Bernie Sanders and Sen. Elizabeth Warren – to share more corporate control and profits with workers.
After conducting a massive, multi-year study of shared capitalism, we found that not only is it good for workers, it’s good for the bottom line too.
Profit sharing 101
U.S. businesses have a variety of ways to share their gains with workers, from offering cash profit sharing to giving them the opportunity to purchase stock at a large discount. Another recourse is the Employee Stock Ownership Plan, known as an ESOP, which allows companies to use credit to buy shares that are later distributed for free to employees.
Past research has shown the benefits for workers. A survey that has tracked 5,504 younger men and women since 1997 – when they were in high school – found that participants who worked at companies that gave employees some ownership reported higher wages and wealth and better benefits and job quality than their peers, regardless of industry or the person’s demographics.
When interviewed in 2013 – when the workers were aged 28 to 34 – their wages were a third higher and their median household wealth was about double. A followup study in 2018showed that the employee shareowners continued to have better jobs, benefits, earnings and wealth.
And a 2018 survey by the National Center for Employee Ownership found that workers in ESOPs reported an average retirement balance of US$170,326, more than twice the national average of $80,339.