Political democracy requires economic democracy.
I spent the day of Donald Trump’s election to the presidency of the U.S. in – of all places – Las Vegas, Nevada. The slot machines garishly blaring in the lobby, and the Trump hotel down the block, were apt symbols for the kind of world we in the U.S. felt ourselves rudely thrust into. I was in town for the annual gathering of the ESOP Association, a membership meeting of hundreds of companies with Employee Stock Ownership Plans. In the post-election moment, that gathering proved apt in a different way. The dialogues I took part in showed me that advancing employee ownership need not be imperilled by a Trump presidency. Indeed, this approach to rebuilding the middle class may be uniquely suited to the new political world. It is one of the most promising paths forward for progressives at this moment.
Here are three reasons why:
Support for employee ownership is bipartisan; both Ronald Reagan and Bernie Sanders were proponents.
Employee ownership in the U.S. does not require new federal policy; handsome tax advantages are already present in the law.
What is needed to advance employee ownership, primarily, is increased awareness. That work can advance, no matter who occupies the Oval Office.
Most importantly, employee ownership directly addresses the issue of wealth inequality that has driven populist sentiment on both the right and left. It is a powerful way to improve the fortunes of ordinary workers and to build an enduring, just economy that is not subject to the whims of electoral politics.
On the final day of the conference, Janet Boguslaw of Brandeis University, recounted the story of Henry, 55, whose life was transformed by the power of employee ownership. Henry had grown up in a large family where his mother worked in a grocery store and his father took on odd jobs. Henry himself was working for minimum wage at a company when it shuttered its doors. He took on a new entry-level position at a different firm, which within five years became employee owned. Henry found the company paid the tuition for him to get an associate’s degree, and he advanced. Today, on top of his paycheck, he enjoys an ESOP account balance of $460,000, plus a company-sponsored pension plan of $80,000. He has medical insurance and can help his children attend college. He told Boguslaw, “I feel more comfortable talking to my kid’s teacher, and more comfortable coaching my kids’ teams.” He plans to retire in ten years and possibly travel. As Boguslaw put it, “Here is a man who started at minimum wage and became part of the middle class.” The reason is employee ownership.
While often missing from the progressive agenda, employee ownership is far from marginal. In the U.S., there are more than 7,000 companies with employee ownership, covering more than 10 million employees, who collectively have assets of nearly $1 trillion. Analogous to the ESOP structure in the U.S. is the trust structure of the John Lewis Partnership in the UK, which is 100 percent owned on behalf of its 88,900 employees. The mission of the firm is “to serve employee happiness”. And while navigating the same pressures in the wake of the Brexit vote as other retailers focused on driving down wages, that chain distributes up to half its profits to employees each year as a bonus. And this is the third-largest company by sales in the U.K.
To move beyond a society controlled by and for the 1 percent, we need broad-based ownership of assets. It is assets that create family stability and, collectively, economic power. As the National Center for Employee Ownership notes, workers at employee-owned firms have more than double the retirement accounts as at traditional firms, and they one-fourth as likely to be laid off.
Movements for employee ownership are growing in the U.S. and the UK. In the U.S., The Democracy Collaborative has joined with other organisations to launch a campaign, “50 by 50,” aimed at catalysing 50 million employee owners by 2050. If achieved, this would mean one in four workers become workplace owners, and substantial wealth would be enjoyed by millions of families. It’s a glimpse of true economic democracy. And as we are seeing, without economic democracy, political democracy fails to thrive.
Marjorie Kelly is a Senior Fellow and the Executive Vice President of The Democracy Collaborative, a U.S. nonprofit working to create an inclusive, sustainable economy. She is author of Owning Our Future and The Divine Right of Capital.