Americans are working hard, but employers aren’t necessarily working for them. Now a radical idea to guarantee U.S. workers a cut of their company’s profits could one day force employers to cough up more of the wealth.
While established profit-sharing and equity-ownership programs already give a financial boost to many American workers, and enjoy bipartisan support in Washington, some advocates for workers’ rights believe more must be done. They want lawmakers to order U.S. companies to pay workers a cash dividend tied to profits, just like any shareholder receives.
Call it profit sharing 2.0. Its supporters envision a day when large privately owned and publicly traded U.S. companies would be required by law to transfer newly issued shares into a collective fund for their workers. Employees wouldn’t individually own the shares, which would wield voting power and be held in a worker-controlled trust, but would receive regular dividends. The fund would be optional for small companies.
“Granting employees an equity ‘stake and a say’ in the companies that they work for means that when corporate executives decide on the level of dividends to be paid to shareholders, the workers who created the profits will not be left in the dust,” Lenore Palladino, a fellow at the Roosevelt Institute and assistant professor at the University of Massachusetts at Amherst, wrote in an article published on the institute’s website.
This dream of a fund that gives money and power to American workers is imported directly from the U.K., where it’s gained considerable traction.
In a July 2018 report commissioned by the U.K.’s progressive Co-Operative Party, the New Economics Foundation, a left-leaning London-based think tank, planted the seed for an “inclusive ownership fund” — a new way to transfer control of a business to workers over time.
‘Give more people a stake’
“If we want to build more inclusive, prosperous and productive companies, we need to broaden ownership and give more people a stake,” Mathew Lawrence, director of London-based think tank Common Wealth and a co-author of the report, said in an email.
For precedent, the report’s authors looked to the John Lewis Partnership, the U.K.’s largest worker-run company, whose generous and lucrative benefits make it something of a gold standard of employee profit-sharing. “In many respects, our proposal for an Inclusive Ownership Fund can be thought of as a John Lewis law,” the report’s authors noted.