We must broaden employee ownership in America.
Broadening stock ownership within corporate America would help address a number of critical problems in our economy.
The lack of wealth in the bottom half of the country can be directly tied to their lack of stock ownership. It is stock ownership, or lack thereof, that is – by a mile – the single greatest contributor to wealth inequality in America. It’s hard to build wealth on wages alone, particularly when wage growth has barely kept up with inflation for decades. Employee ownership can put profits in the wallets of American workers and families. It’s also the fair thing to do: companies are built because of their workers. These employees should benefit from this growth just like shareholders. They built it together; they should profit from its growth together.
Source: Federal Reserve (corp. equity & mutual fund wealth percentile group - Q4 ‘23)
Most employees feel their opinions don’t count. According to Gallup, ~67% of American workers are disengaged on the job. Of these, ~16% are characterized as “actively disengaged” meaning they are miserable and some could do things to hurt their employer – throwing proverbial wrenches in the machines. Employee ownership provides an opportunity to create a different type of culture -- an ownership culture -- where everyone is engaged in the business and all employees are included, trusted and respected. ESOPs accomplish this by linking the employees’ day-to-day performance with the financial success of the company and allowing the employees to share in the company’s financial success.
Source: Gallup Survey of Employee Engagement (2023)
The so-called “quit rate”, which measures the percentage of Americans who quit their job every year, recently peaked at 40%! That means the average American company is re-hiring the entirety of its workforce every few years. This is bad for workers who are not staying long enough to build skills and advance. And it is bad for companies that are wasting money on re-recruiting and re-training so many people each year – not to mention incurring the cost of unproductive workers who are already looking for their next job.
Source: Federal Reserve (peak rate reflects Q3-21 annualized)
According to the Treasury Department, the majority of Americans are financially illiterate. Stock ownership provides hope and a reason to engage on topics related to personal finance. It also provides a context in which to learn basic concepts about how a business operates and how their performance can affect the value of the company for which they work.
Source: U.S. Financial Literacy and Education Commission (2020)
Simply put, broader employee ownership would benefit our economy by putting money in the hands of people who will spend it on things like a home, a car, college tuition or other family needs. Numerous economic studies have shown that income and wealth creation for lower income Americans will lead to faster economic growth because of the consumption it encourages.
Source: Federal Reserve (2019)
Lastly, there is a potential societal benefit associated with more Americans having a stake in our economic future. Our country has never been more divided. Too many of our fellow Americans feel they don’t belong, or that the economy is simply unfair. Broadening ownership to include everyone at a company has the potential to give all of us a greater sense of connectivity and inclusiveness and enhanced meaning in our work.
The lack of wealth in the bottom half of the country can be directly tied to their lack of stock ownership. It is stock ownership, or lack thereof, that is – by a mile – the single greatest contributor to wealth inequality in America. It’s hard to build wealth on wages alone, particularly when wage growth has barely kept up with inflation for decades. Employee ownership can put profits in the wallets of American workers and families. It’s also the fair thing to do: companies are built because of their workers. These employees should benefit from this growth just like shareholders. They built it together; they should profit from its growth together.
Source: Federal Reserve (corp. equity & mutual fund wealth percentile group - Q4 ‘23)
Most employees feel their opinions don’t count. According to Gallup, ~67% of American workers are disengaged on the job. Of these, ~16% are characterized as “actively disengaged” meaning they are miserable and some could do things to hurt their employer – throwing proverbial wrenches in the machines. Employee ownership provides an opportunity to create a different type of culture -- an ownership culture -- where everyone is engaged in the business and all employees are included, trusted and respected. ESOPs accomplish this by linking the employees’ day-to-day performance with the financial success of the company and allowing the employees to share in the company’s financial success.
Source: Gallup Survey of Employee Engagement (2023)
The so-called “quit rate”, which measures the percentage of Americans who quit their job every year, recently peaked at 40%! That means the average American company is re-hiring the entirety of its workforce every few years. This is bad for workers who are not staying long enough to build skills and advance. And it is bad for companies that are wasting money on re-recruiting and re-training so many people each year – not to mention incurring the cost of unproductive workers who are already looking for their next job.
Source: Federal Reserve (peak rate reflects Q3-21 annualized)
According to the Treasury Department, the majority of Americans are financially illiterate. Stock ownership provides hope and a reason to engage on topics related to personal finance. It also provides a context in which to learn basic concepts about how a business operates and how their performance can affect the value of the company for which they work.
Source: U.S. Financial Literacy and Education Commission (2020)
Simply put, broader employee ownership would benefit our economy by putting money in the hands of people who will spend it on things like a home, a car, college tuition or other family needs. Numerous economic studies have shown that income and wealth creation for lower income Americans will lead to faster economic growth because of the consumption it encourages.
Source: Federal Reserve (2019)
Lastly, there is a potential societal benefit associated with more Americans having a stake in our economic future. Our country has never been more divided. Too many of our fellow Americans feel they don’t belong, or that the economy is simply unfair. Broadening ownership to include everyone at a company has the potential to give all of us a greater sense of connectivity and inclusiveness and enhanced meaning in our work.
