Posted by:
Steve Dubb
Employee ownership's profile is on the rise
“If you melded Adam Smith with Karl Marx, what would you get? Aside from a person constantly arguing with himself, you might also get something similar to an economic model that is slowly taking root in the U.S. economy: employee ownership.” So begins a June 2007 article in fedgazette, a monthly publication of the Federal Reserve Bank of Minneapolis. The article goes on to note: “An estimated 20 percent, and possibly more, of the private workforce holds some form of direct ownership in the company it works for, up from almost zilch little more than three decades ago.”
As author Ronald Wirtz notes, one key reason for ESOPs success has been economic performance: As Wirtz puts it, “Firms that offer some form of ownership or other worker-reward system have demonstrated impressive performance, possibly better than those that don’t.”
Using a broader definition of employee ownership, which includes, in addition to ESOPs, options, stock purchase plans and the like leads to truly astonishing numbers. As a sidebar article notes, according to the Shared Capitalism Research Project of Rutgers University Professors Joseph Blasi and Douglas Kruse, in 2006 about 20 million workers held stock in the company they worked for-that’s about one of every three employees working at a private-sector company that has stock; roughly 11 million workers held stock options; some 44 million workers participated in profit-sharing programs (close to 40 percent of all private sector employees); and almost 35 million received a disbursement the previous year.
Wirtz also notes in a separate article that employee ownership seems to be uniquely strong in the United States. In Europe, there are employee-owned companies, especially in France, Spain, the United Kingdom, and Finland, but not in as large of numbers. One big difference: in Europe, the worker cooperative, rather than the ESOP, is the most common form, led by the 75,000-member strong Mondragón cooperative in the Basque Country of northern Spain.