I’m sharing this article because one of our AAPN members, Contempora Fabrics in Lumberton NC, run by Ron Roach and Alex Whitley, is a successful employee-owned operation and a great example of that concept in the ‘real world’.
Shareholders Are Stealing Our Jobs
Fortune: October 25, 2018
It’s not the robots that are coming for American jobs. It’s not the immigrants. It’s not evil offshoring CEOs either. It’s the shareholders.
Under shareholder capitalism, the U.S. labor force has become a liability—a cost to be contained—rather than an asset, and the decrease in worker well-being is a simple externality to be placed off books and ignored.
To help American workers and shareholders, we suggest asset managers and owners move to reject shareholder primacy and embrace stakeholder capitalism, invest in positive approaches to quality employment, and help workers regain a voice in corporate decision-making.
Here’s how we can get started:
Support multi-stakeholder corporations
There are three potential ways for investors to help effect the shareholder-to-stakeholder capitalism transition. The first is the steward ownership model, which builds on a distinguished history of European companies being managed for the long-term benefit of stakeholders. These companies accomplish this by assigning to a trust veto rights over fundamental issues and by distributing shareholders’ traditional rights among a broader range of stakeholders. Governance is distributed among those connected to the operation and its mission (shareholders, workers, customers, and suppliers) and profits above the cost of capital are deployed to advance the company’s mission.
Second is a new corporate legal entity developed in the U.S., the benefit corporation, which provides legal standing for a corporation that seeks to maximize benefit for stakeholders in addition to shareholders. Adoption of benefit corporation status among major public companies has been slow, so in August, Sen. Elizabeth Warren introduced the Accountable Capitalism Act, which she summarized in a Wall Street Journal op-ed: “The Accountable Capitalism Act restores the idea that giant American corporations should look out for American interests.”
A third approach is to support employee-owned companies. Current U.S. tax law encourages Employee Stock Ownership Plans (ESOP) through tax benefits. Employee ownership can promote job security and resilience to shocks while giving workers higher average wages and a stake in the upside of their businesses. And research shows that broad-based employee ownership increases firm productivity and decreases turnover. Read More