Labor Day is a significant occasion to reflect on the sacrifices and contributions of American workers. However, as we observe this day, we must acknowledge a harsh truth: our economic system is increasingly biased against them.
A majority of voters believe that corporations make excessive profits, and many feel that the economy favors powerful interests unfairly. Workers continue to face challenges such as wage stagnation and a decreasing share of income compared to previous years. Recent data from the Federal Reserve shows that the wealthiest 1% own a significant portion of stock shares, while the bottom 50% own very little in comparison.
This Labor Day, it is essential to recognize the risks that workers take every day, often with little reward. Fortunately, there are steps we can take to address this issue, one of which is promoting employee ownership.
The Great Risk Shift
Our economy tends to favor those who own capital, assuming they take the highest risks. In reality, workers invest a great deal of risk and effort into building successful businesses. This difference in risk-taking has widened over time, resulting in what some call “the great risk shift.” Workers face various challenges, including job insecurity, low wages, and lack of benefits, while bearing the brunt of business failures.
One solution to rebalance this disparity is through employee ownership, where workers have a stake in the company’s success. By owning shares or having rights to share values, employees can benefit from the wealth they help generate.
Companies like Clegg Auto and Optimax Systems have implemented employee ownership trusts, sharing profits with their workers. Research shows that workers in ESOPs receive good wages, benefits, and training, along with increased job security and stability.
Potential Solutions
Employee ownership has garnered bipartisan support in Congress, offering a way to bridge the gap between labor and capital. Companies like Sky Blue Builders have transitioned to ESOPs, benefiting their workers and potentially narrowing the wealth gap.
Worker-owned cooperatives and ESOPs promote worker participation in decision-making, creating a more democratic workplace. Embracing employee ownership initiatives alongside fairer taxes, a stronger safety net, and updated labor laws can lead to a more equitable economy.
As policymakers discuss labor and economic policies, prioritizing employee ownership can pave the way for a fairer system where workers have a stake in their success. This Labor Day, let’s advocate for policies that ensure everyone is fairly rewarded within our economic system.
Matt Helmer is the managing director of the Aspen Institute Economic Opportunities Program.