In April, 19 private equity firms committed to providing equity shares to employees at some portfolio firms, as part of the new nonprofit Ownership Works initiative, which has a goal of creating $20 billion in wealth for low- and moderate-income workers over the next decade. Seems like good news. But we urge impact investors to be skeptical. The industry that has done the most damage to job quality and worker security over the last two decades claims to be reversing course. And there will be workers who see a nice hit of cash. But ownership? Not really. What these PE firms are doing falls far short of what authentic employee ownership represents, which is the beginning of a truly democratic economy where ordinary people have more control over their lives, more stability in their work, a fair share in the wealth they create, and the chance to own and control the places where they work.
More than 3,000 researchers from 600 universities around the world have issued an urgent call to heed the lessons of the COVID-19 crisis and rewrite the rules of our economic systems in order to create a more democratic and sustainable society. Their call – made in an op-ed published simultaneously in 33 leading media outlets around the world, including The Wire – in the midst of an unprecedented health, climate, and political crisis, paves a positive path forward following three core principles: democratize (firms), decommodify (work), and remediate (policies) in order to respect planetary boundaries and make life sustainable for all.
This May 1, 2020, let us ask the question, why do we keep a system that requires workers to endlessly struggle against the opponents who own and operate each enterprise with exclusive control of the profits? For workers to secure reforms requires a strategic next step. They must transition beyond the employer vs. employee system, the one which defines capitalism. With a worker co-op based economy, workers, who are the majority in every workplace, collectively and democratically become their own employer, and by negotiating amongst themselves, workers will secure more rights than they could ever achieve under capitalism.
In our capitalist economy, business enterprise is controlled by capitalists, of course, and structured to bring highest return to shareholders. We’re all supposed to love this set-up because competition among companies gives us ever cooler products and always better deals. Right? But, wait a minute…where is the competition? Over just the last 15 years, mergers have proliferated so quickly that in twelve major industries just two companies now control more than half the market. Economists warn us this level of concentration kills competition — not to mention bringing with it an erosion of wages, as monopoly weakens competition for workers too.
Durham, North Carolina, once famous for its “Black Wall Street,” is exploring a new strategy to preserve and grow local African-American businesses through employee ownership. One of four cities chosen to participate in the Shared Equity in Economic Development (SEED) fellowship program, sponsored by the National League of Cities and the Democracy at Work Institute (DAWI), the city is preparing to reach out to African-American business owners — particularly those approaching retirement age — to encourage them to consider employee ownership when planning their succession strategies.
General Motors’ November 26th announcement that it will be eliminating more than 14,000 jobs and closing seven factories worldwide by the end of next year, including four factories in the U.S. and one in Canada is an opportunity. These facilities should be condemned by government authority and turned over to the workers whose labor created the wealth and profits that General Motors’ shareholders enjoy. They could then, with government assistance, be retooled and placed under the ownership and control of their workers, organized into democratic cooperatives for that purpose.