American workers feel their footing in the economy slipping. The stock market has hit high after high, while workers’ share of national income is at its lowest point in at least 75 years. Add to that an affordability crisis hitting families’ checkbooks and many businesses’ eager push to utilize artificial intelligence, and workers’ sentiments appear well-founded. Our current political polarization leaves few confident that we can agree on a way to offer workers a real stake in the prosperity our country creates.
Employee ownership offers a promising path forward that is rooted in bipartisan ideals and designed to ensure economic prosperity is widely shared. We’ve spent the last six months talking to employee owners across the country at companies with just a few workers to those with several thousand, in industries ranging from manufacturing to home care. What employee-owned firms hold in common is that they draw ideas from the wisdom of their workers and share their profits, whether a worker is on the factory floor or in an office.
The workers we spoke with told us that the ownership stake they have at work fosters a sense of commitment and motivation. A machine operator at a Vermont manufacturer who’d been with the company 37 years and was nearing retirement told us: “If you work for a boss, you feel like you’re making money just for him.” But as part of a company with an Employee Stock Ownership Plan, he explained, “you know you’re making money for your future and for yourself, not just somebody else.” Workers describe workplaces with shared goals and mutual accountability. Everyone knows: if everyone contributes their fair share of effort and profits increase it’s the workers who stand to directly benefit.
An ownership stake makes a real difference in workers’ lives. Workers described how the extra money could help solidify their financial security in the present and help them retire with dignity. For younger workers who feel retirement to be a distant, even unrealistic, prospect, an ownership stake can open up a world of possibilities. One early-career worker in fleet services at an ESOP-owned tree service contractor put it bluntly: “I’m a millennial, and I didn’t know if I would have the opportunity to retire. But with an ESOP, I do feel like I will — it gives me that ability to dream.”
Employee owners said time and again they felt like they were part of a family at work. They describe a feeling of agency at employee-owned companies, where ideas between management and the front lines flow freely. Continuous improvement and transparency of the business’s financials are the norm. “Being a worker-owner means having power in what you’re doing,” one co-owner of a Cincinnati childcare cooperative said. “It empowers you to make decisions, to benefit from your work and be someone who has a say in what’s going on.”
Research shows employee-owned firms are more likely to stay open, hold onto their workers, and avoid layoffs than conventionally owned firms. When COVID hit and Web Industries’ aerospace business dropped by 90 percent, they pivoted to medical manufacturing, scaling a Massachusetts plant from 50 to 650 employees and shipping millions of COVID rapid tests. Office workers packaged tests after their shifts and family members helped. Michael Quarrey, a vice president at Web, explained: “When it’s your business, when it’s your company at stake, this is what happens. Our business was saved by the fact that we had a great employee ownership culture.” Recent research also shows employee-owned companies have an advantage in productivity.
So why don’t we have more employee ownership? Financing gaps are a major barrier to helping companies convert to employee ownership — but so is low awareness. While people overwhelmingly support the idea of employee ownership when it is explained to them, it remains a best-kept secret. Employee ownership isn’t integrated into our business support infrastructure or lexicon. Few universities teach it, and advisers, lenders, accountants, and lawyers rarely have expertise in it. And though it can be a powerful economic tool to help retain and grow businesses, it’s rarely been used for that purpose.
This is beginning to change. Federal legislation championed by both parties — such as the American Ownership and Resilience Act, which addresses the financing challenges — is one of several bills recently introduced. States around the country such as Colorado are also passing legislation to help provide financing, and many are creating new state centers focused on outreach and assistance. Almost $1 billion in new private investment also signals growing momentum. Norges Bank Investment Management, the world’s largest sovereign wealth fund, recently stated that “employee share ownership can create long-term value for companies, shareholders, employees and society.” And large companies such as Walmart are increasingly looking to provide equity ownership to their employees.
We are at an urgent moment. Many workers and families are falling behind every day we wait. When people feel they have no stake at a place where they spend a good part of their lives, it’s hard to expect them to feel like they have a stake in America. Millions of business owners will retire in the coming decade, creating a once-in-a-generation window for businesses to convert to employee ownership. This massive transition of wealth is a rare chance to rewrite the rules of the economy in a way both parties support. Accelerating employee ownership isn’t just good economic policy and business practice — it’s how we begin to recommit ourselves to building an economy and country where people have a real stake in its success.
The opinions expressed in Fortune.com commentary pieces are solely the views of their authors and do not necessarily reflect the opinions and beliefs of Fortune.
