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1worker1vote.org and Mondragon International North America are building a national network of unionized worker-owned cooperative businesses to overcome inequality of opportunity, mobility, and income.

Ownership for All

Only 32 million American employees, about ten percent of the country, have some form of equity relationship with their workplaces. Despite intense economic populism positions taken during the 2015-2016 presidential campaigns by leading candidates from both parties; widespread, deepened, and more inclusive worker equity policies and practices are still adrift on the nation’s cutting room floor. This is no small oversight given significant economic tax policy class privileges granted to entrepreneurial owners, employee owners and worker owners in descending order resulting in pervasive and vested structural inequalities.

Politically, these differences separate into a reoccurring “trickle-down versus gusher-up” policy framework. In a prescient April 2014 paper on “Inequality, Commerce and Inclusive Capitalism,” ownership expert, Christopher Mackin, noted President Obama’s December 4, 2013 speech highlighting “inequality as ‘the defining challenge of our time.’” Mackin went on to describe the source of “excessive inequality” as a “gulf that has opened up between two segments of Americans; those dependent upon labor income, upon paychecks, and a second, much narrower segment of Americans enjoying the fruits of capital income through investment and the ownership of assets… Asset owners earn healthy incomes but also accumulate wealth tied to assets. Meanwhile, wage earners survive primarily on income. In order to narrow the gulf, policy remedies must address gaps in the ownership of wealth producing assets as well as gaps in income.”

A strong answer to America’s inequality challenge will depend on how quickly and sustainably a rising working class that includes 25 million working poor can benefit from capital income through investment and the ownership of assets by becoming mainstream worker and employee owners. Policy innovations to achieve this goal will need to focus on worker-centric solutions and not just on top-down, employer-based tax incentives to reconstitute a United States able to score at least a passing grade on the global GINI index (GINI index World Bank estimate) that comparatively measures country-wide disparities in income, opportunity and mobility.

Community activist campaigns are starting to understand why creating, replicating and scaling profitable worker owned and governed enterprises within sustaining ecosystems can break the debilitating dependency cycles caused by multi-level structural inequalities.  Committed social media organizers recognizing America’s visibly changing working class demographics are beginning to grapple with how best to impact a national Gross Domestic Product that derives 75 percent of its bulk dimension from individual consumers “buying stuff.” Election year politics morphing into policy flash points are compelling a more robust and inclusive nationwide consideration of multilevel workplace equity policies as essential “take-home” currencies for those who work hard but still can’t make basic ends meet, those who deserve equity as well as a family and community sustaining living wage.

Surprising given strong bipartisanship legacy in this area, the Republican Party platform is still plank-less on the subject of employee and worker ownership as is its standard bearer, Donald Trump, both on the stump and via his twitter megaphone. This development cedes visionary policy territory as evidenced by Ronald Reagan’s August 1987 “Speech on Project Economic Justice” declaring (as many have noted) that “…in the future we will see in the United States and throughout the western world an increasing trend toward the next logical step, employee ownership. It is a path that befits a free people.”

President Reagan in his remarks then went on to recount the story of Walter Reuther, “…one of the first major labor leaders to advocate that management and labor shift away from battling over wage and benefit levels to a cooperative effort aimed at sharing in the ownership of the new wealth being produced. He was looking far beyond the next contract.” Doubling down on founding principles 126 years earlier, Abraham Lincoln in his first Annual Message as President in 1861, declared that “Labor is prior to and independent of capital. Capital is only the fruit of labor, and could never have existed if labor had not first existed. Labor is the superior of capital, and deserves much the higher consideration.”

Democratic presidential candidate, Hillary Clinton, proposes (in her Rising Incomes, Sharing Profits” plan) that the federal government incentivize the private sector to offer profit-sharing plans via a two-year tax break equal to 15 percent of shared profits and with a higher credit for small businesses (to offset programmatic costs), priced at $10 to $20 billion over a decade. “The tax credit would phase out for higher-income workers, and it would only be available to firms that share profits widely among employees. Moreover, the benefit for any single company in a given year would be capped to prevent an excessive credit for very large corporations.”

Enacting this virtuous cycle (“studies show profit-sharing that gives everyone a stake in a company’s success can boost productivity and put money directly into employees’ pockets”) would depend “on the company’s profitability in a given year and may be tied to a formula based on a worker’s salary,” would apply equally to employees making up the corporation’s bottom 80 percent as well as its top 5 percent, and is intended to be self-perpetuating. Profit-sharing funds would grow tax-deferred as in a 401(k) type vehicle governed by time-based vesting at each participating company.

This approach is necessary but not sufficient. Top-down (from employer to employee) tax policy approaches ignore “fair share” (the worker ownership version of “fair trade”) equity compensation innovations. More critically, this standard line of thinking mostly excludes freelancers, 1099 contractors, temporary workers, organized labor, alternative labor, the unemployed, and under-employed – basically those without preexisting assets. Conclusion – policies deploying earned equity formulas to drive ownership wealth towards the striving working poor and paycheck-dependent to expand civic America’s equity classes are missing in action during this election cycle.

Why are both political parties missing forests as well as trees? Almost one year ago, Steven Hill in “How BIG is the GIG (Economy)?” summarized three trending reports: Intuit stating that “by 2020, contingent workers will make up nearly half of American workers and 11 percent of these will be working for on-demand platforms; the Freelancers Union proving that “one in three workers – 53 million Americans – are now freelancing”; and MBO Partners which “found that within 10 years nearly half of the 145 million employed Americans — about 65 million workers — will find themselves on similar grounds, turned into so-called “independent workers.”

The Economic Policy Institute (EPI) defines America’s newly emerging (by 2032) working class as less Midwest blue collar, less older, angry, white working class males with up to a Bachelor’s degree, and more working people of color (according to a new analysis by Valerie Wilson). Hispanics are growing while “the share of white working class women will decrease by 7.9 percent,” “white working class men will decrease by 5.1 percent” and “the ‘older millennial’ segment of the working class—workers between the age of 25-34—will become majority-minority by 2021.” Clearly, both candidates and parties can commit to more equitable policies ensuring all workers from all economic classes and industries receive commensurate opportunities to earn a fair share of the value they create.

To address this policy gap, the “Ownership4All” Campaign launched by the American Sustainable Business Council (ASBC) & ASBC member, 1worker1vote.org, similar to the much more advanced “Green For All” and “Black Lives Matter” movements, intends, as Valerie Wilson writes, to secure “wage growth and greater equality by both class and race” and “calls for sustainable, working-class solidarity that supersedes the racial and ethnic tensions present among all groups of people, not just between whites and people of color.” Specifically, “Ownership for All,” seeks to level the ownership community tax benefits playing field between ESOPs (employee stock ownership plans – the largest and most privileged of employee ownership communities) and Worker and Union cooperatives.

“Ownership4All” represents thefair share” campaign to provide start-up and transitioning worker and union cooperatives with the same tax benefits that ESOPs currently enjoy and equalize the already privileged ownership community playing field for those knocking on the worker ownership door. “Ownership for All” will highlight the national policies needed to transition all workers in all industries from purely paycheck dependency to investor and ownership status.

Instead of “big government” redistributive after the fact policies or no policies at all, this approach designs performance-based equality into founding corporate structures and is based on “truly free” market principles. Deploying “virtuous cycle” market mechanisms including more equitable and widespread equity-producing tax policies will generate rising “neighborhood-organic” returns exhibiting individual and community ownership as the ineluctable and founding American economic and democratic system condition. Building the bottoms-up ecosystems where workers earn and access more power over their individual workplaces as stakeholder-shareholders will prove more beneficial than simply incentivizing corporations to share their wealth through well-intentioned rules that can be circumvented in the dead of legislative night or in the heat of reporting quarterly returns.

“Ownership for All” transitions from an extractive system concentrating ownership and often expropriating community wealth to a regenerative ecosystem where ownership is more widely held and more democratically accountable to people and their communities. Virtuous capitalism attributes such as “self-reliance,” “bootstrapping,” “independence,” “civic responsibility,” “ingenuity,” “pride of ownership” and “giving back” historically belong to America’s Main Street residents and not to any particular political party or tax-privileged interest group. It’s time these attributes reemerged in mainstream economic and social policies benefiting the majority rather than special interest minorities. This transformation is especially necessary in a changing national demographic context that is increasingly colonized by perpetrators of vested structural inequalities on all sides of America’s political divides.

Michael Peck is an ASBC board member and co-founder/executive director of www.1worker1vote.org

 

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