Every company should be owned by its employees
Every company should be owned by its employees
Central States Manufacturing as a model for exiting to employee-ownership.
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How does an Employee Stock Ownership Plan work? How do partners/employees make money with it? When you hold stock, don't you need to sell it/liquidate it in order to make money?
And how do you hire somebody? Do you sell your shares to the person at no cost or something?
I'm confused.
Don't take this the wrong way, but this made me bust out laughing...
When you hold stock, don't you need to sell it/liquidate it in order to make money?
Boy, if that isn't just a perfect example of the perversion of our economic system. "You can't make ACTUAL money with it, you can only make money by participating the meta gambling game."
No, stock entitles you to dividends, which is just a fancy way of saying "a share of the profits". Like, a company brings in A amount of money (gross income) in a year, spends B of that on payroll and whatnot (expenses), maybe puts away C of that into a savings or spending account, and everything that's left, D, gets given to the owners. If you have stock in the company, that's you.
Of course, dividends are generally very small (like, think savings interest) compared to what you can make trading and speculating, so it's never good enough for the rich.
It's also rather common for companies to pay no dividends, because they just put all the leftover money into C. Which isn't even necessarily bad, it's generally built on the idea that keeping the money in the company will give the company more room for growth, I.E. raising the stock price, with the assumption that that will be worth more than the dividends may have been. But for so many companies, that just never ends. Sooner or later, the growth won't be sustainable, and many companies just collapse under their own weight, leaving the stock worthless.
Every year I get shares from my company. The vesting period is typically longer. For me it took 7 years to be fully vested. But I was accumulating every year. When I leave the company, the company will pay out my shares and I can tell them where to put the funds. But the higher base salary I have, the more shares I get. Also the people retiring or leaving the company, the shares get bought back by the company and redistribute to the employees. At least that's how it works at the ESOP I work at. Kinda a simplistic view of it.
When someone is hired, they don't get shares. They are enrolled into the ESOP program. Then after some time, they will eventually start accruing shares on a regular basis.
How do partners/employees make money with it?
Sell their stock for money, or stocks owned may pay dividends, or both.
When you hold stock, don't you need to sell it/liquidate it in order to make money?
Yes. But only a small percentage of the employees are retiring and selling their stock at any given time. There are usually limits on how and when employee stock awards can be sold before retirement.
And how do you hire somebody?
The usual way. After hiring, hires receive stock as a part of their compensation.
Do you sell your shares to the person at no cost or something?
It's just part of their compensation. Longer tenure employees end up with more stock earned over time, and may also receive more stock per pay period to reward loyalty.
Implied question: If employees can sell stock won't the company eventually be publicly traded?
There lots of ways the rules for holding the stock can be structured to prevent that, while still having real monetary value to retirees.
It's a bit much for a post here, though. And it varies by country, I think.
Think of it like a founder selling their company to their current employees.
Current employees have no money but will if/when their future company does well.
A third party pays the owner now and manages this account.
Once employees retire, they sell their shares to the company, and the company uses that for new employees!
There is a city in Spain called Mondrago. I first heard about it years ago.
The way it was brought up to me was that the people there are happy. And we should also be happy. But why are they happier on average then others.
My favorite part too is that this is capitalism. Its not communism. It isn't socialism. You can bring this to the right wing whoevers and argue that this is a better way.
Intellectually honest people that for whatever reason started out on the center-right can be convinced to support worker coops. The arguments in favor of them are personal responsibility arguments that center-right people tend to favor. I actually posted one such moral argument for worker coops in this community. Here is a link to that post:
I mean collective employee ownership can’t really be considered capitalism. Who are the capitalists in this economy? Everyone? It works very differently.
Generally most proponents of worker-coops are considered market socialists or anarchists, depending on their attitudes toward the state.
That said it can exist within capitalism, though it’s not clear whether capitalism will allow this ownership structure to expand significantly.
I agree that it is not capitalism as it abolishes the employer-employee contract, but it isn't quite socialism either because it is technically compatible with private property.
In terms of expanding the worker coop sector, I actually have some ideas for getting startup funding for worker coops, and creating economic entities that would buy up capitalist firms and convert them into worker coops
The capitalists are the workers. They collectively want to increase their profits and grow their company and invest in the markets. This isn't socialism, anarchy or anything else. It's capitalist. Socialism, communism are not good systems. Cooperatives sit in a neat place that bridges ideas between both major political groups.
Socialism means the workers control the means of production which is an antiquated term but can definitely mean direct ownership of businesses. So worker coops are certainly socialist. It doesn’t really make sense to speak of socialism as a single system since it’s more of a collection of ideas, most of which having never been tried. I assume you are talking about the USSR and those who followed its economic system. While I agree that that system was bad, they also didn’t grant workers real control over the economy and weren’t really socialist by the original definition. Even Lenin referred to their system as state capitalism, which they advocated for because marxists believe that capitalism has to advance to a certain stage before socialism can take root. The stated plan was to eventually move towards socialism but of course they never did because when do dictators ever want to give up power?
Most people think socialism is about free markets vs state planning but this is just Soviet and US propaganda. While some socialists did advocate for state planned economies, you can also have state planned capitalist economies such as the nazi war economy.
Anyway, that’s all esoteric political theory and not super relevant to worker coops which almost everyone agrees are pretty cool.
Problem I have here is that the government doesn't need to change. Markets would exist how they do. Hell even businesses would run as they do with private owners and capitalist investing freely. What I would suggest changing is any company who wants to go public to become something larger they should have to restructure as a cooperative or something similar where the employees have a majority stake in the shares while the rest can be sold publicly. so for me I feel like it's a bit of a mix but ultimately it's still all exists in a capitalist market with all the intention of being acting and behaving like capitalist.