Employee stock ownership plans: A new way to work

Abstract

S ince the Industrial Revolution, it has always been assumed that a few people would actually own the means of production and everyone else would work for them. Any other alternative, it seemed, was sociali s t i c -o r worse. In the last ten years, however, more and more American businesses are taking a new approachthey ' r e making their workers owners. About 5,000 companies now have employee-ownership plans, and a majority of the stock of at least 500 of these is owned by employees. These companies range from small businesses to industrial giants. A hypothetical executive might in any one day use several products made by employeeowned companies. He might, for instance, get up in the morning and have a glass of Juice Bowl orange juice, Starflower granola, Celestial Seasonings Tea, and Rath Bacon while perusing his Milwaukee Journal. Later, he might scan U.S. News and World Report and the Daily Tax Report from the Bureau of National Affairs. When he returns home, he might don his running shoes made out of GoreTex and go to sleep under his George Washington bedspread made by Bates Fabric. All of those products would be produced by companies substantially owned by their employees. The perhaps surprising fact is that employee ownership has moved into the mainstream of American business. It has received the blessings of Congress through a whole series of tax breaks, and has been endorsed by such disparate figures as Russell Long (its most active proponent) , Ted Kennedy, Ronald Reagan, and even Pope John Paul. Some companies are interested in employee ownership simply because it provides tax breaks, but most are attracted to the possibility of creating a new, and more productive, way to work. By making employees owners, the argument goes, everyone becomes a capitalist, with the result that everyone works harder and more effectively. So far, the evidence seems to bear this theory out, but it also raises some very distinct warnings. Employee ownership can work very well indeed, it seems to