Labor’s Capital and Worker Well-Being: Do US Pension Funds Benefit Labor Interests?

Abstract

Abstract Since the 1980s, the shareholder value revolution has undermined the position of workers and organized labor within US firms. At the same time, workers have paradoxically become one of the largest classes of shareholders through labor pension funds (LPF), including state public employee funds and private sector union-affiliated funds. Does workers’ concentrated ownership of capital in LPF represent a mechanism to advance worker interests against the prevailing wage, benefit, and jobs squeeze in publicly traded firms? This article links data on US state pension funds’ investments and shareholder activism to firm-level data on work and employment outcomes from 2001–2016. LPF shareholder proposals targeting large firms have declined over time. However, panel regression models show that intra-firm mobilization by LPF in the form of shareholder proposals is associated with modestly improved worker outcomes. There is no evidence that greater ownership share by public pension funds (PPF) is associated with more labor-friendly outcomes. This null association obtains even when focusing only on ownership by the most socially activist funds, or those from Democrat-controlled states. Nor does PPF ownership buffer workers from the negative impact of extractive hedge funds. Together, the results help reconcile contending accounts of pension fund capitalism’s effects on worker well-being. The analysis contributes to the sociological study of financialization, corporate governance, work and employment, and labor movements.