By Osita Nwanevu
On Wednesday, Bernie Sanders spoke at Walmart’s annual shareholders’ meeting in support of a resolution that would require the company to consider its hourly associates for seats on its board of directors. “The concerns of workers, not just stockholders, should be part of board decisions,” he said. “Today, with the passage of this resolution, Walmart can strike a blow against corporate greed and a grotesque level of income and wealth inequality that exists in our country.”
On policy, Sanders is perhaps best known for his support for two progressive proposals: Medicare for All and a fifteen-dollar minimum wage. But his appearance at Walmart’s shareholders’ meeting came on the heels of a report, by the Washington Post, that Sanders is expected to release a pair of proposals that take a new approach to reducing the wealth gap. One is a plan to require large companies, like Walmart, to grant workers a substantial number of seats on their corporate boards. The other would require companies to turn over portions of their stock to a worker-controlled fund, granting employees both stock dividends and, potentially, the votes in corporate affairs afforded to shareholders.
Sanders would be the second Democratic Presidential contender to offer a corporate-co-governance proposal. Last summer, Elizabeth Warren introduced the Accountable Capitalism Act in Congress, which would require companies taking in at least a billion dollars in annual revenue to grant worker representatives forty per cent of their board seats. Sanders’s worker-controlled fund would be a novelty in recent American politics, though it could be similar to a proposal recently offered by the Labour Party in the U.K., which would grant workers ten per cent of the stock in major firms. The case the Sanders campaign will make for these proposals is largely intuitive—if workers are granted more of a say in corporate decision-making, companies will make decisions that are better for workers. “Workers are not going to vote to send their own jobs to China,” Warren Gunnels, a Sanders policy adviser, said. “If a company in a big city can make a big profit by polluting the environment in which workers live, if the workers had a seat at the table, they would more than likely prevent that company from polluting their own environment.”
Democratic Presidential candidates have offered a flurry of policy proposals to lift the fortunes of middle- and working-class Americans, from Kamala Harris’s lift Act, which would grant thousands of dollars in supplemental income to working Americans, to Elizabeth Warren’s universal-childcare plan. But one of the major drivers of inequality is stratified access to stock and other capital. The top ten per cent of Americans own about eighty-four per cent of the stock in the economy and seventy per cent of national wealth over all. Beyond a handful of proposals, such as Cory Booker’s baby-bond plan for American children and Elizabeth Warren’s wealth tax, few ideas from the 2020 field address that gap directly. Although details are still light on Sanders’s stock-ownership scheme, it would presumably create a significant expansion in stock ownership among the middle and working classes.
There are thousands of worker-owned and -managed firms in the American economy already, including both standard coöperatives and other models. Nearly seven thousand companies have employee stock-ownership plans, or esops, retirement packages that grant employees ownership stakes in their companies, which have been broadly supported by both parties for decades. The esop model “generally, on average, improves firm performance,” Douglas Kruse, a professor at the Rutgers School of Management and Labor Relations, who was a senior economist for President Barack Obama’s White House Council of Economic Advisers, told me. “And there do seem to be several studies showing that it improves job stability—that the layoffs over the past two recessions were about thirty per cent smaller among employee-ownership companies. There’s not been enough research on the effects on worker income. But the data we have pretty clearly points to worker ownership, employee ownership, coming on top of standard market-level pay.”
Yet, while esops have enjoyed bipartisan support for many years, policies to expand worker ownership have not figured largely in the economic platforms of either party. “I think the reason is that both parties have been committed to the lie that they could dramatically increase real wages to reduce economic inequality,” Joseph Blasi, an economic sociologist at Rutgers and a frequent collaborator of Kruse’s, told me. “And it didn’t work under the eight years of President Obama, it didn’t work under the eight years of President Bush, and it’s not working under Trump.”
Another reason that policymakers have not seriously pursued worker ownership may well be the ideological implications of such proposals. Sanders, as most Americans know by now, describes himself as a democratic socialist. In explaining what this means to laypeople, Sanders generally points to his commitments to Medicare for All and other policies that are, in fact, in keeping with the welfare-state liberalism espoused by Democrats from Franklin Roosevelt to Ted Kennedy. The Democratic Socialists of America, by contrast, define democratic socialism as an economic system in which workers directly control most of the firms in the economy. The worker-ownership proposals Sanders is expected to unveil will be his first in keeping with the fundamentals of that broad vision. As Matt Bruenig, of the People’s Policy Project, put it recently, in the socialist magazine Jacobin, “Sanders’s move, along with his historical advocacy of worker cooperatives and other forms of collective and public ownership of capital, puts him in the position of saying that ownership does matter.”
It’s unclear whether Sanders, with his proposals, will explicitly say the same or meaningfully alter his definition of socialism. Loren Rodgers, the executive director of the National Center on Employee Ownership, said that he is wary of any proposal that requires companies to hand over stock to employees. “Employee ownership works well when companies choose employee ownership,” he told me, adding that he hoped Sanders would put some distance between his proposal and the Labour Party’s, which he views as overly radical. Blasi expressed concern about the political viability of a plan that mandated worker ownership. “There’s been bipartisan support for employee ownership and profit sharing voluntarily for decades,” he said, “and I think compelling companies to do it is going to be a very difficult road. I think it’s unlikely that such a proposal could ever pass the Congress.”
There is some evidence, though, that voters might be more open-minded than lawmakers. A YouGov poll commissioned by the Democracy Collaborative, a worker-ownership advocacy group, last month found that fifty-five per cent of Americans would somewhat or strongly support a plan that would require companies with more than two hundred and fifty employees to put a ten-per-cent share of their stock into an employee-controlled fund annually, which would put up to half of each company’s stock into employee hands over time. “Americans are really, really positively predisposed to the idea of worker ownership in companies in a way that they are not at all about government ownership of companies,” Peter Gowan, of the Democracy Collaborative, told me. “Now, I am a big supporter of public ownership, but this is a really striking finding.”
Whether that translates into support for Sanders’s proposals remains to be seen. But he may nevertheless raise the profile of worker-ownership policy enough to encourage other Democrats to advance their own ideas, in much the same way that his Medicare for All advocacy and the rise of the Green New Deal have prompted more ambitious health-care and environmental proposals. If so, he will push the Party not only further left but deeper left, putting the basic structure of the American economy up for debate.
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