Your Federal Quarterly Tax Payments are due April 15th Get Help Now >>

ILPC2010paper 10810 by jsD36d4

VIEWS: 0 PAGES: 2

									                       Symposium on Shared Capitalism and Worker Appropriation

The ongoing economic crisis in the US and world economies has called the governance structures of both
financial and non-financial enterprises into question. This symposium presents new work from two
strands of research on employee ownership and economic democracy. The notion of “shared capitalism”
covers a variety of forms of worker participation and gains sharing that are already quite common in the
US. The notion of “worker appropriation” looks more narrowly at how the surplus is appropriated at firm
level. Building on cases studies and statistical analysis of survey data these research programs tell us quite
a bit about the potential economic and political benefits and costs of providing workers both more voice
in management, as well as greater dependence on the financial health of their enterprises. Richard
McIntyre will introduce the panel.

According to Doug Kruse, almost half of American private-sector employees participate in employee
ownership, profit sharing, gainsharing, and/or broad-based stock options. He refers to these plans that
directly tie worker pay or wealth to workplace performance as "shared capitalism." Such plans are often
associated with greater employee participation in decision-making and information sharing, and may help
increase worker pay, wealth, and quality of work life. More broadly, they have attracted interest for their
potential to affect economic performance and the societal income and wealth distribution. They can also,
however, present serious issues of financial risk for employees, particularly if they substitute for other pay
or wealth, and have the potential to worsen workplace relations.

Kruse’s presentation is based on the National Bureau of Economic Research (NBER)'s Shared Capitalism
Research Project. For an extensive view of shared capitalism, he put questions on the 2002 and 2006
General Social Surveys, containing representative samples of American workers. For an intensive view he
conducted detailed surveys of over 40,000 employees in 14 companies with different combinations of
shared capitalism plans, analyzing a wide variety of measures affecting workplace performance (e.g.,
turnover, loyalty, response to shirkers) and worker outcomes (e.g., pay, supervision, training, job
security), with special attention to how shared capitalism may interact with other workplace policies.
Shared capitalism is generally linked to positive outcomes for both workers and firms, with more positive
outcomes when it is combined with employee involvement, training, job security, and above-market
wages, and less positive outcomes when it is combined with close supervision. The results indicate that
there may be significant potential for broad expansion of shared capitalism.

Erik Olsen will discuss his research on the growth of majority employee-owned (MEO) enterprises in the
U.S. Overall employee ownership in the U.S. has grown to the point where more than one in six workers
currently own some equity in the company they work for. But an increasing share of U.S. workers is
employed in firms where the employees of that firm own the majority of the equity. These enterprises
add an additional dimension to employee-ownership because the employees have an enhanced degree of
control over of the firm. These MEO firms range from worker cooperatives, which typically combine
employee ownership with egalitarian principles and participatory management, to firms that are majority
employee-owned but operate in ways that are not substantially different from conventional capitalist
enterprises. In the U.S. there are currently several hundred worker cooperatives employing several
thousand workers, but there are several thousand MEO firms with close to one million employees. Thus
majority employee-ownership is no longer an ephemeral or utopian endeavor, but rather has become a
viable, and increasingly common, way to organize an enterprise in the U.S.

The growth of these types of firms raises a number of interesting questions. For example, given that the
ownership structure of the MEO firm is different from other types of firms, is their internal structure (e.g.
ratio of production to supervisory labor, use of work groups, etc.) also different? Furthermore, recent
years have seen the growth in state and local policy initiatives to foster the growth in MEO firms.
Typically these have been designed either to preserve local employment that might otherwise be lost
through ownership succession, or to bring new employment to areas with high unemployment. But it is
likely that MEO firms also provide benefits to workers and communities that have not been adequately
recognized, and these benefits may provide additional bases for policies supporting them. Despite the
growth in MEO firms very little is known about them. Because they are almost exclusively closely-held
they are under no obligation to make information publicly available, and hence most of the basic
information about them is a matter of conjecture. How these firms are organized, what industries they are
most commonly found in, and how they became majority employee-owned is simply not well known.
Olsen will discuss his current research, which is intended to provide insight into some of the unanswered
questions about majority employee ownership in the U.S.

Daphne Berry and Stu Schneider examine the decision-making processes for allocating the net profit
earned by one business that utilizes shared-ownership and participatory decision-making practices.
Cooperative Home Care Associates (CHCA), currently the nation’s largest worker-cooperative by
employment, has developed an innovative process for determining the allocation of its annual net profit
as: a) retained earnings; b) dividends; c) 401(k) plan contributions; and d) bonuses. While structured as a
worker-cooperative, CHCA’s operations reflect some characteristics of a shared-capitalist enterprise.
Because of dispersed work sites and limited levels of education for most of CHCA’s 1,600 employees,
some non-owner involvement is called for. However, worker-owners make final determinations regarding
this surplus.

Specifically, a majority of all employees who have purchased an ownership stake in the company must
vote to approve the allocation of annual profit as recommended by CHCA’s senior management and
accepted by its Board of Directors. If a majority of worker-owners votes against an allocation as proposed
by the cooperative’s senior management, the Board of Directors must recommend another allocation for
approval. Notably, eight of fourteen members of CHCA’s Board of Directors are home care workers
elected to their positions by all worker-owners. They provide insight into the practices used by CHCA to
help its 1,600 home care workers learn about the company’s finances so they can make informed
decisions with respect to the annual vote on a proposed allocation of net profit.

Using her case study of Broadway musicians, Cathy Mulder argues that worker or collective
“ownership” of the means of production may be sufficient but is not necessary for a democratic
workplace. Mulder focuses on exploitation, which she defines as the appropriation of surplus at the firm
level by someone other than its direct producer. She gives concrete suggestions on how workers might
eliminate exploitation in their workplaces without necessarily having to own a share in the particular
enterprise. She argues that collective appropriation and the subsequent distribution of the surplus value is
the key to a non-exploitative and possible democratic workplace. Mulder shows how a trade union, in
this case, the Associated Musicians of Greater NY, Local 802, AFM, can facilitate a revolutionary change
in the form of a capitalist enterprise to a collective and discusses the union’s likely role after that change.

								
To top