Imagine hundreds of employees walking off the job not to protest against their boss, but to save his job. That’s not something you see every day — yet it’s exactly what workers at Market Basket supermarkets across New England did last year for Arthur T. Demoulas. What explains this unusual loyalty?
Market Basket is one of a growing number of companies that are prospering by viewing workers as assets to be developed rather than costs to be cut. Research out of MIT has shown that well-paid and well-trained employees tend to work more efficiently, stay on the job longer, and provide better customer service. So investing in employees is not just the right thing to do — it’s smart economics.
At Market Basket, the centerpiece of this approach has been a generous profit-sharing program that gives all employees a stake in the company’s success and puts much-needed extra money in their pockets as well. At a time when paychecks have barely budged in real terms for most Americans, a boost from profit sharing can make a real difference for families dealing with rising costs of everything from prescription drugs to childcare. And, as we saw when Demoulas was temporarily ousted as Market Basket CEO, profit sharing can build real loyalty as well.
When a company does well, employees deserve to share in the success. And if profit sharing can be such a win-win, what can we do to encourage more companies to adopt similar programs and share more of their profits with employees?
This question is part of a broader challenge for our country. We urgently need to get wages rising and incomes growing again so more hard-working families can afford a middle-class life. That’s why I have outlined an agenda for strong growth, fair growth, and long-term growth. We need all three if we want to make our economy work for everyone, not just those at the top.
Profit sharing is not a silver bullet by any means, but as economists from Harvard and Rutgers have documented, it can have “meaningful impacts on workers’ wealth.”
With this evidence in mind, I am proposing a new tax credit that will provide an incentive for more businesses to share their profits with employees.
A company starting or continuing a profit-sharing program would receive the credit for two years, and it would equal at least 15 percent of the profits that companies share on top of an employee’s base salary. Small businesses would receive an even higher rate to defray any costs of implementing the program. We would put in place strong protections against any potential fraud or abuse, and to ensure that profit sharing supplemented — not substituted — for regular wages, benefits, and pay raises. And the new credit would be fully funded by closing tax loopholes for big corporations and the wealthy, so it won’t add a dime to the deficit.
Beyond the details, this plan represents a model for how we can solve some of the toughest problems in our country. If we put the right incentives in place, market forces can help drive more virtuous cycles and fewer races to the bottom. I believe many business leaders do want to do the right thing and invest in their workers. In fact, some of America’s most successful companies, from Southwest Airlines to Wegmans, have already created profit-sharing programs of their own. Now we need to make it easier for more businesses to join them.
This may sound like a common-sense approach that should appeal to people across the political spectrum. But you’re unlikely to hear the Republican candidates for president embrace this profit-sharing proposal any time soon. Instead, they’re going to keep pushing the same top-down policies that wrecked our economy before: Cut taxes for the super wealthy, let big corporations write their own rules, and that’s about it.
For example, former Florida Governor Jeb Bush scrambled recently to explain his statement that Americans need to work longer hours. He now says he just wants part-time workers to be able to find full-time jobs. Well, I do too. There’s just one problem. His policies – and the policies of all the Republican candidates – make that harder, not easier.
Americans don’t need a lecture. They need a raise.
Far-sighted business leaders like Market Basket’s Demoulas recognize that lasting prosperity doesn’t come from chasing the next quarterly earnings report, laying off workers, or holding down wages. It comes from investing in American talent and innovation, the engines of real growth. That’s true for our businesses and it’s true for our country.
My mission is to renew the basic bargain of America: If you work hard and do your part, you and your family should be able to get ahead and stay ahead. And when you get ahead, America will get ahead too.
Former Secretary of State Hillary Clinton is a Democratic candidate for president.