While Hillary Clinton and Bernie Sanders are battling it out on the appropriate rate for minimum wage ($12 and $15, respectively), economic policies pertaining to “shared ownership” strategies, such as employee ownership and profit-sharing, deserve greater attention. Both forms of shared ownership have been shown to boost economic growth by increasing productivity, profits, wages, and firm innovation. Both Clinton and Sanders support shared ownership; in order to determine what policies will be most beneficial, an in-depth dialogue on the merits of these plans is essential.
Sanders has introduced two bills on employee ownership. Under his Worker Ownership, Readiness and Knowledge Act, the Department of Labor would provide funding to states to establish employee ownership centers. Modeled on the success of the Vermont Employee Ownership Center, these centers would provide training and support for programs promoting employee ownership. A second bill would establish a US Employee Ownership Bank to provide loans that enable employees to purchase businesses, either through an employee stock ownership plan or a worker-owned cooperative.
Building off the momentum of Market Basket, Clinton’s “Rising Incomes, Sharing Profits” plan proposes that companies that share profits with their employees would receive a two-year tax credit equal to 15 percent of the profits they share. The tax credit would be higher for small businesses, phase out for higher-income workers, and would only be available to firms that share profits widely among employees. The overall cost of the tax credit is estimated at 20 billion over 10 years and would be paid for through the closure of tax loopholes. According to Clinton, this investment is expected to boost to the economy by increasing the wages of millions of employees.
We need to ensure that all forms of shared ownership are widely available to businesses and their employees. Shared ownership arrangements are more common in technology and manufacturing firms but not in service-sector jobs like retail, food services, and hospitality, where low-paid jobs are concentrated. Thus policies must ensure that businesses are aware of any shared ownership opportunities, and additional capacity building and incentives are offered for the service sector to ensure all citizens have full access to shared ownership.
Shared ownership policies certainly do not negate the need for an increased minimum wage. Nor will employee ownership or profit sharing solve all problems related to inequality. But shared ownership needs to be universally accessible in order to unleash the talent and promote economic growth across Massachusetts.
Republican candidates haven’t said much on shared ownership, but they should, since it is a plus for business and the economy. As Republican President Ronald Reagan said in a 1987 speech for the Presidential Task Force on Economic Justice: “[I]n the future we will see in the United States and throughout the Western world an increasing trend toward the next logical step, employee ownership. It is a path that befits a free people.”
Susan Crandall is director of the Center for Social Policy at the McCormack Graduate School of Policy and Global Studies at UMass Boston.