Labor Day is an important reminder of the sacrifices and contributions of American workers. But as we commemorate this day, we must confront a sobering reality: our economic system is increasingly stacked against them.
Pew reports two-thirds of voters think corporations make too much profit. Three in four believe the economy unfairly benefits powerful interests. Workers still struggle from decades of wage stagnation and labor’s share of income recently reached its lowest point since the Great Depression. Federal Reserve data indicates that the wealthiest 1% own half of all stock shares worth a record $46 trillion, while the bottom 50% collectively own just 1% of shares worth $3.7 trillion.
This Labor Day, I hope we can all take a moment to recognize the risk workers take everyday—often, with little reward. Fortunately, there are steps we can take to address this challenge head on. One that I firmly believe in: employee ownership.
The great risk shift
Our economy disproportionately rewards those who own capital, reflecting a systemic assumption that those who write the checks take the highest risk. In reality, workers risk and invest so much more into building strong businesses. Many workers risk their lives while on the job. Overtime, the difference in how much workers and the 1% risk has expanded in what Yale political science professor Jacob Hacker calls “the great risk shift.” For instance, 401(k) plans have replaced pensions, placing the burden of retirement on workers. At many organizations, full-time jobs have been cut in favor of gig-, temporary-, and part-time work. Independent workers like ride-share drivers, who are often misclassified and lack worker protections, shoulder the costs of doing their jobs, like buying, maintaining, and insuring a vehicle. And lest we forget, AI is poised to restructure, and potentially cut, jobs too.
The most fundamental risk workers take on when they accept any job is if it will pay enough to meet basic needs like food and housing. In fact, almost 25% of U.S. workers earn less than $17 an hour. Plus, workers can be let go anytime without reason, with few exceptions. Still, workers invest time and energy into their jobs and bet on a brighter future.
Parents bet that the time they sacrificed to work, instead of bonding with their children, will pay off. When a business falters, workers bear the costs first — in jobs, income, and benefits, the loss of which can ruin lives. When profits soar, shareholders flourish while workers rarely benefit—and often, languish. In this “heads I win, tails you lose” arrangement, what better choice do we have?
Potential solutions
Employee ownership has caught the attention of Congress. Members on both sides of the aisle have attended the Employee Ownership Ideas Forum. It offers a way to help rebalance risks and rewards between labor and capital. Through employee ownership, workers own shares in the company or have the right to the value of shares.
Kevin Clegg, CEO of Clegg Auto in Utah, saw many business transitions during his career where the workers and customers suffered. Kevin told me, “Our employees are the reason we are here today. We wanted an ownership structure that rewards everyone.” Clegg established an employee ownership trust (EOT) that shares 40% of the profits with workers. Rick Plympton, CEO of Optimax Systems, another EOT, says, “Employee ownership is an evolution in capitalism where the wealth generation of the firm is shared with the employees.”
Workers in Employee Stock Ownership Plans (ESOPs) receive shares in the company. The approximately 11 million workers in ESOPs have an average wealth of $165,000 in their ESOP accounts. In this wealth generating power, some see an opportunity to help shrink the racial wealth gap. For instance, Sky Blue Builders in Colorado recently became an ESOP with help from Apis & Heritage, a firm assisting companies with large numbers of workers of color convert to employee ownership. President Mowa Haile recently explained that the long-term security of the workers concerned him and converting to employee ownership rather than an outside buyer “felt right.”
Research shows workers in ESOPs also often earn good wages, have a range of benefits, and receive more training. Workers in ESOPs enjoy higher job security and stability because employee-owned companies are resilient to downtowns. ESOP workers are also less likely to be injured at work.
Workers want more of a fair say at work. The National Bureau of Economic Research has found that employee ownership is linked to higher worker participation in decisions. Worker-owned cooperatives are democratically owned and managed under the principle of one worker, one vote. At Opportunity Threads, a cooperatively owned textile manufacturer in North Carolina, founder Molly Hemstreet says she sees “giving agency and voice to workers” as an integral part of “building an economy which lifts us all.”
Amidst an economy failing to help everyone rise, faith in democracy is at an all-time low. Rebalancing these risks and rewards of work is critical to believing our institutions work. Employee ownership alone cannot solve this challenge. We need fairer taxes, a stronger safety net with economic guarantees, care infrastructure, and updated labor laws with adequate enforcement. But in this polarized time, growing employee ownership may give us some of the inspiration and shared purpose needed to recommit to democracy and continue the struggle toward a fairer economy and society.
As policymakers deliberate on the future of labor and economic policy, embracing employee ownership offers a promising path toward a more equitable economy. By reforming labor laws and supporting employee ownership initiatives, we can foster a fairer system where workers have a stake in the success they help create. This Labor Day, let’s champion policies that ensure our economic system fairly rewards everyone, not just the few.
Matt Helmer is the managing director of the Aspen Institute Economic Opportunities Program.
