The Political Economy of Employee Ownership in the United States: From Economic Democracy to Industrial Democracy?

Abstract

This study examines the development of economic democracy in the United States since the 1700s with particular emphasis on the last 30 years. The particular focus is on employee ownership, although the phenomenon of profit sharing receives some attention. The nature of research and documentation on the subject is reviewed. The study concludes that research in the area has emphasized narrative studies of particular companies and sectors until the 1980s. At that time the support for the concept by the US Federal Government created reporting requirements for companies to the US Department of Labor and the US Internal Revenue Service (the taxation authority) and the US Securities and Exchange Commission. These data-sets have made systematic research on the phenomenon possible. Results of the first national random sample of employed individuals and work sites on the incidence of employee ownership and profit sharing are presented. Finally, we conduct a political economic analysis of the phenomenon. We demonstrate that, despite the growth of employee ownership in particular, a form of employee ownership has developed which encourages workers to use their savings to buy stock in their companies. This form dominates employee ownership in terms of the number of workers, firms, and dollar assets involved. Nevertheless, there is significant employee ownership in a group of closely held firms that use traditional ESOPs (Employee Stock Ownership Plans) and in a group of publicly traded high technology companies that use broad-based stock options. These two sectors offer fertile territory for the development of both economic democracy and nascent forms of industrial democracy.