How Employee Ownership can Reduce the Wealth Gap

Last year, I visited Minnesota-based Room & Board, which had recently transitioned to something called an ESOP (Employee Stock Ownership Plan); the furniture maker is now 100% owned by its employees. Not many companies have tried to make an ESOP work. But the structure deserves more attention and consideration than it’s getting. An ESOP can give employees a true stake in a company’s success, which yields more than warm, fuzzy feelings — it can lead to increased productivity and dramatically lower turnover. And if their efforts help the business thrive, it can put significant returns into employees’ pockets. (Just ask the so-called Publix Millionaires famously minted by the grocery chain’s ESOP.) Turning employees into shareholders also has the potential to chip away at the growing US wealth gap. Over the last 50 odd years, the top 0.01% has grown its wealth nearly six times as fast as the bottom 50%. One of biggest drivers of this disparity is the fact that some 40% of Americans own no stock. Most companies perpetuate the problem by granting stock only to those at the very top of the org chart; at an ESOP, all employees get shares in the company. Here's my deep dive into Room & Board and ESOPs for Bloomberg Opinion. https://lnkd.in/ePfXpkYz

🏭 What happens when heartland entrepreneurs become employee-owners? The results are transforming American communities. I'm incredibly proud to highlight the exceptional work of my colleague Margot Brandenburg at Ford Foundation, whose strategic investments in America's heartland are proving that when workers build wealth—not just wages—entire communities prosper. The challenge: Over half of U.S. business owners are aged 55+. When these founders retire, too many businesses leave town, taking jobs and prosperity with them. Margot's solution: Strategic partnerships supporting employee ownership, a time-tested American approach where workers become stakeholders in the companies they build. The impact is remarkable. → Employee-owned companies are about 50% less likely to disappear than traditional firms  → 3-4x better employee retention during the COVID-19 pandemic  → Workers achieve 92% higher median household net worth through ownership  → Independent businesses return 3x more money to their local communities From Bentonville's Gnargo Bike Co. transforming abandoned steel bikes into custom e-bikes, to Iowa manufacturers staying local through employee buyouts, Margot's work embodies the best of American entrepreneurship. This isn't about changing capitalism—it's about strengthening it. When every worker has skin in the game, businesses thrive, communities grow stronger, and the American dream becomes accessible to more families. Employee ownership represents free enterprise at its finest. Rewarding hard work with real ownership, keeping successful businesses rooted in their communities, and creating Main Street prosperity that lasts generations. Margot's energy, dedication, and strategic vision exemplify Ford Foundation's commitment to building opportunity for all Americans. Her catalytic investments are drawing other funders and investors to support this proven model across the heartland and beyond. The results speak for themselves: stronger businesses, wealthier workers, and more resilient communities. This is how we build an economy that works for everyone who's willing to work hard and contribute. Join me in celebrating Margot's exemplary leadership in strengthening America's economic foundation—one employee-owned business at a time. What would change if more American workers owned the companies they help build? Share your thoughts below 👇 https://bit.ly/44ieEde #EmployeeOwnership #AmericanManufacturing #HeartlandInnovation #MainStreetEconomy #CommunityInvestment

My latest in Forbes summarizes the recent The Aspen Institute conference on employee ownership, explaining how it could be a double-dividend that counters income inequality and encourages upskilling. 🔍 📈 AI and Growing Income Inequality: A recent Gallup poll indicates a growing unease among Americans regarding AI's impact on employment, with 22% expressing concern in 2023, up from 13% in 2017. And much of these concerns are driven by the polarization we've seen take place in the labor market - the thinning of the middle class. But AI has the potential to generate different effects from automation. “You can think of automation as a machine that takes a job’s inputs and does it for the worker,” whereas “you can think of augmentation as a technology that increases the variety of things that people can do, the quality of things people can do, or their productivity,” David Autor explained to me. Upskilling remains a critical strategy for workers aiming to adapt to rapid technological changes. However, widespread low employee engagement levels pose a significant hurdle to this necessary evolution. Without the desire and drive to develop new skills, many workers may find themselves sidelined in the evolving economy. 🌟 Employee Ownership as a Catalyst: One innovative solution that's gaining bipartisan support is employee ownership. This approach not only boosts engagement by giving workers a stake in their company's success but also helps mitigate income disparities by aligning personal growth with organizational achievements. It is also one of few bipartisan topics in Washington. “Employee share ownership naturally interests conservatives who believe that more broad-based property ownership is good for democracy and naturally interests liberals who like the idea of more inclusive participation in the economy,” said Joseph Blasi. "The Employee Ownership Ideas Forum was an opportunity to bring together experts to highlight and explore what a more supportive policy environment could be, and what that would mean for expanding employee share ownership in the US... One of our priorities at this year's forum was to examine and celebrate some of the developments in state policy that we have seen in recent years," said Matt Helmer. 🔄 Evidence from StoneAge Waterblast Tools: StoneAge is a 100% ESOP owned company. “Our employee owners are here for more than a paycheck; they feel deeply responsible for the health and performance of the company because when the company does well, so do they... Because our employee owners are invested in the long term success of the company, they actively seek growth opportunities and are excited about learning new skills,” Kerry Siggins continued. Link in comments - read for more! #FutureOfWork #ArtificialIntelligence #IncomeInequality #EmployeeOwnership #Upskilling #EconomicGrowth

99.9% of workers build companies they'll never own. So this woman created a model that turns employees into owners. The result? 66 companies now share $350M with their workforce. Here's her wealth-sharing blueprint that's transforming American business: Picture this: Millions of Americans building empires they'll never own a piece of. Working late nights. Solving problems. Creating value. All while watching executives cash in on equity packages. Something had to change. That's when a revolutionary idea emerged: What if EVERY employee could become an owner? Not just the C-suite. Not just management. Everyone. Anna-Lisa Miller, as Executive Director of Ownership Works decided enough was enough. She was sick of the old system being rigged: • Executives get wealthy through equity • Workers get stuck with stagnant wages • The wealth gap becomes a wealth canyon Then came her breakthrough. She approached the unlikeliest of allies: private equity (PE) firms. The pitch? Transform companies by making EVERYONE an owner. And Miller was determined to turn this dream into reality. Her blueprint was elegantly simple: • Partner with investors who want better results • Structure company-wide ownership programs • Build genuine "ownership culture" The results are staggering: • 66 companies revolutionized • 95,000+ new employee-owners • $350M+ distributed to workers • Skyrocketing engagement • Plummeting turnover But here's the real magic: They don't just hand out equity and hope for the best. They build complete ownership ecosystems: • Regular owner meetings • Financial literacy programs • Value tracking • Real decision-making power The movement is exploding: • Spreading to family businesses • Public companies joining in • 90+ programs launched • 110,000+ lives changed Why does this matter? Because it proves what's possible when we reimagine capitalism. The data is clear. Companies with employee ownership see: • Higher productivity • Better wages • Stronger job security • Greater resilience The old system made a few people wealthy. This system makes entire companies wealthy. For 100 years, we accepted that workers build wealth for others. In just 2 years, 95,000 workers are building wealth for themselves. This is what visionary leaders do. They don't just build companies. They build legacies that lift thousands of lives. And they change the game forever. - Want to discover how great leaders leave legacies like this? • Join the 300,000+ leaders who get our weekly email newsletter: https://lnkd.in/en9vxeNk • Become part of our leadership community at https://lnkd.in/etZGVhtE • Follow for daily insights on leading high-performing teams • Share with leaders in your network 🔁 Lead with impact. #EmployeeOwnership #BusinessTransformation #Leadership #Equity