Labor Day is a time to call for worker ownership and better worker protection

Labor Day is an important reminder of the sacrifices and contributions of American workers. But as we remember this day, we have to face a startling reality: our economic system is piling up against them.

Pew reports that two-thirds of voters think companies make too much profit. Three out of four believe the economy unfairly benefits powerful interests. Workers are still struggling from decades of stagnant wages and the labor wage share recently hit its lowest level since the Great Depression. Federal Reserve data shows that the richest 1% own half of all stocks worth a record $46 trillion, while the bottom 50% collectively own $3.7 trillion worth of stocks.

This Labor Day, I hope we can all take a moment to recognize the risks that workers take every day—often, with little reward. Fortunately, there are steps we can take to address this challenge head on. What I strongly believe in: employee ownership.

A major risk shift

Our economy disproportionately rewards those who own the money, which reflects a systematic assumption that those who write the checks are at the greatest risk. In fact, workers take risks and invest heavily in building strong businesses. Many workers risk their lives while on the job. Over time, the difference in how much labor and the 1% risk adds up to what Yale political science professor Jacob Hacker calls “the big change in risk.” For example, 401(k) plans have replaced pensions, placing the burden of retirement on employees. In many organizations, full-time jobs have been cut in favor of gig-, part-time, and part-time work. Self-employed workers like ride-share drivers, who are often unfairly classified and lack worker protections, bear the costs of doing their jobs, such as buying, maintaining, and insuring a car. And lest we forget, AI is poised to reorganize, and potentially eliminate, jobs too.

Workers take the biggest risk when accepting any job whether it will pay enough to meet basic needs such as food and housing. In fact, about 25% of US workers earn less than $17 an hour. In addition, employees can be let go at any time without reason, with few exceptions. Nevertheless, employees invest time and energy in their work and bet on a bright future.

Parents are betting that the time they sacrifice to work, instead of spending time with their children, will pay off. When business falters, workers bear the cost first—in jobs, income, and benefits, the loss of which can ruin lives. When profits rise, shareholders prosper while workers rarely benefit—and are often disempowered. In this arrangement of “heads I win, tails you lose,” what better choice do we have?

Possible solutions

Labor ownership has caught the attention of Congress. Members from both sides of the forum attended the Employee Ownership Ideas Forum. It provides a way to help balance the risks and rewards between labor and capital. With employee ownership, employees own shares in the company or are entitled to a number of shares.

Kevin Clegg, CEO of Clegg Auto in Utah, saw many business changes during his career where employees and customers suffered. Kevin told me, “Our employees are the reason we are here today. We wanted an ownership structure that rewarded everyone.” Clegg established an Employer Ownership Trust (EOT) which shares 40% of the profits with the employees. Rick Plympton, CEO of Optimax Systems, another EOT, says, “Employee ownership is an evolution of capitalism where the generation of the firm’s wealth is shared with the workers.”

Employees in Employee Stock Ownership Plans (ESOPs) receive shares in the company. The nearly 11 million employees in ESOPs have an average savings of $165,000 in their ESOP accounts. In this wealth-generating potential, some see an opportunity to help reduce the racial wealth gap. For example, Sky Blue Builders in Colorado recently became an ESOP with help from Apis & Heritage, a company that helps companies with large numbers of employees transition to employee ownership. President Mowa Haile recently explained that the long-term security of workers concerns him and the transition to worker ownership rather than a foreign buyer “feels right.”

Research shows that employees in ESOPs also tend to earn better salaries, have a range of benefits, and receive more training. Employees in ESOPs enjoy higher job security and stability because employee-owned companies are more resilient to cities. ESOP employees are also less likely to be injured on the job.

Workers want a fair voice at work. The National Bureau of Economic Research found that employee ownership is linked to the participation of top employees in decisions. Workers’ cooperatives are democratically managed and run 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 important part of “building an economy that lifts us all up.”

In the midst of an economy that is failing to help everyone rise, faith in democracy is at an all-time low. Re-balancing these risks and rewards of work is essential to making sure our institutions work. Employee ownership alone cannot solve this challenge. We need fair taxes, a strong safety net with economic guarantees, maintenance infrastructure, and revised labor laws with adequate legislation. But in this age of apartheid, growing worker ownership may give us the motivation and shared purpose needed to recommit ourselves to democracy and continue the struggle for a just economy and society.

As policymakers ponder the future of labor and economic policy, embracing worker ownership offers a promising path toward a more equitable economy. By changing labor laws and supporting employee ownership programs, we can promote a fairer system where employees share in the success they help create. This Labor Day, let’s fight for policies that ensure our economic system rewards everyone, not just the few.

Matt Helmer is the executive director of the Aspen Institute Economic Opportunities Program.