ESOPs and the Limits of Fractionalized Ownership

Summary

“In early 2016, business headlines reported three different stories about companies taking non-traditional steps in compensating their employees. The owner of Chobani, the popular yogurt producer, had given away ten percent of the company’s shares to its employees. These shares were worth over $100,000 for Chobani’s most recent hires and reached over $1,000,000 in value for its more senior workers. A few months earlier, Southwest Airlines had announced that it would be distributing close to a third of its record $2.2 billion profit in 2015 to its employees, representing fifteen percent of their total compensation. Near the same time, the U.S. Department of Labor had celebrated the achievements of the New Era Windows Cooperative in Chicago, worker-owned business which was growing after years of struggle emerging from the bankruptcy of its earlier employer-owner. What all three stories shared in common was that they each garnered commentary as representing some variation of “capitalism done right.” The popular resonance of this theme among these different workplace practices reflects the significant hunger for alternatives to what many consider to the ongoing crisis of economic legitimacy in the United States and around the globe.

Across a myriad of countries and political regimes, the twentieth century has witnessed a recurrent rise and fall of economic ideologies. The rapidity of these cycles has only increased following deepening global interconnection and the hurtling speed of capital mobility. The organizing logic of the Cold War offered a rough binary of political affiliation that masked quite significant variations of capitalism, but the Cold War’s end has yet to result in movement towards any truly global ideology. Herein, the attractiveness of “Third Way” conceptualizations of economic development promised justice without revolution by combining the presumed benefits of free markets and various forms of social security. The limited traction of these “Third Way” paradigms has been matched by cyclical attractions to more centralized, state-led capitalism, in what, until recently, had popularly been called the “BRICS” nations.

What is striking is that stories like those of Chobani, Southwest, and New Era Window draw on an ideal of “employee ownership” that has co-existed during all of these pendulum-like swings in economic ideology.”