The Washington PostDemocracy Dies in Darkness

Bernie Sanders backs 2 policies to dramatically shift corporate power to U.S. workers

Presidential candidate Sen. Bernie Sanders of Vermont holds the first home state rally of his 2020 campaign on May 25 in front of the Statehouse in Montpelier. (Lisa Rathke/AP)

Sen. Bernie Sanders (I-Vt.) will push new policies aimed at giving workers a greater ownership stake in companies, moves the 2020 presidential candidate is pitching as a dramatic transfer of power in the U.S. economy.

The plans would give millions of workers the type of workplace influence typically reserved for shareholders and executives.

Supporters say giving workers a greater ownership stake could boost wages for American workers and force companies to focus on long-term results, while critics contend the plans could cause investors to take their money overseas.

The proposals also suggest Sanders may aim to expand his campaign beyond the issues that defined his 2016 presidential bid — particularly social safety net expansions such as Medicare-for-all and free college tuition — and into other areas of labor policy. They would likely require a complete sweep of Democratic officials in Congress and the White House to be enacted.

“We can move to an economy where workers feel that they’re not just a cog in the machine — one where they have power over their jobs and can make decisions,” Sanders said in an interview. “Democracy isn’t just the opportunity to vote. What democracy really means is having control over your life.”

Sanders said his campaign is working on a plan to require large businesses to regularly contribute a portion of their stocks to a fund controlled by employees, which would pay out a regular dividend to the workers. Some models of this fund increase employees’ ownership stake in the company, making the workers a powerful voting shareholder. The idea is in its formative stages and a spokesman did not share further details.

Sanders also said he will introduce a plan to force corporations to give workers a share of the seats on their boards of directors. Sen. Elizabeth Warren (D-Mass.), another 2020 presidential candidate, proposed a similar idea last year.

Both ideas are expected to face significant opposition from the business community, as well as criticisms that they would discourage entrepreneurs from starting businesses and lead investors to seek to put their money overseas.

Warren, Sanders and Sen. Kirsten Gillibrand (D-N.Y.), another 2020 candidate, have increasingly pitched ways to address soaring wealth inequality by giving workers a bigger ownership stake in their companies, pushing to give employees increased authority over the profits and decisions made by their employers. That represents an important new area of focus in economic policy for Democratic politicians, economists said.

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“There seems to be a virtuous competition setting in between these candidates in reexamining the fundamental relationship between capital and labor,” said Robert Hockett, who teaches law and finance at Cornell University and has worked with Democratic members of Congress on economic policy. “The idea here is to make capitalists of the laborers, and I think it’s one that could catch on as we get closer and closer to the 2020 election.”

Sanders on Friday also reintroduced in the Senate a series of measures to increase the percentage of the American workforce in “employee-owned” ownership models. Those policies include a $500 million bank to finance company transitions to worker cooperatives, new legal requirements that owners give their workers an opportunity to purchase firms that are closing and federal funding to create centers in all 50 states that would encourage employee-owned businesses. These ideas are not gaining traction in the Republican-controlled Senate.

About 25 million workers already own some stock in the company where they work. The United States has about 7,000 companies set up as Employee Stock Ownership Plan businesses — where the ownership can be most significant — representing about 11 million workers, according to research based on federal data by Joseph R. Blasi and Douglas L. Kruse of the Rutgers University Institute for the Study of Employee Ownership and Profit Sharing.

Research by Blasi, Kruse and other academics has also found that employee-owned businesses have smaller racial and gender wealth imbalances, higher savings, higher wealth closer to retirement and other benefits. The academics have also found that these firms increase sales and employment by about 2 percent per year, although the ranks of employee-owned companies have shrunk.

Sanders would become the first member of Congress to propose requiring corporations to create a fund of shares for their employees, said Peter Gowan, a policy associate at the Democracy Collaborative, a left-leaning think tank, who has advocated for the concept.

Sanders also did not provide details on his plan to force corporations to let workers control a share of their boards of directors. Warren has proposed a “co-determination” plan that would require U.S. corporations worth more than $1 billion to let company employees select 40 percent of the company’s board of directors.

These ideas have been met by resistance from the business community, who say the government interventions may inhibit the incentives for entrepreneurs to start new businesses. Jim Kessler, senior vice president of policy at the centrist think tank Third Way, which has been critical of Sanders, said the plans may do little to cover custodial or food service workers at companies, given that these services are sometimes contracted out to non-employees.

Still, the idea to increase the number of worker cooperatives and employee-owned businesses has a degree of bipartisan support, at least for less radical measures. A number of GOP lawmakers, including Sens. Pat Roberts (R-Kan.) and Thom Tillis (R-N.C.), have pushed legislation to encourage technical assistance and other help to boost employee-ownership firms. Last year, Congress approved a plan by Gillibrand intended to bolster assistance from the federal Small Business Administration for worker cooperatives and employee-owned businesses.

These proposals are a response to a widening gap in the U.S. economy, said Blasi and Kruse, the Rutgers economists. The wealthiest 10 percent of Americans currently own 97 percent of all capital income, including all capital gains, interest payments and corporate dividends.

“With real wages being flat, looking at employee ownership and profit-sharing is a compelling way for the middle class to get a share of the benefits of ownership,” Blasi said. “If we don’t find a way to include the middle class in share of ownership, then capitalism is dead. That’s basically it.”