Tags: Folbre | worker | owner | company

Having More Worker-Owners Would Help Productivity, Innovation

By    |   Tuesday, 14 January 2014 07:11 AM

A growing number of politicians and economists are advocating more workers who own a part of the business employing them, known as worker-owners.

A new book by Rutgers professors Joseph Blasi and Douglas Kruse and Harvard economist Richard Freeman, "The Citizen's Share," argues that shared ownership raises productivity, increases innovation and promotes better working conditions.

At least some legislators in both parties support policies that could encourage creating more worker-owners, Nancy Folbre, professor emerita of economics at the University of Massachusetts, Amherst, writes in an article for The New York Times.

Editor’s Note:
Retire 10 Years Earlier With These 4 Stocks

For instance, Rep. Dana Rohrabacher, R-Calif., has proposed that stock widely distributed to employees should not be taxed as income and that it should be exempt from capital gains taxes if held for more than 10 years.

In addition, the government in Britain, which also has a tradition of worker ownership, has implemented tax incentives to boost employee ownership.

Yet there's a potential obstacle to encouraging more worker-owners, Folbre warns. Those already holding power might fight the movement, even it does improve performance.

Recent research indicates that managers want to remain in power even it's not in the best interest of the company. In laboratory experiments, some people preferred to wield power even if it's costly to them, she notes, pointing to the article "The Lure of Authority: Motivation and Incentive Effects of Power" published in the American Economic Review. Meanwhile, many underlings, who resent their lack of power, underperform even if it means they earn less.

Many economists question why government policies are needed.

"Presumably, corporations can figure out on their own if expanding worker ownership is advantageous and move in that direction without the distortionary effects of tax incentives," Folbre explains.

However, evidence shows that corporations are motivated my more than taxes, she argues.

Still, many commentators support greater employee ownership. Saying it helps employees, shareholders and businesses, tax policy expert Dean Zerbe calls the idea "a cure all" in an article for Forbes.

Although 47 percent of full-time workers in the United States share their company profits, amounts they receive are typically too small to make much impact.

"When you scrub the numbers there is certainly a great amount of room for higher employee ownership and/or profit sharing," Zerbe writes.

Businesses owners and employees don't have to wait for Washington to act, he says.

"They can take steps now to look at the benefits as well as tax incentives for greater employee ownership — especially Employee Stock Ownership Plans."

Editor’s Note: Retire 10 Years Earlier With These 4 Stocks

Related Stories:

© 2019 Newsmax Finance. All rights reserved.

   
1Like our page
2Share
Economy
A growing number of politicians and economists are advocating more workers who own a part of the business employing them, known as worker-owners.
Folbre,worker,owner,company
449
2014-11-14
Tuesday, 14 January 2014 07:11 AM
Newsmax Media, Inc.
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved