Dear John,
In 1916, Sears, Roebuck and Co., then one of America’s largest corporations, with over 30,000 employees, announced a major experiment called profit-sharing, in which the firm shared its stock with workers.
By the 1950s, Sears workers had accumulated enough stock that they owned a quarter of the company. And by 1968, the typical Sears salesperson could retire with a nest egg worth well over $1 million (in today’s dollars).
The program was a huge success.
But profit-sharing with employees has all but disappeared in large corporations, which have increasingly focused on maximizing shareholder returns. At the same time, profit-sharing with top executives has soared as big Wall Street banks, hedge funds, private-equity funds, and high-tech companies have doled out huge amounts of stock and stock options to their MVPs.
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Amazon, now one of America’s largest corporations, employs upwards of one million people. Amazon used to give out stock to hundreds of thousands of its employees. But in 2018 it stopped doing so, and instead raised its minimum hourly wage to $15.
The wage raise got headlines, but Amazon’s decision to end stock awards was more significant.
If Amazon’s 1.2 million employees together owned the same proportion of Amazon’s stock as Sears workers did in the 1950s — a quarter of the company — each Amazon employee would now own shares worth an average of over $350,000.
America’s trend toward higher profits, higher share prices, mounting executive pay, but near stagnant wages is unsustainable, economically and politically.
Sharing profits with all workers is a logical and necessary step to making the system work for the many, not the few.
Thanks for watching,
Robert Reich
Inequality Media
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