Lessons From the Fight for $15/hr
Why America’s Next Bold Move Is Worker Company Ownership
By Guest Contributing Writer Daniel Massey
Thirteen years ago, Alvin Major worked as a cook at three Brooklyn KFCs for $7.25 an hour.
To survive on minimum wage, he breaded chicken, mixed coleslaw and baked biscuits for as many as 80 hours a week. Perpetually exhausted, Alvin often fell asleep on the bus home and missed his stop, walking long distances in the middle of the night because he couldn’t afford another fare.
He had two kids and was just happy to be able to support them by working all those hours. But then everything changed. Alvin joined with other fast-food workers across the city planning something big and bold: strikes demanding $15 an hour and a union.
Nobody gave Alvin and his co-workers a shot. But they stuck together and inspired tens of thousands across the country to join them — ultimately winning $200 billion in raises, including $15 minimum wages covering nearly half the nation’s workforce and $15 minimums from mega companies like Target, Disney, Amazon and more. The Fight for $15 movement “entirely changed the politics of the country,” according to MSNBC’s Chris Hayes.
And it changed Alvin's life. A little more than a decade after walking out on his first strike, his salary has nearly tripled. Alvin will tell you nothing is impossible.
I was privileged to support Alvin and his fellow fast-food workers as they turned a $15 minimum wage from "absurdly ambitious to mainstream," as described by the Washington Post. My work on the Fight for $15 connected me to another movement with a bold demand for workers: one seeking to give them an ownership stake in every company in the country.
Our economy is at a tipping point. Voters across the nation in red, blue and purple states sent a clear message in November, namely, that the economy isn’t working. It’s the most urgent issue in Americans’ lives and people want their elected leaders to do more to help.
Yes, it’s the price of eggs, but Americans’ pain and discontent runs so much deeper. The bottom 50% of households hold only about 1% of the country’s equities. Nearly 60% of Americans can't afford a $2,000 emergency situation and most have nothing, or next to nothing, saved in retirement accounts.
Over the past three decades, equity gains have far outpaced gains in real estate or real wages and this trend is accelerating. Without access to equity ownership, most of our fellow citizens are going to fall further behind.
And it isn’t just workers who are hurting. Lack of wealth at the bottom hurts consumption levels as those at lower income levels spend at much higher rates than those at the top. High quit rates — recently peaking at 40% — cause significant and unnecessary friction in the economy, while 70% of Americans are disengaged on the job, costing $2 trillion in annual lost corporate productivity.
A recent report from Gallup found overall job satisfaction across America has matched a record low and employees are seeking new jobs at the highest rate since 2015.
What if, with some simple policy changes — which just happens to be wildly popular with voters across party lines — we could build worker wealth and stronger companies? By expanding employee stock ownership plans, or ESOPs, we can do just that.
ESOPs, qualified retirement plans that allow companies to share wealth with workers, put appreciating assets in the hands of workers, with equity returns compounding over years to generate meaningful retirement wealth. Worker ownership results in greater worker retention rates for companies. And ownership, combined with worker voice initiatives, results in greater levels of engagement.
Let’s go back to a Walmart parking lot in Columbia, South Carolina, 13 years ago, to see the power of the ESOP. In that parking lot, every evening, you’d find Keith Dixon, a 20-year-old kid, parked in his Toyota Yaris hatchback, trying to get some sleep before his next shift as a cashier paid minimum wage at a candy store. Keith was homeless and hopeless — until he landed a job separating scrap metal at a local manufacturing plant.
Keith immediately sensed something different about his new employer, which makes fuel injection systems for commercial and military use. His colleagues were way more interested in a 20-year-old scrap sorter with no professional skills than he ever would have imagined. They took him on the shop floor and showed him the ropes.
Keith worked hard and got hired full time. He realized everyone was so invested in him because they owned the company, he wrote in a recent op-ed in Fortune. They knew if he succeeded, they all did. They trained him to understand how everyone’s job was connected, and how the daily duties of each employee affected the numbers on the P&L.
As he learned about the business, he took on more and more responsibility. Thirteen years removed from that Walmart parking lot, Keith now manages the supply chain for the entire company. He has enough put away in his ESOP account to feel secure about his retirement, something he could have only dreamed about while sleeping in that Walmart parking lot.
Then there’s Kevin Sims, a single father who was working odd jobs after being laid off from a moving company where he’d worked for 14 years in Denton, Texas. He was constantly worried about how to pay his bills and didn't know when his next paycheck was coming or where it was coming from.
“I was always running. Oh my God,” he wrote in a recent personal essay in ImpactAlpha.
In his 40s, with a son, and worried constantly about his future and his kid’s, Kevin landed a job at 100% employee-owned Web Industries in his hometown of Denton.
It changed his life.
“I was taught to think like an owner, to speak up if I saw ways to do things more efficiently,” he wrote. “I was really intrigued by that. I know I'm important, but it made me feel really important, like I was worth more, like I had a stake in something. I came in every day knowing I have a voice that can make change. If the company is losing money, I’m losing money. What can I do to help us? And that’s the way everyone thinks.”
Kevin’s proudest moment is manufacturing Engine Blanket 1361, which blasted off into space. When he thinks of it, he gets emotional, and grateful for how far he’s come — employee ownership took him from unemployed and barely scraping by to producing a blanket that made it to outer space.
We desperately need more Kevin Simses and Keith Dixons. And we need them now.
ESOPs have been an incredible wealth creation tool for workers like Keith — generating $892 billion in wealth over the last 10 years — but we simply don’t have enough of them. We’ve been stuck at around 6,500 for decades, with only 250 new ESOPs formed each year — about 1% of the 25,000 companies that are bought and sold.
The vast majority (71%) of new ESOPs have fewer than 100 employees. About three quarters of new ESOPs are in the industrial and service industries — so we are missing huge swaths of the economy like technology, financial services and media.
Where it works, ESOPs are powerful. And we shouldn’t touch what works. But statutory and regulatory complexity, insufficient corporate tax incentives, tax benefits to sellers that are largely limited to small businesses, and excessive litigation risk associated with forming a new ESOP have constrained new ESOP formation in terms of the number of ESOPs, the size of ESOPs and the sector diversity of ESOPs.
Imagine if instead of hundreds of ESOPs formed each year, we have thousands. Or if workers owned 10% of every company in the country through an ESOP. There is a massive and untapped opportunity to dramatically expand the number of ESOPs formed each year, particularly among larger companies and in sectors of the economy where we currently see little ESOP activity.
The results would change our economy. With all corporate equities estimated at $75 trillion, we’d be talking about $7.5 trillion of wealth creation potential for working Americans. Even with only partial adoption, the impact would be enormous. It would strengthen companies and lift up workers.
Given the dispiriting levels of employee disengagement and growing inequity in who owns equity in the country, we can’t afford to wait. And, fortunately, we don’t have to. Even in these divided political times, everyone can agree that if you work hard, you should have a shot to get ahead.
ESOPs are a unicorn of an issue that unites and excites people, right and left. Ronald Reagan loved them. And so does Bernie Sanders. Polling done for the Expanding ESOPs coalition shows increasing broad-based employee ownership is wildly popular, across party lines. And that voters will support politicians who act to create more opportunities for broad-based employee ownership.
Just imagine: How different would our economy — and our country — be if workers owned a piece of every company in America?
How different would it be if Kevin Sims' and Keith Dixon’s story were the norm and not the exception?
We can do more than we can imagine. Thirteen years ago, Alvin Major and the nation’s fast-food workers didn’t just imagine a different life. They made a bold demand for $15 and a union and took action to make it a reality. In that spirit, let's think big. Let's learn from Alvin that nothing is impossible. Let's build the movement that makes every worker in this country an owner.
Daniel Massey is head of strategy and communications at Expanding ESOPs, a growing movement of organizations dedicated to making every worker in the country an owner. This essay is adapted from a speech delivered earlier this month at the Employee Ownership Ideas Forum, sponsored by the Aspen Institute Economic Opportunities Program and the Rutgers University Institute for the Study of Profit Sharing and Employee Ownership.