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(DV) Zeese: Time to Replace Wage-Slaves with Employee Owners







Time to Replace Wage-Slaves with Employee Owners
by Kevin Zeese
March 22, 2006

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President Bush likes to talk about an "ownership society." There are many steps that can be taken to create an ownership society, one critical step is to continue to expand employee-owned businesses. The Zeese for Senate Campaign presented a “Ways that Work” Award to the Maryland Brush Company on March 21 as part of our Solutions Tour of Maryland. The award was presented to the board and 27 employee-owners of the Maryland Brush Company in order to highlight the importance of supporting employee-ownership of corporations.

The Maryland Brush Company is 100% employee owned and the employees play a major role in selecting the Board of Trustees for the company. The company was founded in 1851 as Paint and Maintenance Brushes Company and became an employee owned business in 1990 and changed its name to the Maryland Brush Company. Maryland Brush is a premier manufacturer and supplier of engineered and standard brush products to all manufacturing sectors of industry. Their focus is the design, development, manufacture and distribution of power brushes, maintenance brushes and paint applicators. They have had 150% stock increase over the past two years showing that employee ownership is not only good for employees but good for business.

Employee-owned businesses should be the future of American corporations as part of an effort to transition the United States to an ownership society -- a society where all Americans can share in the wealth of this great nation. Treasury Secretary Snow has suggested that the Employee Stock Ownership Program (ESOP) be ended so it is important to highlight the success of employee ownership in order to prevent such a mistaken policy decision.

There are now more employee owners in the United States then there are union members with 11,000 employee owned businesses in the U.S. holding assets of $400 billion. The total worker holdings, according to the National Center for Employee Ownership (NCEO) was $800 billion in 2002 -- 8% of U.S. corporate stock.

A survey in Washington State found that employees in employee-owned firms earn 12% greater median pay that non-employee comparable owned firms. Also, worker owners ended their careers with three times the retirement benefits. Employee ownership has also resulted in less bankruptcy, greater profit and more rapid stock growth than for similar non-employee corporations.

The largest study of employee-ownership, a 2000 study by Joseph Blasi and Douglas Kruse at Rutgers University, found that ESOP companies grow 2.3% to 2.4% faster than would have been expected without an ESOP for sales, employment, and sales per employee. They also found a 14.8% improvement in productivity. A 1987 NCEO study of 45 ESOP and 225 non-ESOP companies found that companies that combine employee ownership with a participative management style grow 8% to 11% per year faster than they would otherwise have been expected to grow based on how they had performed before these plans. Subsequent studies by the General Accounting Office and by academics in Washington State and New York found the same relationship, according to NCEO.

Majority ownership in employee owned businesses is increasing -- giving employees greater powers -- 38% of ESOP's in 1989 to 68% in 2000 had a majority of their ownership by employees. As Business Week observed in 1991 workers “who own a significant share of their companies will want a voice in corporate governance.” The Maryland Brush Company provides an excellent model of how employee-owners can influence management of the company they own.

Several studies show the greater the level of employee participation the greater the level of productivity. Democratization of the workplace -- giving employees more power as employee-owners -- is the future -- a future that is better for employees and corporations. Theory O management style comes from a midsize employee-owned manufacturing company called Web Converting. The idea of Theory O is that the company will succeed only when workers feel like -- and act as -- owners. This theory of management challenges the division between workers and owners viewing them as developing into a unit.

Employee ownership has been supported across the political spectrum. Conservative congressman Dan Rohrabacher introduced the Employee Ownership Act of 2001, which had as the goal 30% employee owned businesses by 2010. The bill would have created the Employee Owned and Controlled Corporation.

Similarly, Sen. Bob Dole in 1984 in response to Sen. Russell Long's call for an amendment to a bill to support employee ownership said before the unanimous vote in support of employee ownership: “I don't know much about ESOP's but Russell reminds me that when people own property they vote Republican, and I'm for that.” Russell Long put it differently saying: “The problem with capitalism is that it doesn't create enough capitalists.”

The importance of all Americans participating in an 'ownership society' goes back to Thomas Jefferson. In his draft of the Virginia Constitution he included a provision that every person of voting age “neither owning or having owned 50 acres of land shall be entitled to an appropriation of 50 acres.” He understood that a democracy based on private property rights required a democratic economy.

It is time for us to replace wage-slaves with employee owners as a step in the direction of a real ownership society so that working Americans can participate in capitalism and have some control over the future of their employment.

Kevin Zeese is a candidate for US Senate in Maryland.

Additional Information

* Zeese For Senate, Prosperity and Employee Ownership
The National Center on Employee Ownership

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