Liberal Think Tank and Congressional Democrats Call for Employee Ownership

The progressive think tank Center for American Progress (CAP) released the Report on the Commission of Inclusive Capitalism, the output of a commission co-chaired by former U.S. Treasury Secretary Lawrence Summers and Ed Balls, the UK Labour Party's Shadow Chancellor of the Exchequer. Earlier, the ranking Democratic member of the House Budget Committee, Chris Van Hollen (MD), issued a plan on January 12 that many commentators see as the Democrats' first post-election attempt to lay out an economic vision.

Van Hollen's action plan includes a proposal that closely tracks a policy recommendation in The Citizen's Share by Joseph Blasi, Doug Kruse, and Richard Freeman. Under the heading Incentives for Employee Ownership and Profit Sharing, Rep. Van Hollen writes:

Research shows that firms in which employees are given an ownership or profit stake not only compensate workers better, but also perform better. At many firms, however, employees have no stake or voice in the company, and stock options and other forms of incentive compensation are limited to top executives. Congress should condition tax breaks for executive stock options and incentive packages on such pay packages being made available to all employees and otherwise strengthen tax incentives for employee ownership. The CEO-Employee Paycheck Fairness Act could be revised to allow corporations to deduct CEO and executive compensation in excess of $1 million if the corporations provide their employees with ownership and profitsharing plans meeting certain standards.

The 170-page CAP report includes analysis of the U.S. and U.K. economies and suggests a range of policy options for both the U.S. and the U.K. They summarize one policy recommendation (page 14):

[W]orkers must benefit from increased productivity rather than seeing returns accrue primarily to shareholders. Profit-sharing and share-ownership schemes provide a direct way to ensure that employees have an incentive to help their company to succeed.

Among its many specific recommendations, the CAP report calls for expanding the tax incentives for ESOPs and for establishing an Office of Inclusive Capitalism (page 105).