Friday, August 30, 2019
By Finn Collom
This Labor Day, Democratic presidential candidates will no doubt be touting their support for a $15 per hour minimum wage. None have opposed the idea.
A minimum wage increase would put more money in workers’ pockets. But so far, only two candidates – Sens. Elizabeth Warren and Bernie Sanders – have far-reaching proposals to give workers something even more important: more power.
Both senators, for example, support the idea of requiring big corporations to give workers a seat in their boardrooms.
Warren’s Accountable Capitalism Act would guarantee workers the right to elect 40 percent of their firm’s board of directors. Warren hopes this will help companies break with the “shareholder-first” model that has resulted in a fixation on short-term profits.
In Europe, such “codetermination” policies are widely prevalent, providing unions a strong voice in corporate decision-making. In Germany, for instance, workers choose a significant proportion of company board members – and in certain industries, worker representatives exercise equivalent control to shareholders.
In addition to his Workplace Democracy Plan, which among other things would allow workers to organize throughout entire industries (and not just at their individual workplaces), Sanders is also reportedly developing a proposal to give workers a direct ownership stake in their companies.
This idea also has European roots.
In the UK, for example, the Labour Party program for Inclusive Ownership Funds would gradually shift up to 10 percent of large firms’ stock ownership into worker funds. Workers would receive dividends of up to around $600 per year, with any excess revenue going national welfare programs.
This UK plan can be traced back to a similar, but bolder, proposal in 1970s Sweden.
At that time, Swedish trade unions had agreed to keep wages down as part of an anti-inflation pact with employers and the government. But trade union economist Rudolf Meidner saw how corporations were accumulating excess profits in the arrangement and vowed to do something about it.
Under the “Meidner Plan,” Swedish workers would’ve continued to go without inflation-creating pay raises, but their economic power would’ve increased through the transfer of corporate voting share into new employee investment funds. After just a few decades of operation, Meidner envisioned these funds securing majority control over the Swedish stock market.
The plan sparked a massive corporate backlash. Even ABBA opposed it! (Band members not only topped the global pop charts – they also happened to own several companies.) The country’s center-left Social Democratic Party eventually rejected it, too.
Still, Meidner’s vision remains inspiring. Here in the United States, looking at how executives and wealthy shareholders have pocketed the lion’s share of Republican tax cut windfalls, it’s clearer than ever that we need transformative change if workers are to get their fair share of the fruits of their labor.
Economists have long grappled with how to couple traditional tax and wage policy with the broader question of building worker power.
This Labor Day, it’s time this country had a real conversation about building power for the working class.
Finn Collom is a Next Leader at the Institute for Policy Studies.