In “What Happens When Low-Wage Workers are Given a Stake in Their Own Company,” I write about Texas grocery chain HEB’s recent announcement that it will give 15% of the company to its 55,000 employees.
HEB workers who meet a certain tenure threshold will get an equity stake valued at 3% of their salary and an additional $100 in stock per year going forward.
HEB’s move is not without support. Economists on both the left and right advance the idea of efficiency wage theory, or employers offering compensation above market rate to attract talent and reduce turnover. Social theorists have long discussed how worker ownership gives workers a stake in the success of their company. John Stuart Mill advocated industrial cooperatives, and Robert Owen experimented with utopian communities during the industrial revolution. More recently, Democratic presidential candidate Hillary Clinton has proposed a tax break that would encourage companies to share profits with their workers.
But HEB’s decision is best viewed in the context of recent developments in the labor market. The unemployment rate is finally approaching its pre-crisis level, and activists are becoming increasingly vocal about low pay and poor working conditions. If this is what workers get when the unemployment rate is 5%, what might happen if it falls even further?