Polls and surveys show that the middle class has a positive attitude towards profit sharing and the whole idea of employee shares. This evidence is important since the idea of middle class profit shares has been percolating up in policy discussions across the country. In a February speech in Silicon Valley, Hillary Clinton spoke of the need to "restore economic growth with rising wages for the vast majority of Americans," and trying to "figure out how to make this economy to work for everyone." She made the same point, yet again, in a March speech before Emily's List in Washington, D.C.
This winter, the Center for American Progress (CAP) put some flesh and bones on the Democratic Party's new middle class economics theme when its new report endorsed policies that expand employees having the opportunity to share in profits and ownership at the companies where they work. Both the media and Washington policy circles were abuzz that CAP's Commission on Inclusive Prosperity included former Treasury Secretary Lawrence Summers as its co-chair along with a host of policy heavies such as E.J. Dionne of The Brookings Institution, former Michigan Governor Jennifer Granholm, investment banker Steven Rattner, Judith Rodin of the Rockefeller Foundation, and seasoned domestic policy expert Neera Tenden, who heads this progressive think tank.
If popularity among middle class voters is a concern of these policy experts, the evidence seems to be in: the middle class is quite favorable to profit sharing. The absolute front-line to gauge these middle class attitudes is company recruiters and staffing agencies. Straight out of the heartland, Crain's Chicago Business interviewed a number of staffing experts and compensation firms last fall, such as CEO Jason Hanold of Hanold Associates and CEO Rona Borre of Instant Alliance, which is focused on the technology and accounting. They reported that young people entering the workforce have "a desire for entrepreneurial work and a stake in the outcome" and that this is driving a resurgence of interest in profit sharing in companies. People management consultant Aon Hewitt has noted that its recent U.S. Salary Increase Survey shows that interest in profit sharing is surging as companies try to respond to this broad-based employee interest.
One indication of how strongly middle class workers feel about shares comes from a series of 2001-2006 surveys of 45,000 workers in the National Bureau for Economic Research Shared Capitalism Research Project funded by the Russell Sage Foundation and the Rockefeller Foundation and conducted before the recent recession. The survey covered a variety of companies from service to high tech to manufacturing firms, both public and private, that actually worked to integrate shares into their company operations. The answers can be seen as a referendum on how shares were perceived by a full range of middle class workers.
When asked if they would rather be paid entirely with fixed wages or salaries, about 78 percent workers say they would like to be paid at least in part with profit sharing, stock or stock options. In fact, 60 percent would like their next pay increase split between fixed wages and shares. Moreover, 66 percent of workers who were highly risk averse, still said they wanted to be paid partly in shares. Workers have evidently figured out what top execs have known all along: to gain wealth you need access to a piece of the pie. But workers want lower risk grants of profit shares or equity shares, and, as other studies indicate, workers simply don't like being pushed into buying excessive amounts of company stock with their savings.
Surveys from around the country have been picking up on the importance and the necessity of profit sharing for the middle class. Manufacturing Digital, a leading magazine for managers, says it recently reviewed data from thousands of employee surveys that the Great Place to Work conducted for Fortune Magazine's annual list of the Hundred Best Places to Work for in America. They reported that profit sharing was one of the most important issues for manufacturing workers. On the employer side, the Hay Group, which regularly surveys businesses on pay practices, recently told The Wall Street Journal that there was increasing employer interest in profit sharing and that years of data indicated that company-wide or team-wide shares increased productivity and problem-solving. All of this seems to reflect deepening middle class angst. State Street Global Advisor's March 2015 survey found that three in five workers are experiencing moderate to high financial stress, four in 10 say the stress is causing their productivity at work to suffer, and four out of five are looking for their employers to do something about it. Almost half report that they are living paycheck to paycheck.
Can middle class shares fly politically as an economic policy? What do various polls over the decades suggest about this? In 1975, pollster Peter Hart did a major poll on the issue, although I thought that some of the other questions focused on unrealistic possibilities. A national random sample of Americans were asked if they would rather work for a company owned by outside investors, one owned with employee shares with some employee governance, or one owned by the government. A sizable 66 percent of a national random sample of respondents prefer to work for a company with employee shares while only one in five wanted to work for a wholly investor-owned corporation. What was most interesting was that the employee share idea was appealing across different age groups, income groups, and regions of the country.
It cut across white-collar and blue-collar workers and appealed equally to 68 percent of Democrats and 68 percent of Independents with a slightly smaller group of 61 percent of Republicans and 61 percent of Conservatives liking the idea. Over half of almost every demographic group, except Republicans and Conservatives (and in this case, it was nearly half) thought employee shares would improve the performance of the economy. Interestingly, fewer Americans are willing to support more far-reaching ideas, indicating that the public likes the inclusive prosperity side of shares but has more conventional views about how companies should be structured in general. Many do not want a major adjustment to the American economic system.
Looking forward, decade after decade, it appears that strong public support for the share idea has been fairly constant. For example, about a decade after the 1975 poll, iPoll of the Roper Center for Public Opinion Research at the University of Connecticut cites a 1982 Opinion Research Corporation poll that finds 64 percent of respondents strongly approved and 25 percent mildly approved of profit sharing. A decade and a half after that, a 1996 New York Times/CBS poll found that 45 percent of business executives believed that large corporations had a responsibility to provide workers with profit and ownership share plans. In 1998, a Northwestern Mutual Life Insurance survey found that 79 percent of respondents reported that profit sharing was somewhat or very important to their future financial security. In 2000, the Advantages Payroll Services survey found that employers believed that profit sharing was a top-rated incentive to attract workers. Moreover, since Fortune Magazine started ranking the Hundred Best Companies to Work for in America annually, using extensive employee and management surveys of the companies that apply for this contest, the National Center for Employee Ownership has annually reported that almost half of the winners each year have had some form of profit shares or equity shares.
There is no question that new more current detailed national polls and surveys on the profit share and the equity share ideas are needed. That has not prevented some major corporations from voting with their feet. This February, Delta Airlines was voted one of Fortune Magazine's Most Admired Companies after announcing over $1 billion in employee profit sharing for 2014. The company has shared almost $3 billion with employees in the last five years and its CEO has loudly said that this is the right thing to do. However, the sad fact is that most companies do not do profit sharing with the middle class. Those that do it share very little profits with their workers. This is why new policies are needed. Profit sharing appears to be an idea that wide segments of the public and employers could actually support.
Joseph Blasi tells the American history of shares in The Citizen's Share. He is the J. Robert Beyster Distinguished Professor at Rutgers University and a visiting fellow in the sociology department at Princeton University.