Employee Owned Benefit Corporations


Employee Owned Benefit Corporations (EOBCs) are truly of, by, and for the people. An EOBC is the best example of shared prosperity, one in which employees and that company’s retirees hold a supermajority interest of at least two-thirds, thus limiting the holdings and influence of outside investors to a maximum of one third. An EOBC also has a clearly articulated public purpose. It is less likely to exert a distorting influence upon any of our constitutionally grounded democratic republics and far more likely to act in the greater interest of the community. When such a corporation takes a stance, on matters of public policy, it is inclined to reflect the preference of its employees, retirees, patrons and neighbors.

Employees are seen as the heart and soul of a company because they are the ones that usually pour heart and soul into it. When they don’t, it is usually because they are not respected as stakeholders. Employees generally don’t have the option of participating in buy low / sell high equity scenarios, of demanding dividends during trying times, of selling off real estate assets to one’s own hedge fund, or of dumping huge blocks of capital stock just before hollowing out a company and putting it on the rocks.

Career employees are instead focused upon the long-term viability of the enterprise. They are truly vested.  Rather than sustaining the last gasp of an outmoded economy, they typically want to position the company for the next big thing. Theirs is like a fidelity marriage relationship, for richer or poorer, in sickness and in health. By contrast, investors with no enduring affinity for the company can pull up stakes, as with shallow set tent pegs, at the first sign of difficulty. They are typically not vested for the long term. To the extent such an employee owned business operates to advance a public benefit, it is less likely to be taken over and reverted by an investor group that is exclusively profit motivated.

In a country such as the United States, that fought a revolutionary war to throw off the repressive power of “foreign potentates,” it seems odd that the political influence of corporations controlled by outside investors is the rule rather than the exception. The Supreme Court of the United States, in its series of cases steadily advancing “corporate personhood,” consistently failed to differentiate between employee owned corporations and those controlled by outside, even foreign, investors.

The employee owned corporation is the most authentic corporation. Such a company typically embraces benevolence as strategy. It invests in its employees and the community. It seeks complementary and healthy relationships between employees, suppliers, customers, competitors, and a limited number of outside investors. It supports individual, societal, and climate health as the means to create economic health.

EOBCs incentivize employee participation for the decision making process within the enterprise as well as the host country. Benefit corporations build consensus from within for any stated public purpose. They place emphasis on employee retention. They engage in fair trade while building small business partnerships. They bear their own costs while contributing to the public treasury. And, they respect the sanctity of elections providing time-off to vote.

Inauthentic corporations often privatize gains while socializing expenses and losses thus cheating the public treasury. They may pay wages so low, for full-time employment, they make public charges of their employees, forcing them to seek heating, rent and nutrition assistance at taxpayer expense. If we are to expose the incoherence of those who believe increasing the minimum wage is a job killer, it will be by questioning how paying a CEO one thousand times an entry level employee’s wage is not a job killer.

In those corporations controlled by foreign potentates the employees get lip service, often come up empty with robot-like quotas, hollowed out benefit packages, and poverty wages. The general public never agreed to pick up the slack for poorly managed companies. In our view, the policy influence of such inauthentic corporations should be seriously diminished, while that of employee run corporations is intentionally augmented.

When a retailer offers deep discounts to customers and high dividends to investors, it is not a gift from management. It is usually provided at the sufferance of those front line employees receiving poverty wages for their work. In this twisted equity, the laborer is not considered worthy of his or her hire and all entitlements are the exclusive domain of the wealthy. As political donors, they view healthcare as an employee benefit, rather than as a human right. It doesn’t require even a modicum of management genius to understand that employees, stewing in hormones of stress, are expensive to insure. At the same time, such integrity challenged companies avoid making any meaningful contribution to the public treasury as other taxpayers struggle to meet the most basic needs of the uninsured.  

It is common practice for a business, consistently offering high dividends and low prices, to deliver these competitive advantages to investors and customers by the systematic tamping down of employee compensation, through a combination of poverty wages and hollowed out benefit packages. This is in addition to the imposition of a swing-shifted and largely pre-emptible personal life. It often keeps the workforce off balance while also favoring conditions of peonage. Such faux corporations are clearly operating in parasitic fashion.

In the midst of the COVID-19 pandemic, nations were faced with the very real possibility that each must rebuild their economy. At such a juncture we should ask ourselves: “What kind of economy do we want?” In contrast to the most self-serving, employee owned corporations that forge consensus within, to identify and support a clearly defined public benefit, are less likely to manifest such a calloused attitude about human life.

They are less likely to support politicians, vendors, and others that share a depraved heart indifference to those less fortunate. To put this in the context of The United States Supreme Court’s systematized delusions about corporate personhood, authentic associations of people acting corporately while challenging the present day corporate personhood fiction, are more likely to behave as “good corporate citizens.” They can closely examine each and every Business Roundtable member to determine if they are really sincere about their recent professed commitment to “balance the needs of all stakeholders.”

Intentional Consumerism is how we vote every day with every dollar. It is how the citizenry can express its preferences for a promising future with each and every transaction. It’s how we can direct our purchasing power towards employee owned corporations and better yet, Employee Owned Benefit Corporations (EOBC’s).