This 1916 experiment made workers wealthy

Robert Reich makes the case for bringing back the old practice of corporations sharing profits with their workers.

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SOURCERobert Reich

Profit-sharing is an old idea that emerged in 1916. Major companies like Sears, Procter & Gamble, Pillsbury, Kodak, and U.S. Steel all joined the profit-sharing movement, giving their workers shares of stock so the workers actually owned part of the company.

Profit-sharing gave workers an incentive to be more productive since the success of the company meant higher profits would be shared. It also reduced the need for layoffs during recessions because payroll costs dropped as profits did.

But profit-sharing with employees has all but disappeared in large corporations, which have increasingly focused on maximizing shareholder returns. At the same time, profit-sharing with top executives has soared as big Wall Street banks, hedge funds, private-equity funds, and high-tech companies have doled out huge amounts of stock and stock options to their MVPs.

Share prices have gone into the stratosphere while wages have barely risen.

Sharing profits with all workers is a logical and necessary step to making the system work for the many, not the few.

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Robert Reich
Robert B. Reich is Chancellor's Professor of Public Policy at the University of California at Berkeley and Senior Fellow at the Blum Center for Developing Economies. He served as Secretary of Labor in the Clinton administration, for which Time Magazine named him one of the ten most effective cabinet secretaries of the twentieth century. He has written fourteen books, including the best sellers "Aftershock", "The Work of Nations," and"Beyond Outrage," and, his most recent, "Saving Capitalism." He is also a founding editor of the American Prospect magazine, chairman of Common Cause, a member of the American Academy of Arts and Sciences, co-founder of the nonprofit Inequality Media and co-creator of the award-winning documentary, Inequality for All.

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