My first blog is not expressing an opinion; I am making an observation.
Except for President Ronald Reagan, no President since 1987 has openly, with strong messaging, conveyed support for employee ownership in a full- throated manner.
Both President Clinton, and President Obama were asked in open sessions, what they thought about ESOPs, and by implication, employee ownership in any model. They did not respond negatively, but in the manner typical of successful elected officials. (In general, yours truly, unlike most U.S. citizens, does not hold women and men who run for, and hold elected office as corrupt, dishonest, selfish, etc.). (I understand many will stop reading right now thinking yours truly is out to lunch.).
At a panel discussion in Chicago, led by President Clinton, the topic was economic fairness for more citizens, and policies to grow the economy bigger to benefit more citizens. All panelists except for the admirable Rob Zicaro, former machinist at a 100% ESOP company, were leaders of labor unions, or public corporations. Rob asked simply, I paraphrase, “Mr. President, what do you think of ESOPs; I work for an ESOP company.” President Clinton responded, “When they work, they work well.” (Again, I paraphrase.).
At a town hall meeting in Richmond, Virginia, ESOP professional Tom Roeback, of Blue Ridge ESOP Associates, asked President Obama, again I paraphrase, “What do you think of ESOPs?” Again, President Obama’s response was very similar to President Clinton’s “when they work, they work well”.
(I will soon post story on my blog of President Reagan’s and history of openly, and strongly endorsing ESOPs, beginning before he was Governor of California; and how his position was key to the adoption of the very important 1984 tax bill with major ESOP tax incentives. Another blog for an interesting story.).
Now, what are the views of employee ownership by President Trump and former Vice President Biden?
No direct evidence of either having on his list that broad-based employee ownership is important.
On April 16 of this year, on the White House South lawn, President Trump honored over-the-road truckers for their service during the Covid-19 pandemic.
One trucker honored was Steven Richardson, a 30 year plus driver for Big G Express, based in Shelbyville, Tennessee. Mr. Richardson, after being introduced by President Trump, emphasized that Big G was 100% ESOP. Upon finishing his remarks, and standing by the President to receive a ceremonial key, President Trump, in response to his noting his pride in working as an employee owner, says to Mr. Richardson, obviously not aware before Mr. Richardson’s remarks that Big G was employee owned, “And rich, very rich.”. Clearly President Trump had a general knowledge of ESOPs, and a view that they resulted in average pay employees having considerable wealth via their ESOP account.
(The remarks at the award ceremony can be read at “whitehouse.gov/briefings-statements-President-Trump-celebrating-American-truckers”; or viewed at “C-span.org/video/?4712256/president-trump-celebrates-americas-truck-drivers-coronavirus-pandemic”. Mr. Richardson is recognized by President Trump, Mr. Richardson makes remarks, and President Trump’s comment about being rich are said upon presenting Mr. Richardson a Presidential ceremonial key. The President’s remarks are approximately 9 minutes, 30 seconds into the video.).
This April 16 episode is the only public evidence, pro or con, what the current President knows about ESOP; and other than this circumstantial evidence, there is no other public position of President Trump’s view of broad-based ownership.
Despite a Washington, DC, leadership career first, as a 29 year old elected to the U.S. Senate in 1972, and Vice President from third week of January 2009 until third week of January 2017, Vice President Biden has no “easy to fine” comment on ESOPs, or broad based employee ownership. But one would have to research archives dating long before the internet to be sure no view ever expressed—either directly, or indirectly as was case with President Trump’s four-word comment upon honoring Mr. Richardson.
On the other hand, any person who has served as a public official, and the state he/she represents role is small, when measured by area, population, and number of corporations with headquarters, knows that anyone holding statewide office in Delaware is aware of several very successful ESOP companies with headquarters in Delaware.
In particular, one of the most prominent, and one of the first nationwide recognized corporation in our nation that has roots in employee ownership via the ESOP model is the famous company, W.L. Gore & Associates, Inc., based in Newark, Delaware. In fact, W.L. Gore from its earliest days was dedicated to broad-based ownership by “associates”, the term W.L. Gore uses for the near 11,000 who work for the company, with revenues over $3 billion a year.
Senator/Vice President Biden knows the impressive story of this Delaware based international corporation, and has close contacts with leaders, and former leaders of the company, such as current Delaware U.S. Senator Chris Coons.
BUT, there is no evidence either major candidate for President, Trump or Biden have, endorsed, or promoted broad-based ownership via the ESOP model, the worker owned co-op model, the employee stock option model, or any other model of more owners in our free enterprise economy as part of their economic “proposals”.
How come? The fact is that during the past five years there is more public discussion about employee ownership research—particularly by academics in major universities and colleges in the U.S., many funded with fellowships by Rutgers University’s School of Management and Labor Relations’ Institute for the Study of Employee Ownership and Profit Sharing.
In fact unlike 10 years or so, when many academics, or financial advisors were very harsh in contradicting earlier articles setting forth evidence that employee ownership was good for the employee owners, the employee owned company, the community where they existed, and yes even our nation, we now and read and see many TV, social media, newspapers, and magazines cite these well-written, well-researched, papers and articles on employee owned companies.
But, how come policies to have the U.S. have more employees be owners, directly or indirectly, are not part of any discussion by the Democrat, or Republican parties, or their candidates for President.
The reality? Voters are the most important people in the world to anyone running for public office. (Now I know the cynics—left and right—will scoff at such a comment, saying big donations are more important to our overwhelmingly “corrupt” members of Congress, legislatures, Presidents, and governors. But unless the person running for office gets the most votes, or in the case of President, electoral votes determined by voters in the states, campaign contributions mean nothing except publicizing the candidate’s reason for having someone vote for her/him.). (I know that the media will not believe me; but I have worked in many a campaigns, and as the ESOP world’s best friend political friend ever, former Senator Russell Long, who ensured ESOPs, as developed by founder Dr. Louis Kelso, was not outlawed by ERISA and then played a major role in incentivizing ESOP creation and operation, used to say at townhall meeting with his Louisiana constituents: “the most important thing in the world for a person running for office was to be elected, and then re-elected.” Down the road I will do a blog about the truth of his view, versus the media view big campaign donations determine what a politician prioritizes.).
And here is a fact: there are no ESOP voters determining who is elected to any office, much less voters deciding who will be President.
Of yes, ESOP advocates love to talk about, “Oh, look how many people are owners in the company where they work—14 million, and maybe a million or so more—more than there in private sector labor unions, for which candidates, campaign hard to get their vote. (Of course, men and women working in for companies that are unionized vote for the Democrat candidate for President was not true in 2016.).
Employee ownership fans: Face the Facts. There are not enough men and women who cast votes based on the candidate’s position on ESOP, worker co-ops, broad-based stock options plans etc.
Fact: Of the 14 million or so so-called employee owners, 11 million work for publicly traded companies, and nearly 99% are labeled employee owners because they work for a public company with a combination 401(k) plan and ESOP, or the so-called KSOP. Data indicates, based on filing with the SEC, the share of ownership by employees in KSOPs sponsored by a public company is probably less than 5% of the public companies’ shares, many around 1%.
Is there ESOP account of a value that determines the vote of an employee of one these companies with KSOPs? I will bet my mortgage the answer is no.
Now, we see employees of a private company with an ESOP often have the ESOP owning more than 50% of the companies’ shares, and in the 21st Century the fastest growing segment of the private company ESOP world are 100% S corporation ESOPs, that owe no corporate income taxes.
Even if all of these 3 million private company employees with significant ESOP balances—and I have added about 500,000 in private worker co-ops—voted based only on the candidate’s position on working for more emoloyee ownership, or if her/his position was important in their decision, it would be just less than 2% of the total votes if 2020 turnout tracks the 2016 election.
And candidly, in working around ESOP leaders for over 37years, I know men and women in companies who did not vote for a candidate based on any thought about her/his position on ESOP laws and regulations.
(Thank you National Center on Employee Ownership—NCEO—for providing annually the data on how many ESOP/KSOPs there are, and how many work in publicly traded companies and how many work in private companies.).
BUT: Let us ESOP advocates face the facts, but not despair. The support for ESOP law and incentives is very widespread in Congress, especially in the Senate since the late 1970s, and in the House since the late 1980’s.
Let us not kid ourselves that there may be 14 million voters prioritizing the Presidential candidate’s position on ESOPs; but let us never overlook that when a member of Congress, or a candidate for public office visits an ESOP company, in her/his state, or his/her Congressional district, it has an impact. I know—I have had many members of Congress say to me—beginning in 1980, “ESOPs are special”, after she/he visited an ESOP company.
ESOP companies and their employees have protected their ESOP, and thus their personal interests not with home runs—but with bunt singles, stolen bases, sacrifice flies—(contact me if you do not know baseball lingo)—versus homeruns, or no hitters.
I recall 2016, being in Trump territory for chapter meetings. I recall being in Clinton territory for chapter meetings.
ESOPs continue to have strong Congressional support. I do wish we would have another President Reagan be President if measured by ESOP policy. But ESOP advocates will not determine such an outcome in 2020.
I will focus on future blogs how policy is traditionally made at the White House, so that a President will someday openly endorse more employee ownership in a State of the Union address to Congress, along with thoughts on how to maintain bi-partisan Congressional support.