Every company should be owned by its employees
Central States Manufacturing as a model for exiting to employee-ownership.
There are 47 millionaires working for Central States Manufacturing and they’re not all in the C-Suite. Many of them are drivers or machinists—blue-collar workers for the company.
How? The company is owned by its employees. Every worker gets a salary but also a percentage of their salary in stock ownership. When the company does well so do the employees—all of them, not just the ones at the top.
And the company is doing well. “When we sat down eight years ago, we said we want to be a billion-dollar company and have 1,500 people, we are on track to be both of those this year,” Tim Ruger, president of Central States, tells me.
That’s right, this manufacturing company will become one of only 6,000 companies earning more than $1 billion in revenue. But unlike Walmart, Amazon, and Apple, it’s not just the executives getting paid out.
“It’s not like 80 percent of the company is owned by management and the rest is owned by employees, it’s really well spread across all functions,” Ruger tells me. “We've got a number of people that have been here 15, 20 years and they have $1 million plus balances, which is really cool for a person that came out of high school and runs our rollformer. You can’t do that everywhere.”
He’s right, and because you can’t do that everywhere there is a huge wealth disparity in America. Even though the economy has been on an upward trajectory for a century, the wealth it generates has funneled to a much smaller population who owns it. After a 1990s bill meant executives started getting paid in stock options while the rest of their employees earned a static salary executive pay skyrocketed with the market while their workers’ pay stagnated.
If employees had also owned part of the company their pay would have skyrocketed with the market too, but they didn’t. “It's hard to build true wealth for yourself if you don't have some type of ownership in something, and it's hard for most people to get ownership in something,” Ruger says.
Upping the minimum wage won’t fix that. As Nathan Schneider says in his book Everything for Everyone: “One way or another, wealth is going to the owners—of where we live, where we work, and what we consume.”
So why not make workers the owners?
There is a growing movement to do just that.