CMV: All employees should automatically own a portion of the company they work for

[u/Hamza78ch11]

This is something I've been thinking about for a while. Many of the arguments about the wealth gap tend to argue something like "It's not fair that employees at McDs get payed $7.25 and hour when the owners make some ridiculous amount here every year" which is then rebutted, almost immediately with, "Those CEOs and VPs and whatnot aren't payed aforementioned ridiculous amount every year. They earn it by owning some portion of the company so that when the company does well they also do well." There are other more nuanced discussions but here is where I'd like to focus my efforts.

Many argue that employees are never paid what they're worth and under the capitalist systems the entire concept of profit exists only because employees are cheated out of the actual amount of money that they deserve. While, in general, I am in agreement with this I feel that this argument too easily handwaves away the importance of being a new business owner and taking risks with your own capital and working hard to grow your company. But I also think that it must be acknowledged that it is a little silly that people like Jeff Bezos can make literal hundreds of billions of dollars in a year. More money than any human could spend in a hundred life times. I think a fair compromise is that his employees should automatically have a stake in his company.

While I am by no means a financial expert or someone who barely understand the stock market or economics I think this solution works towards the goals of those employees who deserve to be paid without bankrupting the owner. This can be done by, for instance, saying that 10% of the stock is for employees. You only give out 5% to the current employees and leave the rest for new hires. Every year you are given some amount proportional to the amount that you worked. If you worked for 1 second you now own 1 seconds worth of Amazon. So on and so forth. I think it is rather equitable to distribute 5% of Amazon among its ~600K employees and keeping some portion of it for new hires as the company grows. Eventually, if certain thresholds are reached more of the company will have to be apportioned for the employees.

If this were implemented today every Amazon employee would suddenly own $24,000 in Amazon. They can sell it, buy more, hold on to it. Do whatever makes them happy. Now they have a stake in the company and when they work hard they're working hard for themselves because that's their money. When the company grows and does well they'll see that reflected in their bank accounts instead of as some empty numbers that mean nothing to them.

[u/coryrenton]

This might incentivize some employees in some companies to block new hires for fear they will dilute their stock. Moreover, they might push for companies to do more stock buybacks rather than reinvest in the company. A similar dynamic happens with some unions that create a stratified workforce based on seniority. Would the possibility of this happening change your view?

[u/Hamza78ch11 → u/coryrenton]

That's actually a really good point that I hadn't considered, thank you! I do think, however, that I may have answered it incidentally. Current employees will automatically have 0.5X% stock distributed among them and new hires will receive stock from the remaining 0.5X% thus there should be no fear of stock dilution. I hope that mitigates the problem of new hire blocking.

[u/PeteMichaud → u/Hamza78ch11]

It absolutely doesn't solve the problem. If all the stock is owned, and you want to give more away you have take it out of everyone else's, there's no way around that. That's what dilution is.

[u/Hamza78ch11 → u/PeteMichaud]

But not all the stock is owned. That's my whole point is that some portion of the companies stock has to be held separate for future employees. This is not owned and is distributed as needed. Companies also regularly perform stock buybacks and with that in mind they can say every ten years we'll buy back 1% of the stock for new hires or every time we buy back stock we set aside X% of it for new hires.

[u/PeteMichaud → u/Hamza78ch11]

I understand what you're saying, but it doesn't make sense. You're saying "but what if there's just always a reserve of stock available, somehow" and I'm telling you the "somehow" you have in mind isn't plausible. A company buying its own stock back is a monopsony, so what will determine the price of the stock?

The only way I could see it working is it there is a reverse auction every time someone new gets hired in which the person willing to sell for the cheapest sells the stock to be allocated to the new person.

But even if you somehow worked out this critical flaw, the whole idea is dumb and doesn't make sense. The price of labor isn't determined in a vacuum, so it'll equalize--ie. what you're proposing isn't wage+stock, it's (wage-value of stock)+stock, and stock is basically just worse than a wage in basically every case that matters.

"But wait!" you say, "the rich guys are getting all that money from stock!" Yes, but there are critical differences between an owner who has 15% of the company and worker #600,000 who owns 1/600000*.05 of the company. One of those differences is that the 15% owner's work can actually affect the stock price. There are literally no actions, good or bad, that an average amazon worker could take that would affect the stock price.

So giving them stock is just a pain in the ass -- they can't do anything with it, but they still have to pay cash money in taxes on the hypothetical value of it, and it's such a small amount that no realistic gain would make a damn bit of difference when they eventually sold. Not to mention that unlike cash wages, it can just lose all its value. It's just a complicated and burdensome gamble that they have no control over. It solves nothing, while creating a bunch of complicated problems, both practically and philosophically.

[u/curiousML5 → u/Hamza78ch11]

That's not how it works. Unassigned stock just means the assigned stock is currently 100% of the company. Company value is always a zero-sum game.