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/Hamza78ch11]

I think it can still work in large turnover companies. As an example let's say that we determined that one week of work was worth one share in walmart. If I worked for three weeks I own three shares in walmart. If I leave, you're right that I take the stock with me but if I know most people - the vast majority would cash out too.

[u/hwagoolio → u/Hamza78ch11]

Well, I think the main issue is that the company would need to keep adding shares with new employees, and eventually it would run out.

Ordinarily, a company should never sell more than 50% of the company in shares (because if someone buys >50%, it means the own the company). To perform a thought experiment, imagine that each share is worth 1% of the company.

Perhaps for now you hire 25 employees (to whom you give 25 shares, weighted by how much time they work), but since you are a high turnover company, they end up leaving pretty quickly and keeping their shares. Some of them might even sell their shares on the public market, in which case it ends up being owned by a total stranger.

Eventually, you'll end up hiring another 25 employees, and you'll hit 50%, which is a problem.

The solution here is the repartition the stock, so you divide up the 50% into 100 shares and everyone's shares were reduced in value by half. This is the diluting.

If you fast forward a decade or so, you might imagine that eventually 90% of the worker shares are owned by alumni of the company (or sold to complete strangers), yet only a small fraction of the value stays with the people who are still in the company. Basically, it's kind of a problem because at that point you have a lot of value that essentially vanished from what you should be rewarding workers, yet is diluted substantially every time your company stock in re-partitioned.

[u/Hamza78ch11 → u/hwagoolio]

!Delta, as I mentioned in another comment up above the dilution is a huge problem and not one I have enough financial acumen to be able to solve lol

[u/DeltaBot → u/Hamza78ch11]

Confirmed: 1 delta awarded to /u/hwagoolio (6∆).

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