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

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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.