Employee ownership is the key to economic justice, and Kansas City is poised to lead

Can the solution for economic justice be best found in the heart of America?

We know that Kansas City has been experiencing exciting momentum the last several years. In fact, some of the most successful companies with the happiest employees here in the metropolitan area are employee-owned. What does this mean and how can we lead by example?

The topic of economic democracy isn’t new. Just before the COVID-19 pandemic, the ideals of economic democracy were in the spotlight for a shining moment, a hot topic of American political debates. They were almost always supported by members of both parties. Then came the pandemic and the focus rightly shifted to the health and safety of our nation. As the pandemic turned to endemic (at least in our hearts) this year, the topic of economic democracy rose again. Then came Ukraine.

Let’s be honest: Something immediate will always grab our interest and emotions, but economic democracy deserves your attention now.

Separate work at Boston College, Rutgers and Stanford universities all suggest the same: Wealth disparity hasn’t been this severe in America since our nation began — a notion that rings distinctly undemocratic.

In America today, almost 30% of all accumulated wealth is owned by 1% of Americans. Worse, CNBC and the last census suggest that 50% of all Americans have no savings at all. And I mean nothing — zip, zilch, nada. Many solutions offered to fix this problem are only short-term Band-Aids and do not solve the root problem.

Charitable help, government safety nets and Medicaid are all critical. Likewise, Social Security, pensions and 401(k)s, while great programs, only create non-poor retirements. Some believe the solution is a higher minimum wage. I support a higher minimum wage, but all of these initiatives do little to nothing in terms of long-term, sustainable wealth creation.

Equal-but-poor is not the end goal.

Extreme wealth disparity may just be the natural conclusion of all-out capitalism, but it is not in the best fiscal interest of our nation. That’s not a left or a right conclusion — it is a fiscally conservative requirement for the continuation of economic greatness.

I love Thomas Jefferson’s principle of economic democracy. He believed economic success was possible only if we made the American farmer, manufacturer and fisherman owners. It was the productivity of ownership that Jefferson believed would allow American workers to outcompete their European counterparts, and it permanently changed our nation for the better.

The same principle can — and does — work today. So, what can fix the wealth disparity? Employee stock ownership plans, or ESOPs. I’m sure Jefferson’s favorite companies would be ESOPs. We know that when employees are the owners and the owners are employees, they’re set up for shared success and shared wealth. Today, approximately 7,000 ESOPs exist in America with around 14,000,000 employee-owners. The success of employee-owned firms is predictable. They grow faster, are more productive, are more profitable and are almost always great places to work.

The COVID-19 recession was horribly regressive, but it was the perfect field trial for ESOPs. Would they really weather tough times better than the overall economy? The answer has been a resounding yes, with astounding and impressive data such as ESOPs reducing staff at only 25% of the national average, and the average employee-owner’s retirement account balance is double compared to a conventional organization.

In Kansas City, we may be America’s best town to incubate or convert an existing firm to an ESOP.

Right here, you will consistently see great examples of employee ownership not only working for the individual, but also benefiting the firm. From my personal favorite, Burns & McDonnell, to other terrific local firms such as Black & Veatch, PBI Gordon, Global Prairie, McCownGordon Construction and a brand-new member to the ESOP world — Henderson Engineers — I love seeing the Kansas City ESOP pool continue to expand.

If the American economy wishes to remain a global competitor, it must be more entrepreneurial, more owner-based and its success must be more democratic.

America always shines brightest when she cares the most.

More than 90 million Americans work at firms where an ESOP is possible and where economic justice is calling. Consider this path for your firm, your employees and a more democratic future for America.