By
Robert Reich
Marissa
Mayer tells us a lot about why Americans are so angry, and why
anti-establishment fury has become the biggest single force in American
politics today.
Mayer
is CEO of Yahoo. Yahoo’s stock lost about a third of its value last year, as the company went
from making $7.5 billion in 2014 to losing $4.4 billion in 2015.
Yet Mayer
raked in $36 million in compensation.
Even
if Yahoo’s board fires her, her contract stipulates she gets $54.9 million in severance. The severance package
was disclosed in a regulatory filing last Friday with the Securities
and Exchange Commission.
In
other words, Mayer can’t lose.
Why
do Yahoo’s shareholders put up with it? Mostly because they don’t know about
it.
Most
of their shares are held by big pension funds, mutual funds, and insurance
funds whose managers don’t want to rock the boat because they skim
the cream regardless of what happens to Yahoo.
In
other words, more no-lose socialism for the rich.
I
don’t want to pick on Ms. Mayer or the managers of the funds that invest in
Yahoo. They’re typical of the no-lose system in which America’s corporate and
financial elite now operate.
But
the rest of America works in a different system.
Theirs
is cutthroat hyper-capitalism – in which wages are shrinking, median household
income continues to drop, workers are fired without warning, two-thirds are
living paycheck to paycheck, and employees are being classified as “independent
contractors” without any labor protections at all.
Why
is there no-lose socialism for the rich and cutthroat hyper-capitalism for
everyone else?
Because
the rules of the game – including labor laws, pension laws, corporate laws, and
tax laws – have been crafted by those at the top, and the lawyers and lobbyists
who work for them.
Does
that mean we have to await Bernie Sanders’s “political revolution” (or, perish
the thought, Donald Trump’s authoritarian populism) before any of this is
likely to change?
Before
we go to the barricades, you should know about another CEO named Hamdi Ulukaya,
who’s developing a third model – neither no-lose socialism for the rich nor
hyper-capitalism for everyone else.
Ulukaya
is the Turkish-born founder and CEO of Chobani, the upstart Greek yogurt maker
recently valued at as much as $5 billion.
Last
Tuesday Ulukaya announced he’s giving all his 2,000 full-time
workers shares of stock worth up to 10 percent of the privately held company’s
value when it’s sold or goes public, based on each employee’s tenure and role
at the company.
If
the company ends up being valued at $3 billion, for example, the average
employee payout could be $150,000. Some long-tenured employees will get more
than $1 million.
Ulukaya’s
announcement raised eyebrows all over corporate America. Many are viewing it an
act of charity (Forbes Magazine calls it one of “the most selfless corporate acts
of the year”).
In
reality, Mr. Ulukaya’s decision is just good business. Employees who are
partners become even more dedicated to increasing a company’s value.
Which
is why research shows that employee-owned companies – even those with workers
holding only a minority stake – tend to out-perform the competition.
Mr.
Ulukaya just increased the odds that Chobani will be valued at more than $5
billion when it’s sold or its shares of stock are available to the public.
Which will make him, as well as his employees, far wealthier.
As
Ulukaya wrote to his workers, the award isn’t a gift but “a mutual promise to
work together with a shared purpose and responsibility.”
A
handful of other companies are inching their way in a similar direction.
Apple
decided last October it would award shares not just to executives or engineers
but to hourly paid workers as well. Twitter CEO Jack Dorsey is
giving a third of his Twitter stock (about 1 percent of the company) ”to our employee equity pool to reinvest directly in our people.“
Employee
stock ownership plans, which have been around for years, are lately seeing a
bit of a comeback.
But
the vast majority of American companies are still locked in the old
hyper-capitalist model that views workers as costs to be cut rather than as partners
to share in success.
That’s
largely because Wall Street still looks unfavorably on such collaboration
(remember, Chobani is still privately held).
The
Street remains obsessed with short-term stock performance, and its analysts
don’t believe hourly workers have much to contribute to the bottom line.
But
they’re prepared to lavish unprecedented rewards on CEOs who don’t deserve
squat.
Let
them compare Yahoo with Chobani in a few years, and see which model works best.
If
I were a betting man, I’d put my money on Greek yoghurt.
And
I’d bet on a model of capitalism that’s neither no-lose socialism for the rich
nor cruel hyper-capitalism for the rest, but share-the-gains capitalism for
everyone.
ROBERT
B. REICH is Chancellor’s Professor of Public Policy at the University of
California at Berkeley and Senior Fellow at the Blum Center for Developing
Economies. He served as Secretary of Labor in the Clinton administration, for
which Time Magazine named him one of the ten most effective cabinet secretaries
of the twentieth century. He has written fourteen books, including the best
sellers “Aftershock, “The Work of Nations," and"Beyond Outrage,"
and, his most recent, "Saving Capitalism." He is also a founding
editor of the American Prospect magazine, chairman of Common Cause, a member of
the American Academy of Arts and Sciences, and co-creator of the award-winning
documentary, INEQUALITY FOR ALL.
