Re: Unions and Coops

[Dan Bell <dbell@kent.edu>]

Barry Randall asks why leaders of unions and the coop
movement do not take advantage of ESOPs and CSOPs.

First of all, I think many of these leaders do take
advantage of ESOPs.

On the union side, the United Steelworkers of America
are a clear example of a union which has taken a close
look at ESOPs, decided how to use them effectively to
further the interests of their membership, and under
what circumstances to oppose them. USWA created the Worker
Ownership Institute which brings management and union
leaders together from ESOP companies to explore ways
of building on the unique opportunity for labor-management
cooperation that is present. Former USWA President, Lynn
Williams, and current USWA Secretary-Treasurer, Leo Gerard,
are both part of the advisory board for the Capital
Ownership Group.

On the coop movement side, the Industrial Cooperative
Association in Boston is an example of a group which
began by promoting the formation of democratic worker-owned
cooperatives. They certainly expressed concerns about
ESOPs and the legislation which gave ESOPs certain tax
benefits in 1974. In fact, their input is responsible
for the fact that the 1042 Capital Gains Rollover is not
only available to shareholders selling to ESOPs, but also
those selling to eligible worker owned cooperatives.
Over time, ICA has embraced the ESOP as a mechanism which
can be useful for broadening their concept of democratic
worker ownership.

So, I hesitate to generalize about the attitude of union
and coop movement leaders towards ESOPs.

Having said this, Barry's question is still a valid
question. Why is it that some union and coop movement
leaders do not unite under the banner of the "ESOP movement".

I suspect this has more to do with the lack of clarity
in just exactly what is the "ESOP movement".

An ESOP is a retirement plan that can be used as a
mechanism for providing tax advantaged financing for
the purchase of an employer's stock on behalf of
employees. As a TOOL, it can be used by:

1) those who promote a way to "sell your company to 
your employees and still keep control"
2) those who promote a way to avoid a plant shutdown
which would cause a major loss of employment
3) those seeking a way to fund the establishment of
a company run on the democratic principles of
one person, one vote.

Employees can benefit in all three of these situations.

Unions are about improving the economic security and
the working conditions of their membership. Where ESOPs
further these goals, they support them. However, where
ESOPs are offered in exchange for giving up a better
economic benefit, unions reject them. Furthermore, some
companies openly use an ESOP as a deterrant to union
organizing of their workforce.

The coop movement has a clear ideology organized
around six principles:
1. Open and voluntary membership
2. One member, one vote
3. Limited interest on shares
4. Return of surplus to members
5. Constant education
6. Cooperation among cooperatives

While an ESOP can be a financing means to acquiring
a company on behalf of a group of people who share
these ideals, it takes a lot of creativity and work
to structure the ESOP in a way that does not water
down the coop ideal. Coops are about much more than
just capital accumulation.

I for one hope that union and coop movement leaders
continue to remain focused on their specific tasks
of safeguarding workers' rights and humanizing how
work is organized. I think they can continue to
carry out these important roles, and at the same
time join with others in supporting the promotion
of mechanisms which broaden capital ownership to
a wider population.

Dan Bell
--
Dan Bell
International Program Coordinator
Ohio Employee Ownership Center
Kent State University
Kent, OH 44242
(330) 672-3028
(330) 672-4063 fax
dbell@kent.edu
http://www.kent.edu/oeoc/