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Sharing Productivity @ CAP

The current economic downturn that has plagued the middle and lower class workforce sees little sign of overturn. But, several experts on economics and the labor force have proposed an alternative management model that focuses on productivity of the worker rather than overall corporate success.

Hosted by the Center for American Progress, “Inclusive Capitalism for the American Workforce” focused on experiments that businesses have recently implemented with positive results for the middle class. Richard Freeman of Harvard University, along with Joseph Blasi and Douglas Kruse, both of Rutgers University, wrote the proposal, which has yet to be formally endorsed by CAP.

The principle of their proposal, specifically targeted for those affected by the recession, is that employees will be fairly compensated for their work effort through incentive systems created by companies. With the bottom 80% of the workforce earning as much as the top 5%, such as business executives, this alternative would give workers the option to earn more money than their base salary indicates based on performance.

In other words, when a company is doing well, people at the top of the hierarchy earn the most money because of performance bonuses. But, when companies perform poorly, the lower end of the hierarchy is cut, while executives usually receive less of a bonus that still gives them large sums of money.

For this incentive program to work in America, U. S. Rep. Keith Ellison, D-Minn., said we need actual progress that includes an evidence-based policy signed into law. He said that, “our [financial] problem is found in policy and decision making…we made the problem, and we’re going to have to fix it with policy.”

Another aspect of this academic proposal is to provide stock options for all employees, regardless of their position in a company. Congressman Ellison said that because shareholders rarely know what’s getting done in a company, “we need to make the workers and employees the shareholders.”

Thomas Conway of the United Steelworkers agreed that low-salaried employees are the core of companies, but he said for them to gain more money through performance-based incentive, they need to be given all the performance facts of that company. He said, “You need to look at the entire enterprise, question if it makes sense, and produce studies with specific numbers.” By doing so, he said success will be inevitable because, “employees can then trust their companies and want to work for them.”

(One way to test these proposals would be to see how well they work in academia with graduate students vis-à-vis full professors;)-ed.)