Every company should be owned by its employees • Hacker News Board

Re: Every company should be owned by its employees

#691

Post by goalonetwo » Thu, Jul 25, 2024, 5:34 PM UTC

munificent wrote: post #656

> “It's hard to build true wealth for yourself if you don't have some type of ownership in something, and it's hard for most people to get ownership in something,” Ruger says. I think this is a really good insight. But it also touches on something that many of the HN crowd, especially in the Bay Area find uncomfortable: home ownership. One of the ownership assets that is most attainable by many Americans is a little…

Homes should not be an investment.

And Homes are also generally a bad investment even though there is a whole lobby of people that try to convince you that you need to buy at any price.

The only reason why homes have been a good "investment" for most people is that it is a forced saving through your mortgage, which most people would have spent stupidly otherwise.

But we should normalize renting and investing in actual investments like the SP500. Everyone would be better off and you would end up with more assets.

Re: Every company should be owned by its employees

#692

Post by jkaplowitz » Thu, Jul 25, 2024, 5:42 PM UTC

goalonetwo wrote: post #691

munificent wrote: post #656

> “It's hard to build true wealth for yourself if you don't have some type of ownership in something, and it's hard for most people to get ownership in something,” Ruger says. I think this is a really good insight. But it also touches on something that many of the HN crowd, especially in the Bay Area find uncomfortable: home ownership. One of the ownership assets that is most attainable by many Americans is a little…

Homes should not be an investment. And Homes are also generally a bad investment even though there is a whole lobby of people that try to convince you that you need to buy at any price. The only reason why homes have been a good "investment" for most people is that it is a forced saving through your mortgage, which most people would have spent stupidly otherwise. But we should normalize renting and investing in actua…

> Homes should not be an investment.

[…]

> But we should normalize renting

Isn’t it investors who would normally own rented homes, and own them specifically as an investment, whether each investor only owns one home or several/many?

I’m guessing you meant that an owner-occupied primary residence shouldn’t be an investment, which is usually good advice.

Re: Every company should be owned by its employees

#693

Post by unyttigfjelltol » Thu, Jul 25, 2024, 5:43 PM UTC

goalonetwo wrote: post #691

munificent wrote: post #656

> “It's hard to build true wealth for yourself if you don't have some type of ownership in something, and it's hard for most people to get ownership in something,” Ruger says. I think this is a really good insight. But it also touches on something that many of the HN crowd, especially in the Bay Area find uncomfortable: home ownership. One of the ownership assets that is most attainable by many Americans is a little…

Homes should not be an investment. And Homes are also generally a bad investment even though there is a whole lobby of people that try to convince you that you need to buy at any price. The only reason why homes have been a good "investment" for most people is that it is a forced saving through your mortgage, which most people would have spent stupidly otherwise. But we should normalize renting and investing in actua…

It's been a good investment for many people for obvious macro reasons but also because: 1. You can live in it (thus realizing value directly). 2. Since you live there you can't easily panic and sell in a downturn. 3. Leverage (U.S. gov't FHA provides almost 30:1 leverage) 4. Lenders can't liquidate you simply on account of decline in value (no margin calls)

Re: Every company should be owned by its employees

#694

Post by stavros » Thu, Jul 25, 2024, 5:44 PM UTC

pavlov wrote: post #519

stavros wrote: post #448

Earlier quoted context omitted.

Yeah, this is spot on. It's just that the priorities are different (even unemployed Greeks scrape enough money to have coffee with their friends), which can seem to Americans like we're lazy.

I was recently in Lisbon and was surprised that an espresso still costs 70 cents despite the influx of tourists and expats. If it's the same in Greece, I can easily see how an unemployed person can afford to hang out.

It used to be 2.5 EUR or so, but now it's risen due to inflation. Keep in mind that in Greece, your family will also support you if you're unemployed, so it's not uncommon for parents to share their pension or children to share their salary with the family.

Re: Every company should be owned by its employees

#695

Post by WJW » Thu, Jul 25, 2024, 5:45 PM UTC

standardUser wrote: post #669

munificent wrote: post #656

> “It's hard to build true wealth for yourself if you don't have some type of ownership in something, and it's hard for most people to get ownership in something,” Ruger says. I think this is a really good insight. But it also touches on something that many of the HN crowd, especially in the Bay Area find uncomfortable: home ownership. One of the ownership assets that is most attainable by many Americans is a little…

> once that piece of ownership has been attained it's also rational to want to preserve and maximize the value of that investment By that logic, the idea of workers having part ownership of the companies they work for has a lot of upside.

Focusing on the possible upsides tends to ignore the possible downsides. Worker ownership is only great when the company does well. If the company does not do well, the workers don't just lose their job but their nest egg at the same time. Let's not pretend that you can always influence whether your company will grow or not, sometimes you just work at Altavista and Google just launched.

The average worker has enough of their income tied up into one employer already, they don't need to have even more economic concentration. It would perhaps be better if every company was owned by everyone other than its employees, with the employees of every company being forcibly made to invest in every other company. That way everybody gets to have an cushion if they ever lose their job or their company goes under. A bit like a DIY UBI if you will.

Re: Every company should be owned by its employees

#696

Post by nostrademons » Thu, Jul 25, 2024, 5:45 PM UTC

victorbjorklund wrote: post #677

nostrademons wrote: post #633

Earlier quoted context omitted.

The article is arguing for ESOPs, basically stock options for employees. The examples cited are actually quite tame by tech industry standards: "During Central States’ worst year, employees earned the equivalent of 6 percent of their pay in stock, during their best they earned 26 percent." By contrast, FANG employees routinely make >50% of their compensation in stock, and it can be up to 80% in good years. As for how…

Getting some of your salary in stock options isn't really an employee owned company. How many % of total Google shares are owned by employees (excluding the founding employees)? 0,0000000001%? At least 50% would be required for it to be viewed as an employee owned company.

I don't know about Google specifically, but I know that it's way more than 0.0000000001% because I personally have been paid more than 0.0001% of Google in stock compensation. A typical Series A startup reserves 20% of the company for the option pool, and then there are follow-on refresh grants.

Note that if you run the math on the company in the article, they're considerably less generous than that. They say they have 1500 employees, $1B in revenue, and the average employee makes about 8-26% of their earnings. Figure that's maybe $20K/employee * 1500 employees = $30M in stock compensation on $1B in revenue, so they spend 3% of their revenue on stock compensation. If you figure the company is valued at $4B, they're giving away like 0.75% of the company per year, a bit less than Google and way less than a tech startup.

This is probably a PR hit for Central States Manufacturing anyway, to help their recruitment efforts.

Re: Every company should be owned by its employees

#697

Post by thereisnospork » Thu, Jul 25, 2024, 5:47 PM UTC

janpieterz wrote: post #686

xivzgrev wrote: post #678

Earlier quoted context omitted.

Homes shouldn't be an investment. They've accidentally become that in the past few decades, and as a result, affordability is getting worse. The better it does as an investment class, the worse it will become. It's a self perpetuating spiral. I don't see the market solving this. I only see some regulation helping here - ie any tax filer can at most own 1 SFH (this includes married couples). So no second, third, tenth…

How do you suggest we handle the rental market?

The drastic solution is you ban long term rentals - all 'rental agreements' must return shares in the underlying real estate and structure proportional to length of stay. The rent payments would be distributed pro rata to the existing share holders.

Of course you could also allow people to build homes at market clearing prices, so investments would just be undercut.

Re: Every company should be owned by its employees

#698

Post by jquery_dev » Thu, Jul 25, 2024, 5:48 PM UTC

janpieterz wrote: post #686

xivzgrev wrote: post #678

Earlier quoted context omitted.

Homes shouldn't be an investment. They've accidentally become that in the past few decades, and as a result, affordability is getting worse. The better it does as an investment class, the worse it will become. It's a self perpetuating spiral. I don't see the market solving this. I only see some regulation helping here - ie any tax filer can at most own 1 SFH (this includes married couples). So no second, third, tenth…

How do you suggest we handle the rental market?

Being from UK: stop multi home ownership for private companies/persons. Move to majority council owned houses, which then feeds money back into the communities. Follow right to buy, where the money goes back to the council.

Re: Every company should be owned by its employees

#699

Post by overrun11 » Thu, Jul 25, 2024, 5:49 PM UTC

The company profiled, Central States Manufacturing, has compounded at 20% per year since its formation in 1988 (according to the article). In comparison, Amazon has compounded at 23% since its IPO in 1997. If you are lucky enough to be a worker at an employee owner company that has 1 in a million anomalous stock growth you will do very well. This is not surprising.

World wide public equities have grown at 5% real over the longest datasets available, 7% for US based companies. Even these numbers are misleading because company returns are heavily left skewed: a small minority of companies do tremendously well and the rest are stagnant or shrinking. From 1991 to 2020, 55% of US stocks underperformed 1 month T-bills. From 1926 to 2016, 4% of stocks have outperformed the total stock index.

I do not see what is so amazing about this? If you think that employees deserve a larger share of the spoils then you can advocate that they receive more of it directly as compensation, no employee owned corporation needed. If they will make the same on net but with some of it locked away in a single company's equity than you've just made those employees' economic situation _more_ precarious than it was before.

Non-employee equity ownership arises naturally but these articles always try to paint it as the result of the nefarious machinations of top-hat wearing capitalists. Suppose this company needs more capital than employees can raise but won't or can't take on new debt. Equity must be sold to outsiders.

The article also wrongly suggests that owning equity is exceptionally difficult without employee owned companies: "it's hard for most people to get ownership in something." But we have a whole public equities market that anyone can participate in and innovation has only made it easier over time. Index funds have made diversification automatic, fractional shares have solved daunting investment minimums and payment for order flow has eliminated transaction fees and concern about getting a fair fill price.

Re: Every company should be owned by its employees

#700

Post by orangecat » Thu, Jul 25, 2024, 5:50 PM UTC

stavros wrote: post #477

lupusreal wrote: post #472

Earlier quoted context omitted.

So are you conceding that an economy built entirely out of coops would suffer from reduced productivity?

You're asking me if an economy that optimized for happiness instead of productivity would suffer from reduced productivity? Yes, yes it would, and it would also suffer from increased happiness. Again, this is a culture thing, where I'm saying "I don't care about being productive, as long as I'm happy", and you're coming from a Protestant work ethic place of "but how can you be happy if you aren't productive?".

Again, this is a culture thing, where I'm saying "I don't care about being productive, as long as I'm happy",

And you're free to work part time or switch to a lower-paying job that you enjoy more. I did the latter recently; it's great, and I'm thankful that our economy is so productive that I can still afford everything I need.