Why this structure is still how most jobs work

Everything in this track describes the default. It's worth being honest about how much of a default it is.

The United States has around 160 million people working. Roughly 15 million of them are in an employee stock ownership plan, by the National Center for Employee Ownership's count, and about 11 million of those are still active employees at their ESOP company. Worker cooperatives employ somewhere around 10,000 people across about a thousand businesses. Certified B Corps number about 10,000 worldwide, but most of them are conventionally owned; the certification is about conduct, not ownership.

Add it up generously and something like 9 in 10 American workers are at a company owned by people who don't work there, whether that's public shareholders, a private equity fund or a founder and their investors.

Why it won

The shareholder-owned corporation is very good at one thing: raising money. If you need $200 million to build a factory, you can sell shares to a thousand people who each risk only what they put in, never have to show up and can sell to someone else whenever they want. No other structure does that as well. Worker cooperatives raise money from members and from lenders, and both have limits. Our post on how cooperatives raise money goes through them.

It's also the legal default: file incorporation papers in any state and you get a shareholder-owned corporation. Forming a cooperative means finding a state with a cooperative statute, which not all have, and a lawyer who has done one, which fewer have. Setting up an ESOP costs a company $100,000 or more in legal and valuation fees before it starts.

And it scales: Boeing, Kaiser Permanente and Amazon each employ hundreds of thousands of people. Coordinating that many workers as voting owners is an open problem. The largest worker cooperative in the world, Mondragon, has about 70,000 employees, and a large share of them are not members. Our post on which businesses work as cooperatives goes into why the model fits some industries and not others.

What it's good at

This model built most of the physical and digital world you use. It funded the railroads, the power grid, the internet and the pharmaceutical industry. It rewards people who put money at risk, and money at risk is how new things get built. Anyone who tells you it's simply a scam is skipping this.

It's also flexible, in that a shareholder-owned company can raise wages, share profits, put employees on the board or convert to employee ownership, and some do. The structure doesn't require any of it, but it allows it.

What the trade is

What the structure decides is who gets the upside and who gets a say, and both go to shareholders. Employees get wages, and whatever else management chooses to give them, for as long as the arrangement serves the owners.

Whether or not that's a good thing is up for debate. Our opinion is that most people just never see it written down, because it's the water everyone swims in.

Why we bother listing the exceptions

The Better Work Co. lists companies that are set up differently: worker cooperatives, employee-owned firms, benefit corporations and nonprofits. That isn't because the conventional model is illegitimate. A job at one of those companies is a different deal, and you can only compare deals if you understand the standard one.

If you've read this track, you now understand it better than most people who work inside it. The other three tracks cover the alternatives.