The American Dream—that foundational promise of economic opportunity, social mobility, and lasting security—looms large in our life stories. While access to this promise has been granted slowly and unevenly, at its best, our nation has been a beacon of democracy and free enterprise.
Today, corporations remain too fixated on the latter at the expense of the former–but we believe democracy and free enterprise must go hand in hand. In a principled, democratic society, every worker should have the opportunity to participate fully in the economy. That means employers, large and small, must provide their workers with more paths to ownership.
We know the power of ownership firsthand. Darren’s grandfather, a Black man born in the Jim Crow South, held only a third-grade education–but as a porter for a Texas oil company, he participated in a profit-sharing plan that dignified his work, sustained his family, and left him with enough stock to retire comfortably.
Pete’s father operated a road grader for nearly five decades for a construction company outside of Chicago. Despite his long hours over many years, he never participated in the success of the company beyond an hourly wage. As a result, he never felt a sense of ownership or alignment, and enjoyed few options for mobility.
Today, millions of Americans feel the same way. Gone are the days when first-generation college graduates could see doors open to them that were closed to their parents. Instead, many Americans are now downwardly mobile.
Unlike previous generations, only half of American adults born in 1980 make as much as their parents did at the same age. Two in five Americans cannot afford a $400 emergency, let alone save enough for retirement. Gaps in knowledge widen the disparity: according to the Treasury Department, only one in three Americans is financially literate.
These trends—evaporating opportunities for access, growth, and prosperity—have dangerous implications not only for the economy but also for democracy. Our social contract is fraying—and we all have a vested interest in weaving it back together. Whether we work for an hourly wage, a salaried job, or own companies ourselves, one way we can do just that is by advocating for shared ownership plans.
What does this look like in action? Publicly-traded pump manufacturer Ingersoll Rand introduced an incremental shared ownership plan for its 16,000 employees in 2020. Employees who have been with the company since 2017 have earned free equity grants equal to 100% of their annual income.
In return, the company has seen its turnover rates drop from 20% to below three percent—even amid the “Great Resignation.” Employee engagement scores at the company skyrocketed from the 20th percentile to the 90th. The impact on corporate culture and performance should be self-evident but, to be clear, investors have also done extremely well.
Over time, staffing giant Insight Global has increased its employee ownership, and today every one of the company’s 4,500 employees has a pathway to share ownership–starting with $5,000 grants with eligibility increasing as they spend more time with the company. It’s had a considerable impact on their employee turnover and culture building–with a decline in the employee turnover rate by more than 60% since 2017.
Likewise, material sciences company Hyperion Materials & Technologies granted all 2,000 of its employees ownership in 2019 alongside a robust internal employee engagement effort. They’ve seen profit margins increase by 57% along with a 72% increase in their employee engagement scores measured by Gallup.
These results–engaged, well-compensated workers, doing fair, dignified work at healthy companies able to support them–can be replicated across our economy. Broad-based employee ownership can help get us there.
This is a crucial opportunity for everyone to participate in meaningful wealth creation. To that end, we are proud to collaborate as partners on a new non-profit called Ownership Works, which pushes for broader profit-sharing and a sustainable, inclusive economy.
This consortium of more than 60 (and growing) investors, pension funds, labor advocates, foundations, financial institutions, and professional services organizations controls or influences trillions of dollars of capital and millions of jobs. It can have a profound social impact.
By 2030, we aim to create hundreds of thousands of new employee-owners and generate over $20 billion in wealth for working families. We see potential to meaningfully exceed these figures.
We can—and must—do more. Like all symbiotic relationships, free enterprise and democracy need each other to thrive.
We urge all stakeholders to join us in the fight for an inclusive, democratic free enterprise—where all of us can find dignity and ownership in our labor. Only then can we fully restore our social contract—and rebuild an American Dream that endures.
Darren Walker is president of the Ford Foundation, an independent organization working to address inequality and build a future grounded in justice. Pete Stavros is the Founder and Chairman of Ownership Works, and Co-Head of Americas Private Equity at KKR. KKR is an investor in Hyperion and former investor in Ingersoll Rand.
The opinions expressed in Fortune.com commentary pieces are solely the views of their authors and do not reflect the opinions and beliefs of Fortune.
More must-read commentary published by Fortune:
Sign up for the Fortune Features email list so you don’t miss our biggest features, exclusive interviews, and investigations.