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This model also puts a lot of risk on the employees. It’s basically forcing investment in the same company that pays your salary. An investment that has less li

by yibg 2y ago

This model also puts a lot of risk on the employees. It’s basically forcing investment in the same company that pays your salary. An investment that has less liquidity than standard investments. It’s like putting all your retirement fund into your company’s stock.

W3cUYxYwmXb5c 2y ago
This is a very good and understated point. One of the benefits we have as employers is being unattached. If things go bad, we can cut and run to some other company. On the other hand, the owners and primary investors are by definition more invested, and have to actual bear the burden of failure. I definitely didn't want that level of involvement in most of the companies I have worked for.
whoknowsidont 2y ago
>It’s like putting all your retirement fund into your company’s stock. As opposed to putting your retirement fund into other company's stocks, which everyone does at the same time, making those companies too big too fail without unraveling several threads of social fabric. I think your statement actually proves why employees should have stock in the company. If we really were worried about issues such as this we'd have universal (not attached to you employer) healthcare and a pretty robust (but minimal) retire fund for citizens. But we have the opposite of that with none of the upsides.
- missedthecue 2y ago
  If I'm employed by Acme Corp, and have a 401k in index funds, but get laid off after the company goes bankrupt, I lose my income, but not my wealth. On the other hand, if my wealth is in Acme Corp and they go bankrupt, I lose my wealth and my income. The first model is less risky, yet profitable enough to be worth it. And everyone can still own the means of production.
  - whoknowsidont 2y ago
    You've not only missed the point, but additionally nothing is stopping you from investing your wealth elsewhere. I don't understand how your scenario is applicable; it's definitely constructed.
- bruce511 2y ago
  I agree with you on Healthcare and retirement. And there are non-financial benefits to owning shares where you work. But any investment manager will recommend that your savings are diversified. That helps to insulate you from individual events thus making your savings more resistant to failure. So you might invest in public shares, or property, or personal energy (residential solar) and so on. You might mix different kinds of shares. Etc. By contrast owning shares where you work offers few financial upsides. It may or may not out perform the market. It may or may not be liquid. And so on. It does however come with substantial financial risk. With one point of failure, one event, you can lose your income and savings. Only you can decide if the risk is worth the upside. For most people, it's not.
refurb 2y ago
Precisely. Seems to me the best option would be to offer employees ownership. You could have two compensation structures: - 100% cash compensation - 50% cash/50% equity See which ones employees prefer. I'll bet it's overwhelmingly the first.
ellegriffin 2y ago
Not true, 90% of employees with an ESOP account also have a 401k or other retirement account. The ESOP account is not instead of a retirement account, it's in addition to it.

by yibg 2y ago

W3cUYxYwmXb5c 2y ago

This is a very good and understated point. One of the benefits we have as employers is being unattached. If things go bad, we can cut and run to some other company. On the other hand, the owners and primary investors are by definition more invested, and have to actual bear the burden of failure. I definitely didn't want that level of involvement in most of the companies I have worked for.

whoknowsidont 2y ago

>It’s like putting all your retirement fund into your company’s stock. As opposed to putting your retirement fund into other company's stocks, which everyone does at the same time, making those companies too big too fail without unraveling several threads of social fabric. I think your statement actually proves why employees should have stock in the company. If we really were worried about issues such as this we'd have universal (not attached to you employer) healthcare and a pretty robust (but minimal) retire fund for citizens. But we have the opposite of that with none of the upsides.

missedthecue 2y ago
If I'm employed by Acme Corp, and have a 401k in index funds, but get laid off after the company goes bankrupt, I lose my income, but not my wealth. On the other hand, if my wealth is in Acme Corp and they go bankrupt, I lose my wealth and my income. The first model is less risky, yet profitable enough to be worth it. And everyone can still own the means of production.
- whoknowsidont 2y ago
  You've not only missed the point, but additionally nothing is stopping you from investing your wealth elsewhere. I don't understand how your scenario is applicable; it's definitely constructed.
bruce511 2y ago
I agree with you on Healthcare and retirement. And there are non-financial benefits to owning shares where you work. But any investment manager will recommend that your savings are diversified. That helps to insulate you from individual events thus making your savings more resistant to failure. So you might invest in public shares, or property, or personal energy (residential solar) and so on. You might mix different kinds of shares. Etc. By contrast owning shares where you work offers few financial upsides. It may or may not out perform the market. It may or may not be liquid. And so on. It does however come with substantial financial risk. With one point of failure, one event, you can lose your income and savings. Only you can decide if the risk is worth the upside. For most people, it's not.

refurb 2y ago

Precisely. Seems to me the best option would be to offer employees ownership. You could have two compensation structures: - 100% cash compensation - 50% cash/50% equity See which ones employees prefer. I'll bet it's overwhelmingly the first.

ellegriffin 2y ago

Not true, 90% of employees with an ESOP account also have a 401k or other retirement account. The ESOP account is not instead of a retirement account, it's in addition to it.