Business: The Workers' Stake in Capitalism

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EMPLOYEE STOCKHOLDERS

DURING the greatest economic boom of all time, a new group of stockholders is sharing in the fat corporate profits. They are the U.S. workers who make the goods. Since World War II, plans to help employees buy stock have spread so fast that some 300 companies now have programs involving 2,000,000 salaried and production-line workers. This week General Motors announced the results of a poll on its plan for 112,000 salaried employees. Four out of every five eligible workers decided to invest up to 10% of their pay in G.M.'s future, and the corporation started making deductions from paychecks. Ford will bring out a similar plan to help employees buy Ford stock (if and when it is put on sale). Du Pont, which started a stock plan last month, reports that nearly 70,000 (out of 87,000) eligible workers have signed up. But despite their increasing popularity, stock-buying programs are also the center of a growing argument on whether they are good for companies and their workers.

Worker stock programs are not a new idea, and for some businessmen their past record is against them. In 1929 many of the biggest corporations —U.S. Steel, Standard Oil Co. of Indiana, A.T. & T., Procter & Gamble—some 200 in all, had stock programs. But when the Depression hit, all but a handful ran into trouble and were dropped. Not only did the workers, like almost everyone else, sell out at large losses, but the plans themselves were faulty. Most called for stock to be bought at a fixed price on a fixed day and paid off in rigidly fixed installments. Thus, a worker might buy a stock valued at $200, only to have it plummet to $20 a share while he was still paying off at the original price. In many cases, the only way for a worker to escape was to quit his job.

Today, however, U.S. industry is doing its best to make sure that history does not repeat itself. Apart from the basic good health of the entire economy, most modern stock-buying programs contain safeguards to protect employees. One device is for the company to help its employees buy stock, either through discounts or straight cash contributions. Thus, if the stock drops, the loss is spread between company and worker. A.T. & T., for example, sells its stock (currently $180) at a $20 discount. G.M. buys 50¢ worth of stock for a worker for each $1 he puts into savings (of which one-half is invested in Government bonds and one-half in G.M. stock), and also promises to make up the difference if the price drops. Du Pont gives a 25% stock bonus for each $1 the worker invests in savings bonds. In the oil industry, Sun Oil, Gulf, Standard of California. Standard (N.J.), Pure Oil and Cities Service all add to their workers' kitty with as much as 50% worth of stock or bonds. Other companies, while helping their workers buy stock, also do their best to educate them about possible dangers. Sample quote from Inland Steel's booklet: "Buying stocks involves risk . . . Before you buy, you should give consideration to a family insurance plan . . . And it's possible you should begin a home-financing program before investing in stocks."