# Mandatory corporate profit sharing: Why would it not work (or work well anyway)? **URL:** \ **Category:** Great Debates\ **Created:** [April 3, 2019, 12:36pm UTC](https://boards.straightdope.com/t/mandatory-corporate-profit-sharing-why-would-it-not-work-or-work-well-anyway/831974 "2019-04-03T12:36:00Z")\ **Posts on this page:** 20\ **Page:** 4
**Author:** ![Ruken](https://avatars.discourse-cdn.com/v4/letter/r/f475e1/32.png) [@Ruken](https://boards.straightdope.com/u/Ruken)\ **Post date:** [April 20, 2019, 12:21pm UTC](https://boards.straightdope.com/t/mandatory-corporate-profit-sharing-why-would-it-not-work-or-work-well-anyway/831974/61 "2019-04-20T12:21:24Z")
> [@Cheesesteak](#): > > And that conversation? It doesn’t usually end with 5% of your salary, it ends with 100% as Bob gets laid off. If he’s lucky his employer can do what IBM did a few years back and give employees a mandatory 2 week unpaid vacation. Or if he’s hourly there won’t BE a conversation, he just gets assigned fewer shifts and has to make up the money deficit some other way. 5% of salary already paid. The worker is at minimal risk of not getting paid for his or her labor. If they want the risk associated with ownership and profit, they can buy stock like I do. ---
**Author:** ![msmith537](https://avatars.discourse-cdn.com/v4/letter/m/d9b06d/32.png) [@msmith537](https://boards.straightdope.com/u/msmith537)\ **Post date:** [April 20, 2019, 1:02pm UTC](https://boards.straightdope.com/t/mandatory-corporate-profit-sharing-why-would-it-not-work-or-work-well-anyway/831974/62 "2019-04-20T13:02:18Z")
> [@UltraVires](#): > > I’ve never understood the idea that workers should share in the profits of a business. Because they helped contribute to those profits? > [@UltraVires](#): > > The workers do not take any financial risk to start or continue the business. I think you are confusing “profit sharing” with owning shares of equity in the business. > [@UltraVires](#): > > The only way that I could see such a thing as being remotely fair is if the workers must also share in the losses as well. “Gee, Bob, the industry went to hell last year because of the recession. You owe us 5% of your salary.” When you purchase stock in a company, do you have to pay money to cover their losses if they have a bad quarter? ---
**Author:** ![Chronos](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/chronos/32/134_2.png) [@Chronos](https://boards.straightdope.com/u/Chronos)\ **Post date:** [April 20, 2019, 1:12pm UTC](https://boards.straightdope.com/t/mandatory-corporate-profit-sharing-why-would-it-not-work-or-work-well-anyway/831974/63 "2019-04-20T13:12:36Z")
Not only do the workers have a share in the risk, they often have a much larger share of risk than the owner. If the business tanks, then it can go bankrupt, and let the owner walk away and try again. The workers don’t usually have it so easy, and the business tanking can result in things like them not being able to buy food. ---
**Author:** ![Ruken](https://avatars.discourse-cdn.com/v4/letter/r/f475e1/32.png) [@Ruken](https://boards.straightdope.com/u/Ruken)\ **Post date:** [April 20, 2019, 3:18pm UTC](https://boards.straightdope.com/t/mandatory-corporate-profit-sharing-why-would-it-not-work-or-work-well-anyway/831974/64 "2019-04-20T15:18:39Z")
> [@Chronos](#): > > Not only do the workers have a share in the risk, they often have a much larger share of risk than the owner. If the business tanks, then it can go bankrupt, and let the owner walk away and try again. The workers don’t usually have it so easy, and the business tanking can result in things like them not being able to buy food. The only equivalent risk that they are taking is that the owner won’t pay them for their already-worked labor. While wage theft is real, that risk is low. I am not taking any significant risk by going to work on Monday. ---
**Author:** ![Ruken](https://avatars.discourse-cdn.com/v4/letter/r/f475e1/32.png) [@Ruken](https://boards.straightdope.com/u/Ruken)\ **Post date:** [April 20, 2019, 3:20pm UTC](https://boards.straightdope.com/t/mandatory-corporate-profit-sharing-why-would-it-not-work-or-work-well-anyway/831974/65 "2019-04-20T15:20:30Z")
> [@msmith537](#): > > When you purchase stock in a company, do you have to pay money to cover their losses if they have a bad quarter? Here’s a tip: If you’re ending with a question mark, you’re not actually making an argument. You’re asking others to make one for you. ---
**Author:** ![D\_Anconia](https://avatars.discourse-cdn.com/v4/letter/d/67e7ee/32.png) [@D\_Anconia](https://boards.straightdope.com/u/D_Anconia)\ **Post date:** [April 20, 2019, 4:10pm UTC](https://boards.straightdope.com/t/mandatory-corporate-profit-sharing-why-would-it-not-work-or-work-well-anyway/831974/66 "2019-04-20T16:10:28Z")
Corporations do not exist for the purpose of providing jobs, salaries, bonuses, or _food_ for the employees. ---
**Author:** ![D\_Anconia](https://avatars.discourse-cdn.com/v4/letter/d/67e7ee/32.png) [@D\_Anconia](https://boards.straightdope.com/u/D_Anconia)\ **Post date:** [April 20, 2019, 4:56pm UTC](https://boards.straightdope.com/t/mandatory-corporate-profit-sharing-why-would-it-not-work-or-work-well-anyway/831974/67 "2019-04-20T16:56:40Z")
Corporations do not exist for the purpose of providing jobs, salaries, bonuses, or _food_ for the employees. ---
**Author:** ![Saint\_Cad](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/saint_cad/32/18907_2.png) [@Saint\_Cad](https://boards.straightdope.com/u/Saint_Cad)\ **Post date:** [April 20, 2019, 5:09pm UTC](https://boards.straightdope.com/t/mandatory-corporate-profit-sharing-why-would-it-not-work-or-work-well-anyway/831974/68 "2019-04-20T17:09:30Z")
I think that a better solution to accomplish the OP’s goal would be that every company traded publicly should have an employee stock purchase program. But then again, those made more sense back in the day when you couldn’t have your own stock account in less than 5 minutes and manage it online. ---
**Author:** ![Ruken](https://avatars.discourse-cdn.com/v4/letter/r/f475e1/32.png) [@Ruken](https://boards.straightdope.com/u/Ruken)\ **Post date:** [April 20, 2019, 9:19pm UTC](https://boards.straightdope.com/t/mandatory-corporate-profit-sharing-why-would-it-not-work-or-work-well-anyway/831974/69 "2019-04-20T21:19:11Z")
Well it’s still not clear what the OP’s goal is. But those programs often include a discount (5-10% in my limited experience), so it’s not completely irrelevant with today’s easy online purchasing. ---
**Author:** ![UltraVires](https://avatars.discourse-cdn.com/v4/letter/u/ecccb3/32.png) [@UltraVires](https://boards.straightdope.com/u/UltraVires)\ **Post date:** [April 21, 2019, 4:54am UTC](https://boards.straightdope.com/t/mandatory-corporate-profit-sharing-why-would-it-not-work-or-work-well-anyway/831974/70 "2019-04-21T04:54:12Z")
> [@Cheesesteak](#): > > There is nothing inherent in the idea of taking financial risks justifying risk takers getting 100% of the profits. Risk takers must get profit, for sure, but 100% is a choice not a requirement. > > And that conversation? It doesn’t usually end with 5% of your salary, it ends with 100% as Bob gets laid off. If he’s lucky his employer can do what IBM did a few years back and give employees a mandatory 2 week unpaid vacation. Or if he’s hourly there won’t BE a conversation, he just gets assigned fewer shifts and has to make up the money deficit some other way. > > Sent from my iPhone using Tapatalk You and I are not talking about the same salary. Let’s say that Bob made $50k/yr in 2018. The corporation had a bad year and lost money in 2018. Yes, they might let Bob go meaning that he will make no money in 2019. I am saying that under a profit sharing plan in which Bob also shares the loss, he should pay back some of his 2018 salary. If he wants a 2018 bonus because the company did well, why not pay back if the company did poorly? Further you said that “100% is a choice not a requirement” but this thread is about mandatory corporate profit sharing. If we are going to have that, we should also have mandatory corporate loss sharing to be fair. ---
**Author:** ![Saint\_Cad](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/saint_cad/32/18907_2.png) [@Saint\_Cad](https://boards.straightdope.com/u/Saint_Cad)\ **Post date:** [April 21, 2019, 8:41am UTC](https://boards.straightdope.com/t/mandatory-corporate-profit-sharing-why-would-it-not-work-or-work-well-anyway/831974/71 "2019-04-21T08:41:06Z")
> [@UltraVires](#): > > Further you said that “100% is a choice not a requirement” but this thread is about mandatory corporate profit sharing. If we are going to have that, we should also have mandatory corporate loss sharing to be fair. Only if it applies to the CEO and Board of Directors too. ---
**Author:** ![Cheesesteak](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/cheesesteak/32/3694_2.png) [@Cheesesteak](https://boards.straightdope.com/u/Cheesesteak)\ **Post date:** [April 21, 2019, 10:06am UTC](https://boards.straightdope.com/t/mandatory-corporate-profit-sharing-why-would-it-not-work-or-work-well-anyway/831974/72 "2019-04-21T10:06:53Z")
> [@UltraVires](#): > > You and I are not talking about the same salary. > > Further you said that “100% is a choice not a requirement” but this thread is about mandatory corporate profit sharing. If we are going to have that, we should also have mandatory corporate loss sharing to be fair. Of course we’re not talking about the same salary. Financial risk doesn’t confine itself to a conveniently restricted set of funds to help you support your position. Is your suggestion that the workers of a company in financial distress don’t share in the risk of loss of wealth? Sent from my iPhone using Tapatalk ---
**Author:** ![Ruken](https://avatars.discourse-cdn.com/v4/letter/r/f475e1/32.png) [@Ruken](https://boards.straightdope.com/u/Ruken)\ **Post date:** [April 21, 2019, 12:42pm UTC](https://boards.straightdope.com/t/mandatory-corporate-profit-sharing-why-would-it-not-work-or-work-well-anyway/831974/73 "2019-04-21T12:42:13Z")
> [@Cheesesteak](#): > > Is your suggestion that the workers of a company in financial distress don’t share in the risk of loss of wealth? I put in my time and labor. I expect money in return within a month (or two weeks, depending on the pay period.) The risk to not receiving that return is minimal. If I buy stock instead, I put in money, and expect money in return, either in the form of profit or increased value, at some uncertain future time, maybe. I could lose it all. There is very little risk in investing eight hours of my time and labor by going to work tomorrow. I will very likely get paid for that at the end of April. There is substantial risk in buying my company’s stock tomorrow. ---
**Author:** ![etasyde](https://avatars.discourse-cdn.com/v4/letter/e/9f8e36/32.png) [@etasyde](https://boards.straightdope.com/u/etasyde)\ **Post date:** [April 21, 2019, 3:53pm UTC](https://boards.straightdope.com/t/mandatory-corporate-profit-sharing-why-would-it-not-work-or-work-well-anyway/831974/74 "2019-04-21T15:53:33Z")
> [@asahi](#): > > X% of profits be shared with all employees in a company – not revenue My imaginary company has no profits. The cost of labor is too high. I earn $10B in revenue, have to pay about ~400k to my workers, and $9,999,600,000 to myself. I am doing all the hard work, after all, and this is fair compensation… Net revenue is zero dollars, so I guess I don’t have to share anything. If you don’t like that, I can always hire my workers through a subsidiary with an operating agreement that forwards 100% of revenue after other expenses as compensation for use of my trademark… Too many ways to make profit look like a 0. This is part of how tax evasion works, though the tax laws are more intelligently written so it’s not _as_ glaringly easy. ---
**Author:** ![Cheesesteak](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/cheesesteak/32/3694_2.png) [@Cheesesteak](https://boards.straightdope.com/u/Cheesesteak)\ **Post date:** [April 21, 2019, 4:59pm UTC](https://boards.straightdope.com/t/mandatory-corporate-profit-sharing-why-would-it-not-work-or-work-well-anyway/831974/75 "2019-04-21T16:59:46Z")
> [@Ruken](#): > > There is very little risk in investing eight hours of my time and labor by going to work tomorrow. I will very likely get paid for that at the end of April. There is substantial risk in buying my company’s stock tomorrow. The risk for employees is not having the opportunity to trade time and labor for money they need for things like food and rent. The investor already has money they don’t need for food and rent. If they didn’t have excess money they would be workers instead of investors. Investors, particularly big investors, are never at risk of homelessness or hunger, they never have to make the really hard trade offs if the market dips. Workers do. Workers hold REAL financial risk. Sent from my iPhone using Tapatalk ---
**Author:** ![D\_Anconia](https://avatars.discourse-cdn.com/v4/letter/d/67e7ee/32.png) [@D\_Anconia](https://boards.straightdope.com/u/D_Anconia)\ **Post date:** [April 21, 2019, 8:12pm UTC](https://boards.straightdope.com/t/mandatory-corporate-profit-sharing-why-would-it-not-work-or-work-well-anyway/831974/76 "2019-04-21T20:12:50Z")
> [@Cheesesteak](#): > > Workers do. Workers hold REAL financial risk. No, they don’t. As has already been explained, workers provide their labor, and get paid either two or four weeks later. Very, very little risk. ---
**Author:** ![asahi](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/asahi/32/8693_2.png) [@asahi](https://boards.straightdope.com/u/asahi)\ **Post date:** [April 21, 2019, 8:27pm UTC](https://boards.straightdope.com/t/mandatory-corporate-profit-sharing-why-would-it-not-work-or-work-well-anyway/831974/77 "2019-04-21T20:27:38Z")
> [@D\_Anconia](#): > > Corporations do not exist for the purpose of providing jobs, salaries, bonuses, or _food_ for the employees. That may be true, but people still want and need financial security, and they have to get it from somewhere. ---
**Author:** ![asahi](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/asahi/32/8693_2.png) [@asahi](https://boards.straightdope.com/u/asahi)\ **Post date:** [April 21, 2019, 8:31pm UTC](https://boards.straightdope.com/t/mandatory-corporate-profit-sharing-why-would-it-not-work-or-work-well-anyway/831974/78 "2019-04-21T20:31:27Z")
> [@D\_Anconia](#): > > No, they don’t. As has already been explained, workers provide their labor, and get paid either two or four weeks later. Very, very little risk. Although I would agree that investors take on the greater risk, employees are responsible for investing in themselves. Most positions require a minimum commitment of some sort. It doesn’t look good if you keep changing jobs every few months. Moreover, an employee’s value in the marketplace doesn’t last forever. ---
**Author:** ![msmith537](https://avatars.discourse-cdn.com/v4/letter/m/d9b06d/32.png) [@msmith537](https://boards.straightdope.com/u/msmith537)\ **Post date:** [April 21, 2019, 9:56pm UTC](https://boards.straightdope.com/t/mandatory-corporate-profit-sharing-why-would-it-not-work-or-work-well-anyway/831974/79 "2019-04-21T21:56:54Z")
> [@Ruken](#): > > Here’s a tip: If you’re ending with a question mark, you’re not actually making an argument. You’re asking others to make one for you. Is that what I’m doing? ---
**Author:** ![msmith537](https://avatars.discourse-cdn.com/v4/letter/m/d9b06d/32.png) [@msmith537](https://boards.straightdope.com/u/msmith537)\ **Post date:** [April 21, 2019, 10:17pm UTC](https://boards.straightdope.com/t/mandatory-corporate-profit-sharing-why-would-it-not-work-or-work-well-anyway/831974/80 "2019-04-21T22:17:06Z")
> [@D\_Anconia](#): > > Corporations do not exist for the purpose of providing jobs, salaries, bonuses, or _food_ for the employees. Corporations “exist” as a legal entity designed to imbue their owners with specific rights and protections with regards to running a business. And part of that existence is being subject to various laws, taxes, regulations and other things that define how that business can be run. Let’s not pretend corporations are some natural entity that should be allowed to run free in the wild. [Previous page](https://boards.straightdope.com/t/mandatory-corporate-profit-sharing-why-would-it-not-work-or-work-well-anyway/831974.md?page=3) [Next page](https://boards.straightdope.com/t/mandatory-corporate-profit-sharing-why-would-it-not-work-or-work-well-anyway/831974.md?page=5)