As the economist Dean Baker has noted, companies don’t share—they don’t pay people or treat them well—without expecting anything in exchange.
HEB, a family-owned grocery-store chain and one of the largest private employers in Texas, announced that it will give 15 percent of the company to 55,000 of its employees. If HEB is giving a portion of its own stock to its workers, what is the chain getting in return?
Perhaps HEB wants its workers to feel more loyalty to the company. For over 20 years, economists from the right and left, including Berkeley’s Carl Shapiro, the Nobel laureates Joe Stiglitz and George Akerlof, and Fed Chief Janet Yellen, have advanced what’s called “efficiency wage theory”—the idea that employers can strategically pay wages higher than the market rate so that their employees care more about keeping their above-average jobs. For a company, this would reduce turnover and save money.
When the unemployment rate is high, low-wage workers tend to fear losing their jobs because there are countless workers eager to take their place. But when the unemployment rate is low, as it is now, that fear isn’t as widespread, so some employers, like HEB, might start sharing profits to make their workers stick around longer.