Labor Shareholders and Worker Power: Do Pension Funds Benefit Labor Interests?

• In Event: 2434 - Economic Sociology Regular Session: Corporations and Elites

Abstract

Since the 1980s, the shareholder value revolution has undermined the position of workers and organized labor within U.S. firms. At the same time, workers have ironically become one of the largest classes of shareholders in publicly-traded firms through pension funds. The net effects of labor shareholders’ presence and activities on firms’ labor- and employment-related outcomes remain uncertain. Do labor shareholders represent a countervailing force against the prevailing wage, benefit, and jobs squeeze? This article assembles data on private and public pension funds’ activism and links it to data on portfolio firms’ labor outcomes. With respect to proposals, the evidence shows that labor shareholder proposals have declined over time. Contrary to the workers’ capital hypothesis, we find no evidence that greater relative ownership share or intra-firm political activity by pension funds is associated with more labor-friendly behaviors or outcomes from 2001-2016. In many instances labor shareholders’ activities appear to have the opposite effect. Based on these analyses, there is no evidence that labor funds have been able to reconcile their contradictory class/political interests in the service of workers.

Authors

• L. Larry Liu, Princeton University

• Adam Goldstein, Princeton University