David Webber - Working Class Shareholder

David Webber on The Rise of the Working-Class Shareholder

David Webber: Guest Speaker on Corporate Accountability Forums

April 4, 10 am Pacific, 1 pm Eastern – Register

David Webber

David Webber


David Webber

Yesterday, David Webber discussed his comment letter on proposed DOL regulations, which failed to consider the jobs of the very workers who contribute to funds regulated by the Department, harming both the workers and the funds themselves. See New Department of Labor Investment Rules Could Be Big Win for Everyone but Labor. On Monday, David will discuss his book, The Rise of the Working-Class Shareholder: Labor’s Last Best
n, and other topics raised by those attending our Forum. Register. See prior videos. Prior Apple podcasts. We use CorpEngage.net to house links to scheduled Corporate Accountability Forums and a growing number of recordings. 

David Webber

David H. Webber is a Professor of Law and the Associate Dean for Intellectual Life at Boston University School of Law. The winner of Boston University School of Law’s 2017 Michael Melton Award for Teaching Excellence, Professor Webber also coteaches the Pensions and Capital Stewardship course for the Harvard Trade Union Program at Harvard Law School. He is a graduate of Columbia University and NYU Law School. See his faculty page.

David Webber: The Rise of the Working-Class Shareholder

The Rise of the Working-Class Shareholder: Labor’s Last Best Weapon by David Webber is sure to get readers thinking (purchase).

For far too long, labor and its progressive sympathizers have sought to transform the market from outside the market: from courts, from legislatures, from regulators, from street protests, from strikes. These tools are important. But ultimately, it is not possible to transform the market from the outside. It must be transformed from within. (xiv)

Those sentences, early in the book, had me hooked. As a sociologist, I have long recognized corporations as the most powerful force in American life. I have tried to influence corporations through legislation, regulations, boycotts, and protests. My most fruitful results have been from “inside,” as a shareholder advocate. While I am not sure more democratic corporate governance is labor’s ‘last’ or even its ‘best’ weapon, it is certainly an underutilized tool.

Thomas Piketty found investment income accelerates at a faster pace than wages. To address that issue, we need many more participants in capitalism (A Nation of Small Shareholders: Review Essay).  Second, we need to bring our full values to investing and be concerned with wealth inequality, climate change, diversity, etc. Investing must become social investing. We need to anticipate how our investments impact society and the environment. Heightening awareness of environmental, social and governance (ESG) issues is necessary if we are to create a salubrious economy.

The Rise of the Working-Class Shareholder argues funds are not legally required “to ignore the overall economic impact of a fund’s investment on workers in the name of maximizing returns.” (36) Trustees should “consider workers’ economic interests beyond just maximizing the returns to the fund.” (37) “Trustees should broaden their economic perspective beyond blindly maximizing returns that can undermine their own workers’ economic interests in their investments.” (39) A more holistic view of workers’ economic interests can actually lead to higher returns, as many have shown.

I would go further. We need a more radical departure from what is typically defined as fiduciary duty. The prudent man standard of ERISA (Employee Retirement Income Security Act of 1974) is a “lemmings rule” because it requires fiduciaries to act like other fiduciaries. If most fiduciaries are investing in something that is highly profitable but will soon make the earth uninhabitable, many believe the prudent man standard dictates all trustees must follow. Yet, even lemmings are not that dumb. Mass suicide was not nature but a Disney invention. Fiduciaries should focus on long-term sustainable growth.

In 1994 the 3rd Restatement of Trust Law drafted by the National Conference of Commissioners on Uniform State Laws set out a list of usual considerations for meeting the Standard of Care, such as economic conditions, tax consequences, expected total return, needs for liquidity, etc. One interesting consideration that needs more attention was the following:

an asset’s special relationship or special value, if any, to the purposes of the trust or to one or more of the beneficiaries.

What “special value” does any specific investment have to one or more of the beneficiaries? Yes, fiduciaries must pay close attention to the money but they should also consider other potential benefits that beneficiaries are known to value, such as clean air, clean water, affordable housing, a healthy planet, economy, etc.

When Norway required public boards to have 40% or more of each gender the initiative was not justified on the basis of expected higher returns because of more diverse boards. The focus was on societal needs for justice, democracy, participation, equality, and human rights. Fiduciaries in America need to push the envelope. We are not Homo Economicus.

Webber’s The Rise of the Working-Class Shareholder is full of interesting bits of recent history, such as campaigns by CalPERS, AFSCME, NYC, SEIU, AFL-CIO, and other union-related funds. That is the bulk of the book, with many lessons learned by labor leaders. Readers can learn much from the book about what works and what does not. The discussion of hedge funds may be particularly instructive to many, as will the discussion of the ugly push for conversion of defined benefit plans to defined contribution plans. (See Making Corporate Governance Decisions that Work for Whom? under the heading “CalPERS Under Attack.”)

Doug Chia Interviews David Webber

In this webcast interview, David Webber and Doug Chia (Executive Director, Governance Center) discuss:

  • The strengths/weaknesses of various tools working-class shareholders can use to effect change at companies (strikes, shareholder actions, etc.)
  • Common triggers among pension funds that made them spring into action (Safeway, Home Depot. etc.)
  • Ways labor should engage with their portfolio companies
  • How a shift from long-term should incorporate labor concerns
  • The future for labor capital as a market force

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