Tech Companies Are Shutting Employees Out Of the Stock Market’s Boom

Many employees who must innovate in America’s leading industries are finding that they can no longer share in the fruits of such innovation. Is this the new American reality?

For more than a decade, equity compensation where average employees get to own shares of the companies they work for through restricted stock or stock options has declined dramatically in many large publicly-traded corporations. What’s more, the percentage of employees with equity stakes in innovative industries, such as computer services, declined from over half of all employees in that industry in the early 2000s to about a fifth of all employees by 2014. The percent of employees nationally receiving stock options has fallen by almost half over this period.

Yet another form of employee share ownership has suffered reverses. Employee Stock Purchase Plans (ESPPs) were one of the earliest forms of broad-based employee share ownership favored by business and encouraged by the U.S. Government. Typically, companies would allow employees to buy company shares at a significant discount while absorbing brokerage fees and letting the employees have a “lookback” option where they could opt to purchase the shares at any price over the last year. Employee Stock Purchase Plans have become less generous in many companies with lower or no discounts and the elimination of “lookback” options.