Talking Points

Want Federal Support? Spread the Ownership


High-technology companies often rely on federal support, particularly for early-stage funding. “Every year the federal government spends billions of dollars to support private-sector tech firms,” writes Karla Walter in a recent white paper from the Center for American Progress, a DC think tank. “This includes government-backed venture capital loans; grants and technical assistance for small businesses; and patented government technologies provided to emerging companies at no upfront cost.” (You can find the white paper here.)

An example? Apple’s Siri “was developed with support from the Defense Advanced Research Projects Agency. Researchers at the Stanford Research Institute (SRI) led the project that received $150 million from the federal government over five years. Siri was a startup company that broke off from SRI and was acquired by Apple in 2010.”

This kind of government support—meaning taxpayer support—helps enrich a handful of people at the top of every successful company. But it does nothing for the rest of the company’s workforce.

That, Walter argues, has to change. The government could start requiring every business that receives federal support to set up a broad-based share ownership program, such as stock option awards or an ESOP. Such a program would spread the wealth and put the government’s imprimatur on widespread share ownership.

The tech industry, Walter notes, was once at the forefront of providing broad-based ownership to its employees. But it no longer is—now, it’s usually only the executives and the top programming talent who get shares. But the federal government can change this. “Adoption of the policy outlined in this report would not only benefit workers and companies in the technology sector, but it also could lead to positive changes for workers throughout the economy as other industries emulate the sector’s culture and practices.”