Why U.S. Corporate Boards Don’t Include Workers
The (strangely brief) history of employee representation in American boardrooms.
United Auto Workers union chief Owen Bieber, right, at a Chrysler board meeting.
Photographer: Ted Thai/The LIFE Picture Collection/Getty ImagesIn Germany, it’s considered perfectly normal that half the members of corporate boards are representatives of the corporation’s employees.5 In the U.S., where Senator Elizabeth Warren recently proposed 40-percent worker representation, it seems like a radical idea.
Why the difference?
Those employee board seats in Germany are required by a 1976 law, and in the U.S. corporations could put worker representatives on their boards if they wanted to. So one interpretation is that the U.S. setup is the natural order of capitalism and the German one artificial. As economists Michael Jensen and William Meckling, leading proponents of the shareholders-first philosophy of corporate governance, argued of the German approach in 1979: