Julius Rosenwald gave Sears workers a share of the profits

Person: Julius Rosenwald
Lived: 1862–1932
Field: Retail & philanthropy
From: American

The story

Julius Rosenwald became president of Sears, Roebuck in 1908, and under his leadership the mail-order company grew into one of the largest businesses in America, employing thousands of people at its giant Chicago headquarters. He was known for his open door: any employee could come to talk to him, and on most days in Chicago he bought lunch in the company dining hall for ten people from around the firm. He believed the company's success should benefit the people who worked there.

In 1916 he and his colleague Albert Loeb, the lawyer who oversaw administration and was much admired by employees, introduced one of the first and most comprehensive corporate profit-sharing programmes in the country, covering every employee. Workers could put up to 5 per cent of their pay into the fund, to a maximum of $150 a year, so higher-paid executives had no advantage. The company added 5 per cent of its net profits, and the money was invested in Sears stock.

After ten years employees could withdraw everything, both their own savings and the company's contributions. Women who left to marry could take out their money after five years, workers could borrow against their accounts, and in cases of extreme need the company let them have their money early. Ninety per cent of Sears workers joined. In 1923 Rosenwald raised the company's contribution, guaranteeing a minimum of 7 per cent of after-tax income. He insisted the plan was not charity but good business: treating people right, he said, was simply good business.

The results were remarkable. A worker earning $1,200 a year who saved for twenty years might put in about $1,230 and leave with around $17,000. Between 1916 and 1936, 65,000 employees who retired, left or died had put in $10 million and taken out $45 million.

Over time the plan became the largest owner of Sears stock, and it continued throughout the twentieth century, with the daily share price posted in every store and facility. It turned ordinary clerks and warehouse workers into part-owners of the company they served, and it stands as an early example of the kind of employee ownership and retirement saving that many workers rely on today.

Why it matters

The profit-sharing plan turned ordinary Sears workers into owners and helped thousands build savings for retirement.

About Julius Rosenwald

Clothier who turned Sears, Roebuck into America’s great mail-order retailer, then helped build nearly 5,000 schools for Black children across the segregated South.

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Julius Rosenwald

1862–1932 · Retail & philanthropy

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