Power Players

Mark Cuban: Workers paid by the hour are 'always going to fall behind,' making wealth inequality worse

Mark Cuban
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Billionaire tech entrepreneur Mark Cuban has proposed a solution for income inequality that doesn't involve dismantling capitalism: Business owners should give all their employees equity.

"The biggest issue for entrepreneurs, for capitalists, for those of us who are successful is, if someone is only going to be paid by the hour...they're always going to fall behind," Cuban told Recode Decode with Kara Swisher at the 2019 SALT Conference in Las Vegas. "And income distribution is … [the] disparity is going to get wider and wider."

So, said Cuban, "We as entrepreneurs have got to make a point to give stock to everybody that works for us. Period. End of story. No exceptions, because that's the only way people are going to get any type of equity appreciation."

If entrepreneurs give their employees an ownership stake in the company, then employees can reap the benefits of its success as the value of the stake grows, said Cuban, often substantially.

Uber's first employee, Ryan Graves, for example, is now worth more than a billion dollars thanks to the company stock he got as part of his employment. And many of Cuban's former employees became millionaires, he tells CNBC Make It.

Cuban says that he gave all his employees stock at the two companies he founded — Microsolutions, a computer consulting service he sold to Compuserve in 1990, and Broadcast.com, an online streaming service he sold to Yahoo in 1999 for almost $6 billion in stock.

"300 out of 330 [Broadcast.com] employees became millionaires" at the time of its sale, Cuban tells CNBC Make It.

Giving employees a stake in the company they work for is feasible for small companies as well as larger companies, Cuban tweeted Monday. "Small business are the ones best situated to offer equity. They are more like families."

TWEET: The owner can own 70, 80 even 90 percent , but if the owner pays out 10percent to employees , it's a better company

According to Cuban, "capitalism isn't bad. It's when capitalists don't pay attention" that bad things can happen," he told Swisher. "Our country is a lot like running a business...you can't just look at the short term in the immediate aspect, you've got to look at the long term," he said.

There's one thing a billion dollars won't change: Todd Wagner
There's one thing a billion dollars won't change: Todd Wagner

Other billionaires have recently commented on capitalism in the U.S.

Billionaire hedge fund guru Ray Dalio said capitalism is not working for the majority of people and said President Donald Trump should declare the current wealth gap "a national emergency." As of 2018, the world's richest 26 people own the same wealth as the poorest half of the world, according to Oxfam International's annual report on wealth inequality published in January.

Warren Buffett and and Bill Gates have both said that capitalism is the best system for the economy but that the wealthy should be taxed more.

"Now you can say I'm biased because this system has worked very well for me, and I feel — I plead guilty to that," Gates told CNN's Fareed Zakaria in February.

"But as I look overall at the capitalist economies, there are a lot of good things doing, and I think you can tune the tax parameters and get way more equity and get some additional government services and still be in the same basic framework."

Buffett has also said that people who do not have skills that are marketable in this economy should receive better support from the government.

"A rich family can handle if they've got six children and one of them isn't as good in the market.... They take care of him," Buffett said in February. "So we can take care of people and we should. But we shouldn't screw up the market system."

This story has been updated.

See also:

Apple CEO Tim Cook: 'If you love what you do, you will never work a day in your life' is 'total crock'

Hedge fund billionaire Ray Dalio: 'Capitalism basically is not working for the majority of people'

Billionaire Mark Cuban: One of the 'most patriotic' things you can do is get 'obnoxiously rich'

Billionaire investor Warren Buffett: This is what we need to do about income inequality
Billionaire investor Warren Buffett: This is what we need to do about income inequality