Larry Fink Is Asking the Right Question — But Investment Requires Income First

By Delilah Rothenberg, Co-Founder and Executive Director, Predistribution Initiative

When money talks, the world listens. It is thus no surprise that Larry Fink, the CEO of the world’s largest asset manager, BlackRock, is making headlines again with his latest annual letter. What is a surprise is that Fink dares to say what most business and finance leaders fear acknowledging. As he puts it, “capitalism is working, just not for enough people.” He notes that since 1989, stock market gains have outpaced median wage growth by more than 15-to-1 and that AI threatens to repeat this pattern at an even larger scale — a topic many of our followers know we’ve been diligently working on.

Fink offers genuinely thoughtful proposals, and he deserves a lot of credit for raising these points. In the following reflections, we also consider some first-order issues:

1) the need to ensure workers are paid a living wage before considering whether they have anything left over to invest;

2) employee and worker ownership is an overlooked approach to narrow pay gaps, reduce economic inequality, prepare for the AI and automation revolution, and align worker incentives with those of markets; and,

3) the importance of resilient and balanced capital markets to absorb new inflows.

1) Living wages: Foundational building blocks of prosperity

Fink’s solution centers on expanding access to capital markets — more people investing in stocks, more retail participation, tokenized assets in digital wallets, investment accounts seeded at birth. These are genuinely useful mechanisms, and broader market participation is better than the status quo. To his credit, Fink acknowledges that many people “don’t have the money to invest in the first place” and highlights emergency savings accounts and employer matching as starting points. But for much of the global workforce, the reason that is the case is inseparable from the returns those same capital markets generate. There’s a foundational problem with asking workers to invest more in the stock market when the stock market is partly built on not paying them enough in the first place.

This is not a rhetorical point. It’s a sequencing problem with real consequences. The first order of business must be paying people enough to live on — a genuine living wage, not a minimum that hasn’t kept pace with living costs — along with adequate benefits.

The numbers make the structural problem impossible to ignore. According to the World Benchmarking Alliance’s 2026 Social Benchmark — which assessed the 2,000 most influential companies globally, collectively generating revenue equivalent to 45% of global GDP — “fewer than 5% of companies disclose that they guarantee a living wage for their direct workforce, and only 3% report taking action to support living wages in their supply chains.” These are not small businesses struggling to survive; these are the most powerful corporations in the world. Before we ask workers to open brokerage accounts and invest in the stock market, we should reckon with the fact that the vast majority of those same workers are employed by companies that haven’t committed to paying them enough to meet their basic needs.

Full-time employment is also eroding. Economist David Weil coined the term the “fissured workplace” to describe the systematic shedding of direct employment by major corporations through subcontracting, outsourcing, and gig work — creating vast networks of nominally independent workers who bear the risks of employment without its protections or benefits. Policymakers often reach for the unemployment rate to assess economic health, but the official U-3 rate doesn’t capture the millions of workers who have stitched together multiple part-time jobs or gig assignments because stable full-time work is no longer available. The BLS’s broader U-6 measure, which captures part-time workers seeking full-time work and those marginally attached to the labor force, consistently runs several percentage points higher.

Fink compares American households today to his parents, who came of working age after WWII when the American Dream was still intact. But in modern times, too many households can’t make ends meet, let alone invest any surplus. This is why predistribution is so critical: if we want capitalism to work for more people, we need to restructure how wealth is distributed during production — so that workers have enough to spend and invest in the first place.

2) Distributing returns to those who create value and take risk: Equity-linked compensation for human and social capital

The 15-to-1 ratio Fink cites didn’t emerge because workers lacked brokerage accounts. It emerged because the structure of the modern corporation systemically channeled returns from value creation toward capital and away from labor — at the point of production. Financial capital and executive savvy have become the most valued inputs in the production process, well above the human and social capital of workers and communities.

This is reflected directly in compensation structures. The majority of CEO pay is now stock-based — meaning the shareholder revolution of the 1980s and 1990s, which sought to align executive interests with investor returns, did exactly that — though not without consequences, including well-documented incentives for short-termism that have produced externalities and even compromised corporate financial health.

The logic of aligning incentives was never extended to workers. Boards redesigned pay structures to make executives think and act like owners, with the result that CEO compensation at the largest U.S. firms has risen over 1,085% since 1978 — compared to just 24% for the typical worker, and the CEO-to-worker pay ratio has grown from 31-to-1 in 1978 to 281-to-1 in 2024.

The insight was right. The application was incomplete. If aligning incentives through equity works for executives, there is no principled reason why it should not work for the broader workforce too. Fink’s letter calls for broader ownership in economic growth. We agree — but the most direct path to ownership is not only through brokerage accounts. It is through adequate compensation for the investments of time, labor, land, and health and safety that workers and communities contribute to the value creation processes of the corporations BlackRock invests in.

Fink identifies AI as a potentially civilization-scale concentration mechanism. Consensus suggests he’s right. The companies with the data, infrastructure, and capital to deploy AI at scale will capture disproportionate gains — and their workers, whose labor and institutional knowledge are embedded in those systems, may be automated out entirely, often with little stake in the upside. Employee ownership — structured with a sense of urgency about this transition in mind — isn’t a redistributive afterthought; it’s economic infrastructure with a narrow window for implementation that changes corporate behavior, reduces the systemic risk of inequality, and creates the kind of durable household wealth that doesn’t disappear with a layoff.

Further, rewarding stakeholders for the value that they create and risk that they take extends beyond workers — for instance to communities hosting infrastructure projects, or content creators, artists, and writers training AI.

I grew up in Syracuse, New York, where Micron is building one of the largest semiconductor fabrication plants in American history — a project anchored by CHIPS Act funding and positioned as a cornerstone of U.S. technological self-reliance. Fink writes compellingly about countries investing in domestic industrial capacity, and this is exactly that story. But the surrounding community is absorbing the traffic, the strain on infrastructure, the environmental footprint, and the disruption that comes with a project of this scale. Not every household member will be employed, and there are even questions about the quality of the jobs that are created. What if as a conditionality for new infrastructure projects, data centers, and factories, each household in the host community and every worker received a small equity stake as part of the compact? Not a subsidy. Not a tax rebate. Actual ownership — a share in the semiconductor future their community is literally making room for.

It is worth noting the importance of diversification. Some companies will go under in the technological revolution, with their equity being worthless. Others will thrive. This is why rewarding both human and social capital with living wages, diversified retirement accounts, and equity in the near term are important. There is much more to say here, but we build on this in a forthcoming piece on broadening equity-linked compensation in the midst of AI and automation.

3) Market structure matters

I’ve heard peers speak enthusiastically about baby bonds and Trump Accounts, but worry that these interventions implicitly mean getting more people into cap-weighted index funds. I began my career focused on active investing, working on the sell side including at Bear Stearns before the financial crisis. Passive investing had minimal market share then, but has grown to nearly 60% of U.S. equity fund assets today — a transformation supercharged by a prolonged era of easy monetary policy. That tide was not purely the product of economic fundamentals, and it is not clear if there is another crisis how much more firepower the US government and Fed have to sustain markets.

Further, cap-weighted passive investing tends to bias larger companies — concentrating flows into mega-cap platforms. A landmark paper by Jiang, Vayanos, and Zheng (2025) suggests passive flows disproportionately raise prices of the largest firms through an amplification loop that deters correction — and can generate market-wide overvaluation even when no new money enters equities at all.

If household wealth becomes structurally tethered to the dominance of a small number of concentrated platforms, several risks can manifest. First, the largest companies will have disproportionate bargaining power against labor and other stakeholders. As noted in the opening of this blog, money talks, and over the past decades, it has demonstrated significant sway over policy and regulation that was originally designed to keep the playing field level. Second, if such bargaining power continues to favor financial capital over human and social capital, then households may continue to lack sufficient incomes, leaving them reliant on debt to finance their consumption (and no excess funds to invest), which can result in credit crises. Finally, when too much capital piles into the same strategies and assets, markets become imbalanced, valuations become out of step with fundamentals, and asset bubbles can result.

As with broad-based equity-linked compensation models, PDI will be publishing more on market structure in the future. But suffice it to say that meaningful diversification – across both asset managers and companies — is an important consideration as more capital looks for financial homes.

Where Fink’s frame opens a door

We are grateful to Fink for starting this critical conversation. And we know that the ideas we propose in this blog are relatively high-level. There is much work to be done.

Over the coming weeks, PDI will be publishing more on these topics. We welcome discussions to refine the analysis. When the world’s largest asset manager writes that “capitalism is working — just not for enough people,” it creates institutional permission — and momentum — for deeper conversations and the opportunity to engage with harder questions: why isn’t it working for enough people, and what would need to change to fix that? That is the question predistribution is designed to answer. Stay tuned for more to come…

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The Predistribution Initiative works to restructure markets so that wealth and influence are more broadly shared during production — before redistribution is ever needed. Learn more at predistributioninitiative.org.