Any way of sharing profit is easy to admire in a good year. The test is what it does in a bad one. The earlier chapters each used one year of the example company. This chapter follows it through three: a good year, a loss, and a recovery in which it also grows. The company is invented, and the figures are chosen to be easy to follow.
2027: a good year
This is the year from Chapter 7. The company has 250 people and makes $30 million. The council had set the reserve at 30 percent. An investor holds 2,500 of the year’s Futures, bought in 2025 at $250 each.
The pool is $21 million, there are 52,500 Futures, and each pays $400. A person who worked the full year is owed $80,000, paid through 2028. The investor is owed $1 million on $625,000.
2028: a loss
The company spends heavily on a second product and loses its largest customer. It ends the year $4 million down.
- The pool is empty. The 50,000 Futures earned by the workforce in 2028 pay nothing.
- Salaries are paid in full. The loss is met from the reserve.
- An investor loses everything. In 2026 a second investor had bought 2,000 Futures for 2028 at $280 each. The $560,000 is gone. So is the money of any colleague who rolled a lump sum into 2028.
- 2027’s payouts still arrive. The lump sum was paid on January 1 and the instalments come from the custodian every month, whatever is happening to the company.
That last point shapes how a bad year feels. During 2028 itself nobody’s income falls. The effect arrives in 2029, when there is no lump sum and no instalments. People have a year’s notice of a lean year.
The loss is not carried forward. Each year stands alone: 2028’s Futures are worth nothing, and 2029’s pool is not reduced to make up for it. What the council can do is rebuild what was spent, in the years whose reserve is still open. 2029 is not one of them. The council had fixed its reserve at 40 percent in January 2028, before it sold any Futures for that year, to pay for the second product. After the sale that figure could not be raised, whatever 2028 turned out to cost.
2029: recovery and growth
The second product sells. The company hires 50 people at the start of the year and makes $40 million.
Purchased Futures are 6.25 percent of the year’s total, inside a 10 percent cap. Both the investor and the staff who rolled over paid $300 per Future in January 2028 and receive $375, a gain of 25 percent. The investor’s $900,000 returns $1,125,000.
Profit rose by a third, yet a Future pays less than it did in 2027. Two things account for that. The reserve took 40 percent in place of 30, and there are more Futures: 50 more people earning them, and 1,500 more held by buyers.
The hiring can be judged with the test from Chapter 13. Had the company stayed at 250 people, the same $375 per Future would have needed only $33.75 million of net income. The 50 hires paid off for everyone else if the company would have made less than that without them.
| Step | Figure |
|---|---|
| Net income for 2029 | $40,000,000 |
| Reserve at 40 percent | $16,000,000 |
| Pool | $24,000,000 |
| Futures earned by 300 people over 200 days | 60,000 |
| Futures bought by an investor in January 2028 | 3,000 |
| Futures bought by staff through rollover | 1,000 |
| All 2029 Futures | 64,000 |
| Value of one Future | $375 |
What two people received
Payouts arrive the year after they are earned, so the table shows cash received in each calendar year by a person who worked throughout.
| Year received | From | Futures payout | Junior, total | Principal, total |
|---|---|---|---|---|
| 2028 | 2027’s profit | $80,000 | $130,000 | $230,000 |
| 2029 | 2028’s loss | $0 | $50,000 | $150,000 |
| 2030 | 2029’s profit | $75,000 | $125,000 | $225,000 |
The Junior’s income fell by more than three fifths in 2029 and the Principal’s by about a third. In money, both lost the same $80,000. Measured against what each person lives on, the loss is far heavier at the bottom of the ladder. This is the model’s hardest edge. An equal share of profit is also an equal share of its absence, and it makes up most of a low earner’s income and a smaller part of a high earner’s.
The model softens this in three ways and removes it in none. The salary is paid in full for as long as the reserve lasts, and if the reserve runs out, a lean period takes from the highest bands first and from the floor last. The lean year is known twelve months ahead. And the council, which the lowest-paid elect on equal terms, can keep a reserve large enough to protect jobs. A company adopting FairShare should set its lowest band at a figure people can live on without any Futures at all.
What the reserve did
| Year | Added to the reserve | Drawn from it |
|---|---|---|
| 2027 | $9,000,000 | None |
| 2028 | None | $4,000,000 |
| 2029 | $16,000,000 | None |
The figures leave out what the company spent from the reserve on growth, including the second product. They show the reserve doing the job Chapter 12 gives it, which is to keep salaries paid when there is no profit.