Bipartisan Support for Employee Ownership
Late last week, on October 19, a bipartisan group of senators introduced a resolution to the Judiciary Committee designating October “National Employee Ownership Month.” Sponsored by Senator Tammy Baldwin (D-WI), the resolution was signed onto by senators as diverse as Sherrod Brown (D-OH), Jeanne Shaheen (D-NH), Angus King (I-ME), Todd Young (R-KS), and Pat Roberts (R-KS).
In calling for the designation, the resolution notes:
Whereas employee-owned companies give workers a voice in corporate governance, and that voice helps the long-term well-being of the company;
· Whereas employee-owned companies give workers a voice in corporate governance, and that voice helps the long-term well-being of the company;
· Whereas employee-owned companies often outperform non-employee-owned companies and show greater resiliency during challenging economic conditions;
· Whereas employee-owned companies face lower staff turnover, and workers experience greater job security at those companies;
· Whereas employee-owners feel better prepared to cover the expenses of life and retire with a greater sense of financial security; and
· Whereas employee-owned companies have a rich history in communities across the United States.
The bipartisan support for this resolution echoes the long history of bipartisan enthusiasm for employee ownership. For example, President Reagan in the 1980s worked with Democratic Senator Huey Long of Louisiana on passage of tax relief for ESOPs. Reagan spoke powerfully on behalf of employee ownership. “I can’t help but believe that in the future we will see in the United States and throughout the Western world an increasing trend toward the next logical step, employee ownership,” he said. “It is a path that befits a free people.”
At a time when economic development news is about cities and localities bidding eagerly to attract companies like Foxconn and Amazon — whose jobs are only as stable as the next tax incentive — employee-owned companies represent a way to ground wealth locally for the long term, building reliable assets for workers and their families. As Good Jobs First notes, cities and states spend more than $70 billion in tax incentives for large corporations, only to see those companies too often depart for another city.
Employee-owned companies are far less likely to leave. In Madison, Wisconsin, Isthmus Engineering and Manufacturing has been owned entirely by its employees since 1980. The factory-automation consulting group regularly pulls in more than $20 million in revenue a year. In Coffeyville, Kansas, Medicalodges is also completely employee-owned and provides long-term assisted living care, with 2,000 employee-owners.
The resolution to make October Employee Ownership Month comes on the heels of several bills introduced this year in support of expanding support mechanisms for employee ownership. Senator Baldwin introduced the Worker Owned Wealth Act, which would create a low-interest revolving loan fund for employees seeking to purchase businesses from their employees. The act also includes a tax deduction for financial institutions that loan to ESOPs; and it would remove the corporate tax deductibility for bonuses paid to CEOs at companies that do not have at least 5 percent employee ownership.
“The Senators’ bipartisan advocacy of employee ownership is part of a long tradition of policymakers identifying ownership as a key part of a strong and stable economy,” said Jessica Rose, Director of Employee Ownership for the Democracy Collaborative.
In May, Senator Gillibrand joined with Bernie Sanders and others to introduce two employee ownership bills. The WORK Act would provide more than $45 million in funding to states to establish and expand employee ownership centers. A second bill would establish the U.S. Employee Ownership Bank, providing $500 million in low-interest loans and other financial assistance to help workers buy businesses, through both Employee Stock Ownership Plans and worker-owned cooperatives. With more than 7 million small business owners ready to retire, many without succession plans, and 25 million jobs on the line, these bills come at an opportune time for employee ownership to make large strides.
“The Senators’ bipartisan advocacy of employee ownership is part of a long tradition of policymakers identifying ownership as a key part of a strong and stable economy,” said Jessica Rose, Director of Employee Ownership for the Democracy Collaborative.
As she traveled to talk about her work for employee ownership, Senator Gillibrand in early October visited Once Again Nut Butter, the largest private sector employer in the small New York town of Nunca. This 100 percent employee-owned company has more than $50 million in sales and more than 70 employees. “All my dreams and hopes that I had started with and never thought I’d have, have come true here,” employee-owner Lisa Gibson-Nicholson told Gillibrand. As support for employee ownership gains momentum on Capitol Hill, such hopes may one day be realized for more American workers.
