With all the talk about economic recovery and building an inclusive economy, shouldn’t employee ownership be up front and center in our public programs and policies? We think so!
There has never been a better time to engage our local, state and federal governments in promoting employee ownership. We know that employee-owned companies were 4 times less likely to lay off employees during the worst days of the COVID-19 economic shutdowns, and that employee-owned companies nationwide are creating quality jobs and building wealth for workers every day.
Project Equity is working with peer organizations in the fields of employee ownership, quality jobs, and socially responsible business to collectively leverage this unique moment in time to significantly advance employee ownership.
Read on or click to learn about:
A “big tent” approach that prioritizes awareness
From a policy perspective, employee ownership has the distinct advantage of being one of the rare strategies that appeals across the political spectrum. It is also a win-win approach to business, with models appropriate for businesses of all sizes, and public policies and programs that every level of government can implement.
In our partnerships with local governments and our state and national policy work, we advance several tried-and-true ways that the public sector can support employee ownership:
- Educate agency staff who oversee economic development, business and workforce programs about the silver tsunami of retiring business owners and the employee ownership solution, including the full spectrum of broad-based employee ownership >>> read about ESOPs, worker cooperatives and employee ownership trusts.
- Fund awareness programs about succession planning and all forms of broad-based employee ownership, aimed at business owners, their advisors, lenders and business-serving nonprofits
- Provide subsidies for employee ownership feasibility assessments to help business owners find out whether this is a good path for them, whether they are planning for retirement, trying to recruit and retain employees, or simply strengthening their business
- Remove barriers (real and perceived) to employee ownership, such as the default practice of requiring individual guarantees on loans to cooperatives
Governments at every level – local, state and federal – have a critical role in advancing employee ownership, through their economic development programs, through or through public policy. Whether you are a community leader, government staff or an elected official, here are some ways you can learn more and get involved. Read on to find out how Project Equity works with local governments and to learn about some of the policy efforts we are involved in at the state and federal levels (note this page is updated every few months).
City and County governments around the country are supporting employee ownership. Project Equity’s local government partnerships include the cities of Berkeley, San Francisco, Long Beach, Tucson and Los Angeles, as well as LA County and Miami-Dade County. Learn more about our city and county partnerships:
- Read about four practical steps to promote employee ownership in our City Government Toolkit
- For an in-depth discussion of how Project Equity works with local governments, view this webinar hosted by our friends at Certified Employee-Owned, or review our presentation
- View past webinars that we have put on with various city partners on our events and webinars page
- View our national infographic and local ones (like Tucson’s) that illustrate the impact of legacy businesses on our economy, and the importance of retaining them (you can find other cities’ infographics from our website footer)
- Hear Jordan Klein from the City of Berkeley, our first local partner, talk about Berkeley’s work with Project Equity
Our latest study across the United States indicates millions of businesses are at risk of closing and point to employee ownership as a solution.
City Government Toolkit
How can cities support vibrant, local economies?
Invest in employee ownership as a central part of their business retention strategy. Baby boomer retirements are real, and with boomers owning a significant portion of our locally owned companies, understanding the pending impact on business retention and having the tools to address it is critical.
Track impact on small business ownership
- Track and report on small- and medium-sized business closure rates, and capture age of business or owner
- Report on years in business from city business licenses. How many businesses have been operating for 15 years or more?
- Segment based on industry / sector
Outreach to businesses that are over 15 years old
- Engage with businesses about succession planning and employee ownership transitions
- Forecast which businesses or sectors are likely most impacted and concentrate efforts there
- Hold site visits to discuss succession planning with key target businesses
Contract with succession planning resources that include employee ownership
- Engage with service providers to provide materials, seminars and hands on support for business owners that incorporates employee ownership
Fund technical support for businesses to sell to employees
- Fund feasibility studies
- Create a technical assistance matching fund available to transitioning businesses
Encourage employee-owned businesses to tap city procurement spending
- Track and report on city procurement spend to employee-owned businesses: dollar amount, types of products and services
- Offer incentives for employee-owned businesses within the procurement system
Offer loan guarantees or low interest or forgivable loans to support owners to sell their business to their employees
California Employee Ownership Act
- Project Equity, Worker-Owned Recovery California (co-founded by Project Equity and other California-based worker ownership advocates in 2020) and Ownership America co-sponsored the California Employee Ownership Act.
- Senator Josh Becker introduced this groundbreaking bill in April 2022, and Governor Newsom signed it into law in September 2022.
- Read about the bill and how we got it passed in this article.
- You can also join the WORC coalition to support California advocacy efforts.
The states of Massachusetts, which passed a new employee ownership law in November 2022, and Colorado, which was the first to have an Office of Employee Ownership in the state government, are also doing cutting-edge work to foster employee ownership.
State Small Business Credit Initiative (SSBCI)
- Every state has one or more state agencies that are receiving significant capital for small businesses through the State Small Business Credit Initiative.
- We encourage employee ownership advocates to reach out to the relevant agencies in their state to educate them about how SSBCI funds can be used to support employee ownership. Use our fact sheet as a starting point.
- The $1.7 trillion omnibus bill that Congress passed in late December 2022 includes great news for employee ownership! As part of a broad retirement reform package known as Secure 2.0 that is integrated into the omnibus bill, Congress created an Employee Ownership Initiative within the Department of Labor and appropriated $50 million for education about employee ownership.
- This provision, the Worker Ownership, Readiness and Knowledge (WORK) Act was co-sponsored by Senator Sanders (D-VT) and Senator Moran (R-KS). From 2025 through 2029, the Employee Ownership Initiative will support employee ownership through:
- Project Equity has advocated for the Moran-Sanders bill since 2021, and we applaud the efforts of The ESOP Association, which led this effort, and all the advocates and legislators who have paved the way for more than a decade for this important national Initiative. Read more about the WORK Act and the omnibus bill here.
- In November 2022, the House Small Business Committee introduced two new bills that aim to bring the Main Street Employee Ownership Act of 2018 to life. While these bills focus on removing barriers to financing for employee ownership, we hope they will also pave the way for broader implementation of the succession planning and educational goals that the Main Street Employee Ownership Act set out.
- In 2022 and 2023, the State Small Business Credit Initiative (SSBCI) is sending $10B in federal dollars to the states to support small businesses. Thanks to advocacy from the employee ownership community, SSBCI funds can be used to support transitions to employee ownership. But this opportunity requires active support from employee ownership champions to educate state agencies that are administering SSBCI, and engage business owners, employee-owned companies and capital providers to participate in these new programs. Learn more about SSBCI on the Treasury Department’s website.
- Also, two compelling new bills will be introduced in 2023, one to encourage cooperative development in urban communities to complement the excellent work that the USDA already does in rural communities, and another to unlock additional financing for employee ownership transitions.
Stay tuned here for updates on employee ownership policy from Project Equity, and follow us and our peer organizations on social media (the National Center for Employee Ownership, the U.S. Federation of Worker Cooperatives, and The ESOP Association all play leading roles in employee ownership advocacy and frequently publish helpful updates).
If you’d like to learn more about Project Equity’s policy work, or get involved, please contact [email protected].
Additional resources for advocates and policy-makers
Our report, The Case for Employee Ownership, summarizes the evidence base regarding the impact of employee ownership for policymakers. The upshot? The case for broad-based employee ownership is strong, and it is only getting stronger. A wide range of impact data and research confirms strong positive impacts for frontline low- and middle-income workers and workers of color and across different forms of employee ownership, including ESOPs and worker cooperatives.
Page last updated 1/9/2023
Flatten the small business closure curve
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- Twin Cities Region, Minnesota