New bill supports worker-owned cooperatives

On March 19, Representatives Ro Khanna (CA-17) and Jamaal Bowman, Ed.D. (NY-16) announced a new bill, the National Worker Cooperative Development and Support Act, which supports worker-owned cooperative businesses by endowing the Small Business Administration, Internal Revenue Service, and numerous federal agencies with the authority to implement programs to support worker co-ops.

A worker cooperative is a company owned and controlled by—and for the benefit of—the people who work there. The Board of Directors comprises a majority of employee-owners who are elected by the full membership on a one-person, one-vote basis, and net profits are shared, based on a formula designed to suit the company.

This legislation establishes a United States Council on Worker Cooperatives, led by the Department of Labor. This interagency council will coordinate federal efforts relating to worker co-ops, develop a federal strategy to incorporate worker co-ops into economic development, identify regulatory barriers, propose solutions, coordinate research and data availability, coordinate educational initiatives, and report to Congress on progress and recommendations.

It also creates a small business lending pilot program through the SBA specifically for worker-owned cooperatives, providing $60 million in loans over 10 years and provides funding through the Community Development Financial Institutions Fund for education and services to establish and manage worker co-ops.

“Worker-owned businesses empower employees to have a voice in their workplace and share in the company’s success. They promote more equitable distributions of wealth and anchor jobs locally. In my own district in Silicon Valley, I’ve had the chance to visit worker cooperatives ranging from a home care agency to a pizza shop to a brewery to a bakery. Seeing firsthand how employee ownership transforms people’s lives and livelihoods made me want to help support this business model. I’m proud to lead this legislation alongside Representative Bowman,”said Rep. Ro Khanna. 

“The worker cooperative model has incredible potential to build wealth in local communities around the country — and to strengthen our democracy in the process. But to realize that potential, this budding sector needs the federal support and financing that this bill provides. I’m proud to have championed worker co-ops federally, including in my amendments to the CHIPS and Science Act, and in my district, in partnership with leaders like Cooperative Home Care Associates. I couldn’t be more excited to partner with Rep. Khanna to get this game-changing piece of legislation passed,”said Rep. Jamaal Bowman, Ed.D.

“Worker Cooperatives are a solution for business owners who want to retire, for community stability, and for worker empowerment…and of course wealth building. There are significant issues around the lack of understanding and awareness of what a worker cooperative is, how a business can transition to one, and the business needs. Thank you Rep. Ro Khanna for bringing the conversation of worker cooperatives to the front burner and prioritizing their creation and treatment at the federal level,”said Kirk Vartan, A Slice of New York (a worker co-op in Silicon Valley).

Project Equity’s Chief Policy & Impact Officer, Hilary Abell, was on-site to support and celebrate, “With federal support, worker cooperatives can play a critical role in reducing income and wealth inequality, retaining small businesses, and creating quality jobs. Our nonprofit has helped many business owners sell to their employees through worker co-op transitions, and, as a result, workers’ pay, profit sharing, and job satisfaction are increasing dramatically. This bill complements recent employee ownership legislation by promoting the unique advantages of the increasingly popular worker cooperative model. And it couldn’t be more timely, with nearly three million job-creating businesses at risk of closing when their owners retire; many of these can transition to worker coops, rewarding the selling owner and new worker-owners alike.”

Representatives from the Sustainable Economies Law Center, Network of Bay Area Worker Cooperatives, WORC Coalition, the California Center for Cooperative Development, Certified Employee-Owned, Small Business Majority, Human Agenda, Arizmendi Association of Cooperatives, Smart Yards Cooperative, Tuttle Law Group, and the City of Santa Clara were also in attendance for this momentous unveiling.

Read the full press release.

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