The team at DAWI and USFWC
For Immediate Release: Democracy at Work Institute celebrates the passing of worker cooperative and employee ownership legislation
August 13, 2018
Employee-owned businesses offer a vital solution for the survival and success of small businesses. This legislation improves small business loan programs for employee-owned business concerns through the Small Business Administration.
The first federal level bipartisan legislation that highlights worker cooperatives, the Main Street Employee Ownership Act has just been signed into law. Driven by the efforts of U.S. Senator Kirsten Gillibrand in the Senate and Congresswoman Nydia Velázquez in the House of Representatives, this legislation will support small businesses that save jobs and invest in their workers and communities by transitioning to an employee-owned business form such as a cooperative (co-op) or an Employee Stock Ownership Plan (ESOP).
The Democracy at Work Institute, along with its affiliated organization the US Federation of Worker Cooperatives, played an educational role to inform the creation and development of this legislation, and is pleased to see the expansion of federal support for broad-based worker ownership.
“We applaud this commitment to provide education, microloans, and training through the Small Business Administration, which will cultivate healthy business successions to employee ownership, saving critical business assets and keeping our communities strong and prosperous,” said Melissa Hoover, Executive Director of the Democracy at Work Institute. "We thank Senator Gillibrand along with her co-sponsors Senator James Risch (R-ID), Chair of the Committee on Small Business and Entrepreneurship, U.S. Senator Ben Cardin (D-MD), Ranking Member of the Committee on Small Business and Entrepreneurship, U.S. Senators Todd Young (R-IN), Jeanne Shaheen (D-NH), Susan Collins (R-ME), Cory Booker (D-NJ), and Congresswoman Velázquez, for their commitment to supporting local businesses across the country. We look forward to partnering with federal, state, and local government to implement this visionary and game-changing legislation, creating more opportunities for broad-based ownership of small business."
Thousands of worker cooperatives and ESOPs in the US have demonstrated that employee ownership is good for businesses, workers, and the local economy. Companies that transition to employee ownership see an increase in productivity by 4 to 5 percent, tend to survive longer than conventional firms, and have fewer layoffs. With a more equitable pay ratio and demonstrated impacts for workers across the wage spectrum, “employee ownership has great potential to stabilize employment, to root productive capital in communities, and to increase the assets and incomes of working families," according to the National Center for Employee Ownership.
This legislation, which improves access to capital and technical assistance for employee-owned businesses,will greatly help worker co-ops, includes directives to SBA to:
- Finance the sale of businesses to their employees
- Work with Small Business Development Centers across the country to provide training and education on employee ownership options
- Report on SBA’s lending and outreach to employee-owned businesses
“Too many hardworking New Yorkers are still struggling to get jobs that pay them enough to take care of their families and save for retirement. I was proud to pass into law my bipartisan bill, the Main Street Employee Ownership Act, to help companies reward work without sacrificing profit,” said U.S. Senator Kirsten Gillibrand. “Employee-owned businesses have a strong track record of better pay and retirement benefits for workers and a commitment to creating local jobs. This legislation is one of the most significant expansions of federal support for employee ownership to pass into law in more than two decades. I will continue to fight as hard as I can to pass more proposals like this into law to reward work and support employee ownership around New York and the country."
“I am proud to join forces with Senator Gillibrand to advance this important legislation to make it more affordable for local businesses to adopt an employee-owned structure, creating retirement opportunities for more entrepreneurs, while financially empowering employees with a stake in their workplace,” said Rep. Nydia M. Velázquez.