Several stories on this topic:
- Employee ownership gives power to the people, not corporations
From the Boston Globe, Christopher K. Croft reports on pending bills in congress meant to lighten the burden of passing ownership of companies to employees. In Annapolis, MD they passed the Maryland Employee Ownership Act, which would ease the transition to employee ownership for conventional businesses.
Croft is executive director of the Maryland Center for Employee Ownership and an adjunct professor of sustainable communities and a research fellow at the University of Baltimore.
He details how employee-owned businesses are better for communities, productivity and are an employment cushion during downturns in the economy.
And for boomers:
With 60 percent of businesses owned by baby boomers, job losses associated with the generational transition are expected to increase. Employee-ownership is the natural solution to this “Silver Tsunami” of retiring boomers.
Other benefits for companies transferring ownership to employees are state tax breaks, loans, awareness programs and support when contracting with government. Similar programs are underway in New Jersey, New York.
Link to the full article: Employee ownership gives power to the people, not corporations
2. Can Employee Ownership Hold Back a Tsunami of Small Business Closures?
In Nonprofit Quarterly, Steve Dubb takes the topic further. Summarizing the numbers that may indeed be call for a looming business crisis when owners retire out of their businesses and have no succession plan.
baby boomers own 2.34 million businesses, employ 24.7 million people, and have combined annual sales of $5.14 trillion. It is estimated that 80 percent of these businesses lack a plan for what they are going to do when their owner retires or, if misfortune falls, dies unexpectedly.
That means that millions of employees will be left without work or a say in what happens to the company. For this reason the transfer of ownership to employees has become a more popular plan for owners. The trend can be found in supportive legislation mostly at the state and community level.
The most common plan is called an “ESOP”, or employee stock ownership program.
about 10.5 million private sector workers own all or part of their companies through ESOPs, “which is almost 10 percent of the private sector workforce.” according to Doug Kruse, an economist at Rutgers University, he notes that the average ESOP assets are now about $124,000 per worker
There are programs underway in New York/New Jersey and other states that provide support to companies going through the process of setting up their ESOPs. There have been several bills at the Federal level to encourage the structure too.
Another approach is worker cooperatives, where the employees not only own a share in the company but have a say in how it does business. This structure is being supported by state and community programs as well.
The article is well-researched and absolutely worth a read if you are interested in the topic.
Link to the full article: Can Employee Ownership Hold Back a Tsunami of Small Business Closures?
Steve Dubb is a senior editor at NPQ. Steve has worked with cooperatives and nonprofits for over two decades, including twelve years at The Democracy Collaborative and three years as executive director of NASCO (North American Students of Cooperation). In his work, Steve has authored, co-authored and edited numerous reports; participated in and facilitated learning cohorts; designed community building strategies; and helped build the field of community wealth building. Steve is the lead author of Building Wealth: The Asset-Based Approach to Solving Social and Economic Problems (Aspen 2005) and coauthor (with Rita Hodges) of The Road Half Traveled: University Engagement at a Crossroads, published by MSU Press in 2012. In 2016, Steve curated and authored Conversations on Community Wealth Building, a collection of interviews of community builders that Steve had conducted over the previous decade.
Photo by: Olaf Gradin