Sanders Promotes Employee-Ownership As Alternative To Greedy Corporations (Demo)

In a speech to the Vermont Employee Ownership Conference on June 8, 2018 at the University of Vermont, U.S. Sen. Bernie Sanders (I-Vt.) stressed that in a rapidly transitioning economy we must help workers around the country form employee-owned businesses:

“Instead of giving huge tax breaks to corporations who shut down in the United States and send jobs abroad to low wage countries, we must invest in creating worker-owned companies. When employees own their own companies, when they are involved in the decision-making that impacts their jobs, the results are almost always positive – absenteeism goes down, worker productivity goes up and people stay at their jobs for a longer period of time. When workers are respected on the job as full human beings who can help make the decisions for a profitable company, morale goes up. 

“Employee-owned companies will not provide starvation wages to workers and huge compensation packages to CEOs. They will not allow for unsafe working conditions. They will not shut down and send their own jobs to China. In fact, study after study has shown that employee ownership increases employment, increases sales and increases wages in the United States.

“That is why I have introduced two bills in the Senate focused on employee ownership – the WORK Act and the US Employee Ownership Bank Act.  Together, these bills would rapidly expand employee ownership throughout the country. By giving worker-owned businesses the tools to succeed and educating retiring business owners and employees about the benefits of worker ownership, we can allow the employee-ownership model to realize its true potential and create an economy that works for all of us, not just the 1 percent.”

https://www.sanders.senate.gov/newsroom/press-releases/sanders-promotes-employee-ownership-as-alternative-to-greedy-corporations?fbclid=IwAR2VpFQdrBa7xcqgFnD9Wzy21pmC811_5bzBxVKri7utTD7kD9F7d96ijBA

Gary Reber Comments:

Senator Sanders has always been a proponent for employee ownership, which I have point out in other posts. But we need to aim broader than people having a job, and empower EVERY child, woman and man to become significant productive capital asset owners.

I applaud Senator Sanders for introducing the United States Employee Ownership Bank Act (https://www.congress.gov/bill/115th-congress/senate-bill/1082).

This bill requires the Department of the Treasury to establish the U.S. Employee Ownership Bank, which shall be authorized to provide, in accordance with specified terms, conditions, and other requirements, financial assistance to increase employee ownership of a company.

In addition, the bill amends the Worker Adjustment and Retraining Notification Act to specify that, in general, if an employer orders the closing of a plant or facility, the employer must offer its employees an opportunity to purchase the plant or facility though an Employee Stock Ownership Plan (ESOP) or an eligible worker-owned cooperative.

Another complementary piece of legislation introduced in the Senate by Senator Sanders is the Worker Ownership, Readiness, and Knowledge Act or the WORK Act (https://www.congress.gov/bill/115th-congress/senate-bill/1081).

This bill requires the Department of Labor to: (1) establish within the Employment and Training Administration an Employee Ownership and Participation Initiative to promote employee ownership and participation in business decisionmaking; and (2) establish a program that may include grants for outreach, technical assistance, and training to encourage new and existing state programs to foster employee ownership and participation in business decisionmaking.

Also related is the news reported on March 15, 2018 by Loren Rodgers who writes on the National Center for Employee Ownership (NCEO) Web site:

Sen. Gillibrand, right, and Rep. Velazquez tour Brooklyn Stone and Tile, an employee-owned cooperative in New York City. [photo courtesy Up & Go]

Small Business Committees in Both House and Senate Pass Employee Ownership Legislation

For the first time since the late 1970s, non-tax bills to promote employee ownership are moving in Congress. Two bills, both of which focus on the Small Business Administration, have passed in a committee without dissent, and both have bipartisan support. The NCEO worked with the offices of prime sponsors of the two bills, Senator Kirsten Gillibrand (D-NY) and Gary Peters (D-MI). Coincidentally, both bills passed on the same day, March 14, in separate committees, one in the House and one in the Senate. The bills are described below.

Main Street Employee Ownership Act
By unanimous voice vote, the House Small Business Committee passed the Main Street Employee Ownership Act (H.R. 5236), sponsored by Nydia Velazquez (D-NY) with a friendly amendment from Rep. Steve Chabot, R-OH)). The bill was initially developed by the office of Senator Kirsten Gillibrand (D-NY). The NCEO worked with Senator Gillibrand’s office on the concepts behind the bill.

The bill is focused on increasing the role of the Small Business Administration in facilitating ESOPs. It allows the SBA to make loans to companies that they can reloan to ESOPs (prior law only allowed loans directly to ESOPs), allows ESOP loans to be made under the SBA’s preferred lender program (a program providing for expediting processing of loans with cooperating private lenders), and updates the definition of ESOPs in the current law governing SBA loans so that ESOPs do not have to have full voting rights to qualify.

The bill makes an exception to an SBA rule that sellers of a company cannot have an ongoing role on the firm. It waives a current SBA requirement of a 10% equity investment in a business transition loan, and it allows financing to be used to cover transaction costs. The bill also makes it easier to loan to worker cooperatives.

Finally, it requires the SBA to coordinate with investment funds licensed through the SBA’s Small Business Investment Company program and intermediary lenders through SBA’s Microloan program to promote employee ownership as an area to consider for investment and lending. It also directs Small Business Development Centers to provide outreach and training on ESOPs, and it directs the SBA to set an interagency task force to develop further recommendations for promoting employee ownership.

The bill is expected to be introduced in the Senate by Senators Gillibrand and James Risch (R-ID), the chair of the Senate Small Business Committee. While predicting legislative success is always uncertain, prospects for this bill are encouraging.

Small Business Employee Ownership Promotion Enhancement Act of 2017
This bill (S. 1538), was introduced by Senator Peters and Risch. It directs the Service Core of Retired Executives (SCORE), an SBA outreach program, to promote employee ownership. No funds are appropriated for this purpose.

The bill directs SCORE to appoint an individual to serve as the SCORE Employee Ownership Director. The director will be responsible for “administering and disbursing materials that contain general information and technical assistance with respect to the establishment of employee ownership structures. . . . and coordinating efforts with respect to employee ownership with the chapters of SCORE located throughout the United States.” SCORE is directed to provide technical and other educational materials as well as keep data on the extent of its outreach efforts.

SCORE CEO Ken Yancey supports the program, saying earlier this year that “Our volunteer mentors look forward to contributing their firsthand knowledge, gained through decades of business experience, to raise awareness of different exit strategies and models of employee ownership.”

The Employee Ownership Update (Demo)

Landmark Employee Ownership Act, Signed Into Law August 13, 2018, Will Amend Lending Landscape For Worker Co-Ops

Also on August 14, 2018, Elizabeth Lechleitner writes on National Cooperative Business Alliance’s (NCBA) Co-op Weekly:

The biggest employee ownership legislative victory in two decades was signed into law yesterday as a key cooperative provision of the expansive $717 billion defense bill.

Championed by Sen. Kirsten Gillibrand (D-NY) in the Senate and Rep. Nydia Velazquez (D-NY) in the House, the bipartisan Main Street Employee Ownership Act amends longstanding inequities in how the Small Business Administration (SBA) administers loans to Employee Stock Ownership Plans (ESOPs) and worker cooperatives.

“Small businesses are at the heart of stable, sustainable communities and worker co-op conversions are a proven strategy to strengthen and preserve local businesses nationwide,” said Doug O’Brien, president and CEO of NCBA CLUSA. “We are thrilled to see the Main Street Employee Ownership Act become law, and stand ready to support local economic development through employee ownership.”

Critically, the act makes employee-owned businesses eligible for SBA section 7(a) loans for the first time in history. While the law provides no new public funds to employee-owned firms, it does fast-track loan dispersal to help companies finance conversion to employee ownership—costs that, according to Rep. Velazquez, can exceed $80,000.

The new law comes at a pivotal moment as a generation of Baby Boomer small business owners prepares for retirement, seeking viable options that preserve the culture of their family businesses and ensure that their employees continue to have decent jobs.

As a group, Baby Boomers own close to half of the nation’s privately-held businesses, employing one in six workers nationwide. “This legislation fills an important gap, allowing many of these firms to transition to an employee-owned structure, keeping the businesses intact and retaining jobs in the local community,” Velazquez said.
Beyond improving the lending landscape for ESOPs and worker cooperatives, the Main Street Employee Ownership Act [https://www.congress.gov/bill/115th-congress/senate-bill/2786] creates viable retirement opportunities for entrepreneurs, provides more employees a stake in the businesses they work for and expands technical assistance nationwide.

The act also directs SBA to work with the nation’s network of 900 Small Business Development Centers to provide transition-related technical training, executive education, and one-on-one consulting.

And for good reason. “Employee-owned businesses have a strong track record of better pay and retirement benefits for workers and a commitment to creating local jobs,” Sen. Gillibrand said.

Gillibrand, whose amendment to the defense bill ensured passage of the act, spent a year beforehand meeting with employees of ESOPs and cooperatives across New York State and consulting with cooperative stakeholder associations, among them NCBA CLUSA and the U.S. Federation of Worker Cooperatives.

The cooperative community is welcoming news that the Main Street Employee Ownership Act has been codified. Charles E. Snyder, president and CEO of the National Cooperative Bank, recognized the work of Congressional champions, NCBA CLUSA and the worker cooperative sector, calling the legislation “unprecedented.”

“As a lender to cooperatives nationwide, we recognize the need for access to capital for employee and consumer-owned businesses,” Snyder said. “The Main Street Employee Ownership Act will help meet this need in important ways.”

Cooperative advocates are also pleased that the act requires SBA—through its new Small Business Employee Ownership and Cooperatives Promotion Program—to coordinate with cooperative development centers and cooperative stakeholder organizations nationwide, making NCBA CLUSA and similar associations natural implementation partners in efforts to create better jobs and a fairer economy.

http://www.foreconomicjustice.org/?p=17901

The JUST Third Way does seem to be picking up a little speed around the world . . . and just when it is needed, too.

But much, much more needs to be accomplished.

The legislation introduced by Senator Sanders and the new law passed by the House and Senate will be good for encouraging small businesses to become worker-owned, especially those who produce goods or services for the military and are eligible for Small Business Administration-backed loans.

However, legislation does not yet address the increasing numbers of jobs being displaced by the non-human means of production such as robotics, artificial intelligence (AI) and other technological innovations. It also will have little or no influence on challenging the Federal Reserve’s dangerous government-debt-backed money system that deprives every child, woman and man from equal future ownership opportunities and power. Without further system reform, a small wealthy capital asset ownership elite will otherwise continue to monopolize economic and political power in America.

For those of us to seek to reform the system and empower EVERY child, woman, and man to become economically independent  capital asset owners of the future, the challenge is to organize to surface new political and business leaders committed to the fundamental economic reforms of the JUST Third WAY and the Capital Homestead Act.

See http://www.cesj.org/learn/capital-homesteading/ch-vehicles/employee-stock-ownership-plans-esops/

To read about how to empower EVERY child, woman and man to become significant productive capital asset owners see http://www.cesj.org/wp-content/uploads/2012/05/CapitalHomesteadingForEveryCitizen.pdf.