By David Levine, Carmen Huertas, Kristen Barker, Chris Cooper and Michael Peck
The “Ownership4All” Campaign launched by the American Sustainable Business Council (ASBC) & 1worker1vote, an ASBC member, seeks to advance policy at the national, state and local level to support worker ownership starting with rural and urban underserved communities and regions.
The American Sustainable Business Council is a growing coalition of business organizations, businesses and business professionals committed to creating a vision and framework and advancing market solutions and policies to support a vibrant, just and sustainable economy. Founded in 2009, ASBC and its organizational members represent more than 250,000 businesses across the United States. These diverse business organizations are comprised of worker owners in various shared ownership models such as worker owned cooperatives and ESOPs, trade associations, local and state chambers of commerce, microenterprises, social enterprises, green and sustainable business groups, local and community-rooted business, women business leaders, economic development organizations and investor and business incubators.
In addition, ASBC has been joined by a wide range of companies including Patagonia, Eileen Fisher, Ben & Jerry’s, Seventh Generation, Etsy, New Belgium Brewery, Earth Friendly Products, American Insurance Life, Amalgamated Bank, Naturepedic, and Trillium Asset Management. ASBC informs and engages business leaders, while educating policy makers and the media about the need and opportunities for a sustainable economy ASBC is raising up the voice, presence and power of business to create jobs, grow businesses and build a sustainable US economy.
The ASBC model is to convene and build collaboration and consensus amongst diverse business organizations and companies in order to attain greater voice and power. “Ownership4All” follows that path by bringing together the widest possible, nationwide range of worker ownership organizations and advocacy leaders, which together work to identify the key policies most needed and then develop the communications and advocacy successes needed to advance those policies
In this politically fractured moment our civic history, we have seen that policymakers of all political views value worker ownership as the enabling “future of work” policy driver. We believe that success can be achieved when harnessing the collective voice of the many on behalf of historically marginalized populations through leveraging the power of diverse local, regional, state and national organizations to advance a transformational policy agenda. Our goal is to accelerate forming the preeminent coalition of catalytic businesses and organizations across existing ownership model and practice” silos that together will work to pass legislation to expand the support and opportunity for broadened and deepened worker ownership and worker owners.
ASBC welcomes and recognizes recent successes in this area on a number of fronts. On the national level during the 2015-2018 timeframe, ASBC worked with many partners to successfully pass the Main Street Employee Ownership bill S. 2786 and H.R. 5236 which increases the availability of SBA 7(a) ESOP loans; allows the seller to maintain longer contact with the company to support the transition to worker ownership; and requires the SBA to work with the nation’s Small Business Development Centers to provide transition-related technical training, executive education, and one-on-one consulting. Learn more about the law:
- Historic Federal Law Gives Employee–Owned Businesses Access to SBA Loans – Nonprofit Quarterly – August 2018
- ASBC Statements in Support of the Main Street Employee OwnershipAct – Common Dreams – August 2018
- Worker ownership in the USA – a new law for #coops and #employeeownership – Ed Mayo, Secretary General of Co-operatives UK – August 2018
On the state level, working in support of State Senator Jamaal Bailey (36thDistrict), CUNY Law School’s Community Economic Development Clinic (CEDC) and other New York city & state leaders, this collective effort helped usher in the successfully passed New York State Senate Bill S5349A which establishes an advisory panel on employee-owned enterprises. The bill also provides that such panel shall consist of twelve members who shall report and make recommendations on how best to support existing employee-owned enterprises and promote new employee-owned enterprises.
Going forward there is a slate of policies that ASBC will seek to advance to catalyze greater investments and buy-in for hybrid worker ownership models and underserved, worker-ownership communities. Some of the priorities that we have identified through our collaborative and convening processes include:
Legal parity for hybrid and diverse ownership models in federal laws: there are several models of worker ownership, and this variety contributes to the fragmentation of the law. Today, workers and employees are two distinct and diverging classes of people. More than one-third of America’s current workforce do not play in the same economic class sand box where being an employee with any kind of benefits is a privileged status. By 2020, if current inequality trends continue, this statistic will cover 65 million workers or half of the America workforce.
The “Ownership4All” campaign’s “fair share” or parity platform intends to provide start-up and transitioning worker and union cooperatives with the same tax benefits that ESOPs currently enjoy and equalize the already privileged ownership community playing field for those knocking on the worker ownership door. Tax laws treat cooperatives differently than ESOPs and S Corp ESOPs differently than C Corp ESOPs. Laws must be changed to make tax treatment more uniform for all worker ownership models so that hosting communities and their emerging worker-owners can choose the model and approach best for them.
For example, advocating for the passage of an S-Corp ESOP-like corporate income tax exemption, or the ability to deduct both interest and principal on a worker and/or union cooperative loans, would serve several purposes. First, the wealth creation successes of ESOPs can be added to the democratic participation benefits of worker coops, union-coops, and other hybrid worker ownership structures. Second, this message is one of fairness: extending the tax breaks to hybrid models such as worker-owned LLCs expands the potential beneficiaries of the law, including situations where an ESOP isn’t practical. Third, it shows that the intent of the ESOP tax breaks (promoting broad-based worker ownership) is more important, and fundamental, than a specific corporate structure. Fourth, a worker cooperative’s statutory democratic governance already ensures a broad-based ownership structure and control, negating some of the need for high, and expensive, levels of regulation that can characterize other forms of employee ownership like an ESOP.
Enabling paths to transition: The transition to worker ownership requires technical help in the form of business and market assessments, legal assistance in structuring the transition, and training employee purchasers to run the business. On a regional basis, this can be integrated into shared services cooperatives within structures of existing organizations already working closely with ASBC and worker1vote (examples include the Ohio Employee Ownership Center, the Vermont Employee Ownership Center, and the Rocky Mountain Employee Ownership Center). The“Ownership4All” campaign will highlight the national policies needed to transition workers in all industries from purely paycheck dependency to investor and ownership status.
Access to capital: Many traditional banks don’t know enough about worker-owned businesses to feel comfortable lending to them. Legislation can create ways to raise funds, either through changes to tax law or an increase in government loans. ASBC has partnered with the National Cooperative Business Association through its annual “Coop Impact” event to convene credit unions, community development finance institutions, mission banks, social impact investors, worker-friendly pension funds and other financial innovators such as The Working World in this growing space.
Several examples of bills that ASBC has identified with allies for our “Ownership4All” campaign include:
- The Worker Ownership, Readiness, and Knowledge (WORK) Act (S. 1081, H.R. 2387) – S. 1081, H.R. 2387 would authorize the Department of Labor to provide training, grants, and technical support to local and state programs that promote worker ownership.
- The Promotion and Expansion of Private Employee Ownership – S. 1589 would give S Corp ESOP owners the same right to defer capital gains taxes that C Corp ESOP owners now have. Ideally, S.1589 should be expanded to provide similar tax breaks to worker and union coops as well.
Entrepreneurial Status Parity: “Ownership4All” also intends to advance legislation to equalize the current EB5 immigrant investor visa benefit available to incoming financially privileged applicants who can afford to invest $500k in existing U.S. enterprises. Our goal is to provide equal visa status access to undocumented union coop and other hybrid model worker owners by similarly validating the value of their cooperative enterprises in aggregate to benefit individual worker-owner applicants and to re-democratize America’s increasingly gratuitously cruel and economically unproductive immigration system.
America’s mythic, aspirational connection between work and reward has seriously frayed due to rising inequalities of wealth, mobility and opportunity. One ready, bipartisan solution to this problem is widespread deepened and broadened worker ownership – which allows more Americans to share in their company’s success and build wealth over the long term. It also makes these companies more democratic, stable and resilient, keeping local businesses open for their customers, employees, and communities and recreating common platforms practicing solidarity and civic equity
To conclude, ASBC and our partners’ efforts will help bring greater attention to worker ownership as a business model that can preserve many American enterprises that may otherwise close as baby boomers retire, build stronger and more resilient local economies, increase wealth, and help rebuild an essential middle class within an economy benefitting all. Worker Ownership needs to become mainstreamed, more equal in terms of who receives benefits, and recognized as a leading cultural force transitioning to an aspirational “future of work” for all.
A clear path towards that end is the establishment of national, state and local policies and laws that fulfill these goals. ASBC has proved that we can help to enable legislation to pass at the local, state and national level requiring the coalescing of multiple stakeholders. We can build the consensus that leads to the development of targeted campaigns and the implementation of strategies to deliver the successful passage of laws that continues to grow acceptance of, investment in, and support for hybrid model worker ownership.
Worker ownership is a smart, Main Street, bipartisan idea that is good for workers, companies, communities and civic democracy. ASBC is in a unique position as the nation’s largest sustainable business organization to help build the coalition, marshal that power and urge Congress and state legislatures to take steps to advance, reburnish and extend the proverbial American “ownership4all” ethos.
- David Levine is an ASBC co-founder and serves as ASBC President
- Professor Carmen Huertas serves as the founding executive director of CUNY Law School’s Community Economic Development Clinic (CEDC) and is a 1worker1vote co-founder
- Kristen Barker co-founded and serves as the executive director of the Cincinnati Union Cooperative Initiative (CUCI) and is a co-founder of 1worker1vote
- Chris Cooper is a program coordinator with the Ohio Employee Ownership Center (OEOC) and a 1worker1vote co-founder
- Michael Peck is a 1worker1vote co-founder and serves as executive director