Rochester, NY – U.S. Senator Kirsten Gillibrand today stood with Mayor Lovely Warren at H&C Tool Supply and Hewes Fastener Corporation to announce her bipartisan legislation the Main Street Employee Ownership Act, which would support small businesses that invest in and reward their workers and communities by transitioning to an Employee Stock Ownership Plan (ESOP) or a cooperative (co-op).
ESOPs and co-ops 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 the year the business becomes employee-owned. Employee ownership also rewards workers, paying 5 to 12 percent more and with workers having 2.2 times more in retirement savings as well as greater job stability. Furthermore, employee ownership helps prevent layoffs and creates locally rooted jobs. ESOPs are less likely than comparable businesses to lay off workers in economic downturns, and employee-owned companies are less likely to go bankrupt and tend to stay in business longer.
“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 am proud to announce this bipartisan bill to help companies reward work without sacrificing profit,” said Senator Gillibrand. “Employee-owned businesses have a strong track record of better pay and retirement benefits for workers and a commitment to creating local jobs. I will continue to fight as hard as I can in the Senate to pass my bipartisan legislation that rewards work and supports employee ownership around New York and the country.”
“When the City of Rochester first explored the potential for worker-owned cooperatives and started our Market Driven Community Corporation, our goal was to create good jobs and help Rochester families build wealth in some of our most challenged neighborhoods,” Mayor Lovely Warren said. “We all benefit when workers and their families can build wealth and participate fully in the Rochester economy and the American Dream. I would like to thank Sen. Gillibrand for helping them achieve that goal.”
“These bills provide critical legislative support for employees and families of businesses that carry on after the founder retires. Without the help of the ESOP model and government support for required financing, many local companies would either close or be gobbled up by larger companies without the same long-term commitment to our community. Now, with the help of our partners, our employee-owners can each see tangible benefits from their hard work,” added Don Waltzer, President of H&C Tool Supply and Hewes Fastener.
“In 2014 the value of employee owned assets nationally was 1.31 trillion dollars or $92,000 per employee. In an increasingly volatile economy, employee owned businesses are a powerful economic tool to create sustainable jobs,” said Kate Washington, CEO OWN Rochester. “Rochester NY joins municipalities across the country that support the nearly 7,000 worker owned companies. OWN Rochester leverages the power of worker owned cooperatives like ENEROC to create jobs and build wealth in our low-income communities and supports the Main Street Employee Ownership Act of 2018.”
There are more than 2.3 million companies, employing one in six workers nationwide, with owners who are at or near retirement. This includes an estimated 181,370 businesses in New York employing 1.6 million workers. As these business owners retire, local economies will experience a massive shift that could trigger the closure of small businesses and loss of jobs and investment. This looming crisis can be turned into a unique opportunity to strengthen small businesses, reward workers, and invest in our Main Street economy by helping these companies transfer ownership to employees.
Gillibrand introduced the bipartisan Main Street Employee Ownership Act, which would improve access to capital and technical assistance to transition small businesses to employee ownership and save thousands of small companies and jobs. The U.S. Small Business Administration (SBA) is primed to lead a national effort in expanding small business employee ownership.
Gillibrand’s legislation would give the SBA new authority and tools to achieve this goal, including the following:
- Updating the agency’s lending practices to better serve employee-owned businesses
- Facilitating SBA lending to cooperative businesses
- Empowering the SBA to assist small business owners in converting their companies to employee ownership
Gillibrand also supports two bipartisan bills that would encourage employee ownership of companies. The Promotion and Expansion of Private Employee Ownership Act would eliminate barriers to establishing new small business ESOPs and ensure that small businesses eligible for SBA programs would remain eligible if the company becomes an ESOP. The Small Business Employee Ownership Promotion Enhancement Act would encourage small businesses to become employee-owned by providing technical assistance to help companies transition ownership to workers through an ESOP. Gillibrand also co-led the United States Employee Ownership Bank Act, which would provide $500 million in federal low-cost loans, loan guarantees, and technical assistance to support ESOPs and worker-owned cooperatives.