Gillibrand Visits Schenectady Steel Company In Rotterdam To Announce Bipartisan Co-Op And Employee Ownership Legislation
Cooperatives and Employee Stock Ownership Plans (ESOPs) Help Workers Share in the Success of Companies and Reduce the Risk of Businesses Suddenly Leaving Their Communities; Gillibrand has Previously Met with Employees Currently Working at Cooperatives and ESOPs to Inform Her Legislation Supporting Employee Ownership Across the Country
Rotterdam, NY – U.S. Senator Kirsten Gillibrand today visited Schenectady Steel Company 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.”
“Schenectady Steel is one of the earliest adopters of the ESOP program. Our ESOP plan was initiated in 1975 by John Phelps, one year after the Employee Retirement Income Security Act passed the Congressional vote. Our company became 100% employee owned in 1986 and remains such today. We have found the ESOP structure offers a valuable retirement vehicle for our employees. The program also encourages employee retention and provides all staff with a stake in the company’s continued success. Production, efficiency and craftsmanship are improved by the fact that all employees have a vested interest in the well-being of the company. Having the honor of speaking for a company about to celebrate its 100th year of operation and 50 years as an ESOP company, I am encouraged by Senator Gillibrand’s commitment to the ESOP community of companies,” said Claudio Zullo, President, Schenectady Steel Company, Inc.
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.
Next Article Previous Article