Sens. Patrick Leahy, D-Vt., and Bernie Sanders, I-Vt., along with freshman New Hampshire Democrat Maggie Hassan, introduced two bills late last week aimed at expanding the number of small employee-owned ventures.
“By expanding employee ownership and participation, we can create stronger companies in Vermont and throughout this country, prevent job losses and improve working conditions for struggling employees,” Sanders said in a statement. “Simply put, when employees have an ownership stake in their company, they will not ship their own jobs to China to increase their profits, they will be more productive, and they will earn a better living.”
In a statement, Leahy agreed with Sanders, saying “growth and good-paying jobs in these high-performing companies have benefited employee owners, their companies and our communities.”
One of the bills — dubbed the Work Act — borrows the model of the Vermont Employee Ownership Center, a nonprofit that helps businesses facilitate the transfer of ownership to their employees. In 2016, the center helped two companies become employee-owned, while three others became worker cooperatives.
Don Jamison, the executive director of the Vermont center, said congressional Democrats have been looking to pass this legislation since the 1990s.
He said federal support would prove crucial for employee ownership centers across the country, adding that the VEOC “survives on a modest state grant and sponsorships, mostly from employee-owned companies.”
In fiscal year 2016, Vermont’s Agency of Commerce and Community Development supplied $69,660 to the VEOC, representing nearly 50 percent of its budget.
The newly introduced legislation would provide $45 million in federal funding to help states create and expand employee ownership centers.
A second bill introduced last week would create a U.S. Employee Ownership Bank, which would be allocated $500 million to offer low-interest loans and assistance to help workers purchase businesses through stock purchases or plans to form a cooperative.
Democrats in the House introduced companion legislation to both bills last week.
Employee-owned businesses have higher productivity, morale, sales and wages, according to analysts. Rutgers University, which has studied the topic extensively, has found that employee ownership boosted company productivity by an average of 4 percent, while profits went up 14 percent.
“If good-paying, stable jobs are the economy’s goal, then encouraging employee stock ownership in companies makes a lot of sense,” said Douglas Kruse, a professor at the Rutgers School of Management and Labor Relations, in April. “As part of corporate tax reform, there’s a good case for providing some of these tax incentives to companies that adopt employee stock ownership.”
Nearly 10,000 employee-owned businesses exist in this country. Vermont has more than 40, including Gardener’s Supply Co., PC Construction Co. and Harpoon Brewery.
David Fitz-Gerald, the chief financial officer of the Rutland-based manufacturer Carris Reels, said in a statement announcing the legislation that the proliferation of employee-owned companies like his “creates and maintains more productive companies that sustains American jobs at a higher rate than do conventionally owned companies.”
Jamison said he was hopeful the bill would gain momentum through support from a Republican co-sponsor. He said that while the ownership program has been boosted by Democrats, “it is a way of making more capitalists, more business owners.”
“Co-ops may sound hippyish, but they are successful businesses,” he added.