The first federal level bipartisan legislation that highlights worker cooperatives, the Main Street Employee Ownership Act was signed into law in August 2018. Driven by the efforts of U.S. Senator Kirsten Gillibrand in the Senate and Congresswoman Nydia Velázquez in the House of Representatives, this legislation will support small businesses that save jobs and invest in their workers and communities by transitioning to an employee-owned business form such as a cooperative (co-op) or an Employee Stock Ownership Plan (ESOP).
Employee-owned businesses offer a vital solution for the survival and success of small businesses. This legislation improves small business loan programs for employee-owned business concerns through the Small Business Administration.
The Democracy at Work Institute, along with its affiliated organization the US Federation of Worker Cooperatives, played an educational role to inform the creation and development of this legislation, and is pleased to see the expansion of federal support for broad-based worker ownership.
This legislation, which improves access to capital and technical assistance for employee-owned businesses,will greatly help worker co-ops, includes directives to SBA to:
- Finance the sale of businesses to their employees
- Work with Small Business Development Centers across the country to provide training and education on employee ownership options
- Report on SBA’s lending and outreach to employee-owned businesses
The law is “commitment to provide education, microloans, and training through the Small Business Administration, which will cultivate healthy business successions to employee ownership, saving critical business assets and keeping our communities strong and prosperous,” according to Melissa Hoover, Executive Director of the Democracy at Work Institute.
Thousands of worker cooperatives and ESOPs in the US 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, tend to survive longer than conventional firms, and have fewer layoffs. With a more equitable pay ratio and demonstrated impacts for workers across the wage spectrum, “employee ownership has great potential to stabilize employment, to root productive capital in communities, and to increase the assets and incomes of working families,” according to the National Center for Employee Ownership.