WASHINGTON, July 23 — Sen. Bernie Sanders (I-Vt.), Ranking Member of the Senate Committee on Health, Education, Labor, and Pensions (HELP), announced that tomorrow at 10 a.m., the HELP Committee will hold a bipartisan hearing on the need to expand employee ownership in Vermont and throughout the country. Testifying at the hearing will be Brock Barton, the Chief Financial Officer of King Arthur Baking Company, a world famous employee-owned business headquartered in Norwich, Vermont, whom Sanders invited to testify.
“I am delighted that Brock Barton with King Arthur Baking Company will be testifying in the HELP Committee to highlight the benefits of employee ownership at his company and the need to expand this concept throughout the country,” Sanders said. “King Arthur is not only an enormously successful baking company. What makes it so special is that it is directly owned by its employees, not some multi-billionaire on Wall Street. In my view, we should expand King Arthur’s worker-owned business model throughout the country. At a time of massive income and wealth inequality, when millions of workers are working longer hours for lower wages, we need to expand economic models that broadly benefit the working class, not just the top 1%. Employee ownership is one of those models. That is why I am proud to be introducing legislation to provide the financial resources workers need to purchase their own businesses through Employee Stock Ownership Plans (ESOPs) and worker-owned cooperatives.”
At the hearing, Sanders will be introducing the Employee Ownership Financing Act, a sweeping legislative proposal that would help American workers buy the companies they work for — giving them a real stake in the profits they help create and a voice in decisions that impact their lives.
Sanders’ legislation would expand broad-based employee ownership through ESOPs and worker cooperatives that are majority-owned by employees. Studies show that these businesses provide higher wages, better benefits, stronger job retention, and a more secure retirement. They are six times less likely to lay off employees, and companies that include some level of employee ownership are 20% less likely to go out of business than their non-ESOP counterparts. They also help reduce gender and racial wealth disparities — with one recent study finding that employee ownership could quadruple the share of wealth held by the bottom 50% of Americans.
Despite these clear benefits, growth in employee ownership has stagnated — due in large part to workers’ lack of access to capital. Sanders’ bill would address that directly by creating a $500 million loan program at the Labor Department (DOL) to help workers finance the purchase of their companies.
The Employee Ownership Financing Act would:
- Establish a $500 million loan fund to help workers purchase companies through ESOPs or worker cooperatives that are more than 51% employee-owned.
- Create a new Office of Employee Ownership at the DOL to administer the loan program and expand education about worker ownership nationwide.
- Amend the WARN Act to give employees the right of first refusal to buy closing business facilities, preventing mass layoffs and keeping jobs in local communities.
- Establish an Employee Ownership Advisory Council to support implementation and oversight.
- Ensure workplace democracy, diversified retirement investment options, fair company valuations, and independence from private equity ownership for all loan recipients.
Vermont has one of the highest densities of employee-owned businesses in the country, including the most worker cooperatives in America. There are currently more than 40 employee-owned companies in Vermont that employ over 5,000 workers across the state.
Nationally, there are more than 6,500 ESOPs across the United States, employing nearly 15 million Americans. The plans hold $1.8 trillion in assets. Yet as large corporations continue to outsource jobs and shut down plants, too many workers are left behind. Under Sanders’ proposal, workers would be empowered to purchase profitable facilities slated for closure and preserve good-paying, local jobs.
“This is not a radical idea,” Sanders said. “It’s common sense. When workers own their companies, everybody wins. Productivity goes up, morale improves, communities stay strong, and economic inequality goes down. It’s time for us to give working people the tools they need to take back some control over their economic lives.”
The bill builds on the bipartisan WORK Act, which Sanders helped lead to educate retiring small business owners and workers on the benefits of employee ownership. By codifying and expanding that work, the Employee Ownership Financing Act would mark the most significant federal investment in worker ownership in decades.
The Employee-Owned S Corporations of America (ESCA) said: “On behalf of the nation’s private ESOP-owned companies, we thank Senator Sanders for sponsoring the Employee Ownership Financing Act to encourage the formation of more ESOPs with additional financing opportunities. ESOPs are so powerful in supporting the economic interests of working Americans, and measures like Senator Sanders’ that will drive more companies to offer employee ownership will benefit everyday workers, their families and their communities.”
“Should the policies proposed in the Employee Ownership Financing Act be enacted, my sense is that they would not only accelerate the creation of employee ownership opportunities via the primary existing pathways, but would also create a capital environment where “rescue” conversions could be reasonably back on the table. For economically challenged regions facing the loss of key employers, having an additional strategy in the economic development toolkit to credibly revive, under local employee ownership, the economically viable portion of bankrupt businesses would stabilize communities while opening an additional path, of significant scale, for creating more employee-owned jobs in America,” said Matthew Cropp, Vermont Employee Ownership Center.
In addition to Sanders, Sens. Jeanne Shaheen (D-N.H.), Richard Blumenthal (D-Conn.) and Kirsten Gillibrand (D-N.Y.) cosponsored the legislation.
Read the bill text here.
Read a summary of the bill here.
