Turning Employees into Owners: Rebuilding the American Dream
In tandem with its official launch, Ownership America released its inaugural publication Turning Employees into Owners: Rebuilding the American Dream”. The publication surveys a number of federal policy opportunities to scale employee ownership with a particular emphasis on the Employee Stock Ownership Plan (ESOP) model. An Appendix expands the focus to include worker cooperatives, employee stock purchase plans, and broad-based equity sharing.
The publication was the culmination of a series of conversations that began in late 2017 between Ownership America President Michael Quarrey of Web Industries, OA Board member Corey Rosen of the National Center for Employee Ownership (NCEO), Christopher Mackin of Ownership Associates, and John Case of the Employee Owned America blog (an outlet which Ownership America is pleased to inherit and continue). The conversation quickly expanded to include Gellert Dornay of Axia Home Loans, Stephen Ringlee of Centesimus Capital, and the late Jared Kaplan, a renowned legal expert in the ESOP community to whom the final publication is dedicated. They formed a working group called the Lake Quinsigamond group, named after the lake in Worcester, Massachusetts where the initial conversation took place. The motivating question? Find policy opportunities to scale employee ownership in the United States.
The roster of policy proposals explored in the publication includes:
- The Employee Equity Investment Act (formerly known as the Employee Equity Loan Act), which is a federal loan guarantee proposal to create, grow, and sustain employee ownership in the middle market sector of the American economy using the SBA’s existing Small Business Investment Company (SBIC) as a program template
- Tax incentives to promote employee ownership conversions in the context of private equity transactions and corporate divestitures
- Reforms to Opportunity Zones that would facilitate the qualification ESOP transactions
- Making government benefits enjoyed by corporations contingent on a partial ESOP formation and/or broad-based equity sharing program
- In publicly traded companies, support for employee stock purchase plans, possibly through a tax deduction for companies that “seed” the programs
- An exploration of private-sector initiatives such as revolving loan funds
The number of employee-owned companies has been stagnant for several years. Rather than being content with 1 or 2 percent annual growth in the sector, these policies have been designed with an eye towards 20 or 30 percent. The objective of the publication is to start a conversation both within and outside of the employee ownership community about scale, in the ultimate aim of driving national attention to the issue and the value it can provide as a post-pandemic recovery strategy regardless of partisan affiliation.