Support for employee ownership transitions could save small businesses
by Karen Kahn
The Worker-Owned Recovery California (WORC) Coalition is advocating for California’s state legislature to include $10 million in the state budget to support education, technical assistance, and forgivable loans to businesses that transition to worker ownership.
The state legislature will be voting on the budget on June 15. WORC is urging Californians to contact their legislators.
State Budget Request
The California legislature has limited its work this term to COVID-19 response and recovery, homelessness, and fire prevention. The coalition has framed its request as an investment in the state’s economic recovery.
“The small business succession crisis, driven by Baby Boomer retirements, has become more urgent in the face of COVID-19,” says Yassi Eskandari, attorney and policy director for the Sustainable Economies Law Center and the WORC Coalition coordinator. “Many business owners will be looking for exit strategies but are unlikely to find buyers while the economy is in recession. Their best bet could be their employees.”
“By supporting the transition of small businesses to worker-ownership, the state of California will preserve jobs and businesses, reduce strain on its social safety net, anchor community access to essential goods and services, and cultivate a new generation of worker-owners who have a say in their workplace and share in the profits of their work,” the coalition writes in its Call to Action.
To accelerate conversions to worker ownership, WORC advocates that the state allocate new funding to:
- Finance transitions by including worker buyouts in existing business lending programs and providing tax incentives for qualified transitions.
- Fund specialized technical assistance providers to assist business owners and workers in transitioning their businesses to worker ownership.
- Promote worker ownership conversions, through a statewide outreach campaign, as a critical business retention strategy that addresses the dual crises of COVID-19 and the business succession crisis.
The state legislature will be voting on the budget on June 15. WORC is urging Californians to support the campaign and the budget request by contacting their legislators.
The WORC Coalition
The WORC Coalition includes Sustainable Economies Law Center, U.S. Federation of Worker Cooperatives, Democracy at Work Institute, California Center for Cooperative Development, Project Equity, Lawyer’s Committee for Civil Rights of SF Bay Area, Certified Employee Owned, and the worker cooperative A Slice of New York.
The member organizations, which span both the cooperative and ESOP communities, have been working together informally for the past year. Before the global pandemic shut down businesses across the state, says Eskandari, the group had been educating legislators about employee ownership, assessing policy priorities, and developing a legislative agenda.
In March, when it became clear that the health crisis would also result in an economic crisis, Eskandari asked the group how they would respond to the moment, and the participants formally organized as the WORC Coalition. Well aware of the handouts that large companies receive in moments of shock, Eskandari says she wanted to make a “power grab for the people.” The coalition came up with a comprehensive long-term proposal and homed in on a specific budget request that could pass this term.
“This is a first step in a broader program,” says Thomas Dudley, CEO of Certified Employee Owned and a member of the coalition. “There is so much more we can do if the state is on board: for example, support centers for employee ownership, provide financing for employee ownership transitions, and implement purchasing preferences for employee owned companies. The $10 million is a deposit—it is significant enough to have real impact, but a relatively small investment for a state as large as California.”
The coalition believes that this small investment can catalyze significant savings for the state and promote a more equitable way of doing business.
For more information about the campaign and how to lend support, contact the WORC Coalition Coordinator, Yassi Eskandari at firstname.lastname@example.org.
Karen Kahn is a communications consultant and the editor of Employee Ownership News.