New report calls for broadening employee ownership, among other recommendations
By Karen Kahn
The American Sustainable Business Council (ASBC) has released a comprehensive set of recommendations for creating an economy that works for all. As Jeffrey Hollender, CEO of ASBC, and Maya Fano-Caroti, ASBC policy assistant, write in the preface of the new report, the COVID-19 crisis has laid bare the truth: “our current system of capitalism does not work for most Americans.”
A May 2020 JUST Capital/Harris Poll confirmed that the vast majority of Americans agree: 75 percent of respondents indicated they believe “our current form of capitalism doesn’t ensure the greater good of society.”
Among the key recommendations is the expansion of employee ownership, through Employee Ownership Stock Plans (ESOPs) as well as worker cooperatives and other less well-known ownership structures.
A multistakeholder working group compiled the recommendations that appear in “Creating an Economic System that Works for All.” The proposed policies lay out a framework for making the transition from shareholder capitalism to stakeholder capitalism, as proposed by the Business Roundtable in August 2019. As the authors note, to make real progress toward a different form of capitalism requires more than businesses committing to public good or social mission. Change will require “broad public policy changes as well as clear measurable goals.”
The ASBC plan puts racial equity, a “moral and economic imperative,” at the center of its proposals across seven areas:
- Access to Capital
- Equity, Investment, Taxes, & Disclosure
- Worker Wellbeing
- Government, Money, Taxes & Politics
Among the key recommendations in the section on “Worker Wellbeing” is the expansion of employee ownership, through Employee Ownership Stock Plans (ESOPs) as well as worker cooperatives and other less well-known ownership structures. The report argues for incentives to encourage every major corporation to implement an ESOP and to develop mechanisms to include part-time workers in ownership. The plan endorses Senator Pat Roberts’ (D-KS) “Promotion and Expansion of Private Employee Ownership Act,” which ensures that S Corporations that form ESOPs remain eligible for SBA loans and qualify for certification as minority-, women-, or veteran-owned for purposes of public contracts.
Additional recommendations include incentives to democratize governance and management of employee-owned firms and to establish tax parity for the various employee ownership structures.
“Tax laws treat cooperatives differently than ESOPS, and S Corp ESOPs are treated differently than C Corp ESOPs,” the report says. “The laws must be changed to make tax treatment more uniform for all worker ownership models so hosting communities and their emerging worker-owners can choose the model and approach best for them.”
As the authors note, worker-owned enterprises that incorporate democratic practices and robust worker supports are among the most “stable, inclusive, equitable, democratic, resilient and competitive with fewer job losses, especially during downturns.” It’s time that more federal and state policymakers took note and considered what they can do to build a fairer and stronger economy that fully incorporates broad-based ownership. “Creating an Economic System that Works for All” is a great place to start.
Karen Kahn is a communications consultant and the editor of Employee Ownership News.