Brooklyn, NY – U.S. Senator Kirsten Gillibrand and Congresswoman Nydia Velázquez today visited IceStone, a tile, stone fabrication, and installation company, to push for the U.S. Senate to pass bipartisan legislation, the Main Street Employee Ownership Act, which just passed in the House of Representatives this month. This legislation would support small businesses that invest in their workers and communities by transitioning to an Employee Stock Ownership Plan (ESOP) or a cooperative (co-op). Gillibrand and Velázquez were joined by a number of local cooperative business owners and organizations that assist them, including Dal LaMagna, CEO of IceStone, Marisol Linda Diaz, President of Brooklyn Stone & Tile, and Maru Bautista, Director of Cooperative Development for the Center for Family Life.
ESOPs and co-ops 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 the year the business becomes employee-owned. Employee ownership also rewards workers, paying 5 to 12 percent more and with workers having 2.2 times more in retirement savings as well as greater job stability. Furthermore, employee ownership helps prevent layoffs and creates locally rooted jobs. ESOPs are less likely than comparable businesses to lay off workers in economic downturns, and employee-owned companies are less likely to go bankrupt and tend to stay in business longer.
“I am pleased that the Main Street Employee Ownership Act has passed in the House of Representatives and I am proud to work alongside Congresswoman Velázquez on this important legislation. Now we need to pass this legislation in the Senate. Too many hardworking New Yorkers are still struggling to get jobs that pay them enough to take care of their families and save for retirement, and this legislation would help companies reward work without sacrificing profit,” said U.S. Senator Gillibrand. “Employee-owned businesses have a strong track record of better pay and retirement benefits for workers and a commitment to creating local jobs. I will continue to fight as hard as I can to pass this bipartisan legislation in the Senate so we can make the investments needed to support employee ownership around New York and the country.”
“In New York City, a surge in employee-owned co-operatives has helped residents shop locally and engage with their neighbors,” said Rep. Nydia M. Velázquez (D-NY). “This success ought to be replicated and expanded into other economic sectors. I am proud to join forces with Senator Gillibrand to advance this important legislation to make it more affordable for local businesses to adopt an employee-owned structure, creating retirement opportunities for more entrepreneurs, while financially empowering employees with a stake in their workplace. I am pleased that my bill has passed in the House and encourage the Senate to quickly advance Senator Gillibrand’s bill.”
There are more than 2.3 million companies, employing one in six workers nationwide, with owners who are at or near retirement. This includes an estimated 181,370 businesses in New York employing 1.6 million workers. As these business owners retire, local economies will experience a massive shift that could trigger the closure of small businesses and loss of jobs and investment. This looming crisis can be turned into a unique opportunity to strengthen small businesses, reward workers, and invest in our Main Street economy by helping these companies transfer ownership to employees.
Gillibrand and Velázquez introduced the bipartisan Main Street Employee Ownership Act, which would improve access to capital and technical assistance to transition small businesses to employee ownership and save thousands of small companies and jobs. The U.S. Small Business Administration (SBA) is primed to lead a national effort in expanding small business employee ownership.
This legislation would give the SBA new authority and tools to achieve this goal, including the following:
- Updating the agency’s lending practices to better serve employee-owned businesses
- Facilitating SBA lending to cooperative businesses
- Empowering the SBA to assist small business owners in converting their companies to employee ownership
Gillibrand also supports two bipartisan bills that would encourage employee ownership of companies. The Promotion and Expansion of Private Employee Ownership Act would eliminate barriers to establishing new small business ESOPs and ensure that small businesses eligible for SBA programs would remain eligible if the company becomes an ESOP. The Small Business Employee Ownership Promotion Enhancement Act would encourage small businesses to become employee-owned by providing technical assistance to help companies transition ownership to workers through an ESOP. Gillibrand also co-led the United States Employee Ownership Bank Act, which would provide $500 million in federal low-cost loans, loan guarantees, and technical assistance to support ESOPs and worker-owned cooperatives.