Saranac Lake, NY – U.S. Senator Kirsten Gillibrand today visited Adirondack North Country Association (ANCA) to announce her bipartisan legislation the Main Street Employee Ownership Act, which would support small businesses that invest in and reward their workers and communities by transitioning to an Employee Stock Ownership Plan (ESOP) or a cooperative (co-op). ANCA is currently developing an initiative to assist business owners across the North Country who are at or near retirement in developing transition plans that include the use of employee ownership.
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.
“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. I am proud to announce this bipartisan bill to help companies reward work without sacrificing profit,” said 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 in the Senate to pass my bipartisan legislation that rewards work and supports employee ownership around New York and the country.”
“ANCA strongly endorses Senator Gillibrand’s bipartisan bill,” said ANCA Executive Director Kate Fish. “In the Adirondack North Country alone, there are 10,000-16,000 businesses owned by Baby Boomers. Their impending retirement could send shock waves through our rural communities, which depend on a wide variety of locally-owned small businesses for employment. ANCA is committed to amplifying the benefits of this legislation with our own boots-on-ground initiative that will deliver critical resources to retirement-age business owners across the region.”
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 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.
Gillibrand’s 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.