COULD EXPANDING EMPLOYEE OWNERSHIP BE THE NEXT BIG ECONOMIC POLICY?
Rachel M. Cohen
- Total Posts: 1,602
December 26 2018, 1:06 p.m.
TWO LIKELY DEMOCRATIC presidential contenders in 2020 have made quiet strides in recent years to bring into vogue a little-known policy that could reduce economic inequality — one that harnesses current law to expand workers’ ability to become owners in their place of employment.
Sens. Bernie Sanders, I-Vt., and Kirsten Gillibrand, D-N.Y., have worked to advance legislation on employee stock ownership plans, or ESOPs, which are retirement vehicles that allow a business owner to sell their company stock to a trust co-owned by the company’s employees. The company typically purchases the owner’s shares with a loan, divides the shares among the staff, and then repays the debt annually with pre-tax payments from the company’s profits. When a worker leaves or retires, the company buys back that worker’s stock at fair market value, giving them a slice of the company’s capital earnings.
A bipartisan group of legislators first took up ESOPs in Congress in 1974, but when that generation of lawmakers retired, their successors did not embrace employee ownership with the same enthusiasm. The focus on deficit reduction, coupled with a few bad employee ownership scandals in the ’80s, ’90s, and early 2000s, led many otherwise receptive politicians to steer clear. Federal incentives for employee ownership began to dwindle, beginning under George H.W. Bush and continuing through the next three presidential administrations.
This past summer, for the first time in more than two decades, Congress passed a pro-ESOP piece of legislation. Introduced by Gillibrand in the Senate and Rep. Nydia Velazquez, D-N.Y., in the House, the Main Street Employee Ownership Act makes it easier for small businesses to establish ESOPs and co-ops. It was included in the defense bill that President Donald Trump signed in August. (Another likely 2020 presidential contender, Sen. Elizabeth Warren, D-Mass., introduced legislation this year for a different type of employee ownership. Known as co-determination, it would require companies with revenue over $1 billion to allow workers to elect at least 40 percent of their board of directors.)….
Bernie: "Not Me. Us"
January 12, 2019 at 6:40 PM #11694jwirrParticipant
- Total Posts: 1,647
Doesn’t England have a law that requires any corporation going out of business or moving do another country to give their workers the right to buy the company before any other action is taken? Seems to me that would be a good first step here also.
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