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March 31, 2022

Advocates seek support for employee-owned businesses

Photo | State House News Service Sarah Assefa (left), a coordinator with the Coalition for Worker Ownership and Power, speaks at a rally outside the State House Wednesday as Rep. Carmine Gentile (right) listens.

Advocates for employee-owned businesses in Massachusetts are pushing lawmakers to advance a suite of policy proposals that they say would provide those organizations with access to capital, technical assistance, and give workers at conventional corporations greater governance power.

At a rally in front of the State House Wednesday morning, members of the Coalition for Worker Ownership and Power (COWOP) advocated for two bills, a fiscal 2023 budget line item, and potential American Rescue Plan Act spending that would promote employee-owned businesses' growth in the state.

The coalition argued employee-owned businesses, or cooperatives, produce better working conditions, are more competitive, and create better products because workers have a stake in the organization's future. But Sarah Assefa, a coordinator with COWOP, says they often have trouble finding the funding and financing necessary to flourish in the state.

"We would like to see more funding available for co-ops, particularly for co-ops in communities of color," Assefa said. "This will help level the playing field, making sure that more people have access to the transformative power of worker ownership."

The coalition is lobbying to keep money in the fiscal 2023 budget to fund a small business technical assistance program, for legislation that would require that some board of directors members at Massachusetts corporations with over $100 million in annual revenue be elected by employees (S 1223), and a bill that would establish employee ownership as an economic priority for the state (H 511 / S 261).

The coalition is also asking the Legislature to allocate $4 million from the state's share of the American Rescue Plan Act for grants and loan guarantees to facilitate the development of new worker-owned enterprises.

The Labor and Workforce Development Committee reported the board of directors bill favorably on Feb. 24. It now sits before the Senate Rules Committee, chaired by Sen. Joan Lovely.

Both the House and Senate versions of the employee ownership legislation cleared the Economic Development and Emerging Technologies Committee in March and are now before each branch's respective Ways and Means Committee.

The employee ownership bill would formalize in state law the Massachusetts Center for Employee Ownership (MassCEO), which provides training, education, and direct assistance to employee-owned businesses.

The proposal would also create a 19-member statewide board on employee ownership that would advise both the governor and MassCEO's director. Members of the board would include representatives from the Office of Business Development, Executive Office of Labor and Workforce Development, the Massachusetts Growth Capital Corporation, and the Associated Industries of Massachusetts, among others.

Rep. Paul Mark, a House co-sponsor of the bill, said his interest and care for employee-owned businesses goes back to when he was 12 year old and his father was laid off from his factory job. He said it was the day before Christmas when his family found out through the evening news that the factory his father worked at was closing.

The benefit of an employee-owned business, he said, is workers are involved in the decision-making and know exactly what is going on with the company.

"They know if the company is not profitable," Mark said. "And they certainly don't do what my father's business did, which was sell out to something that was really big and just move all the businesses out of Massachusetts."

Shavon Prophet, outreach and marketing manager at MassCEO, said half of small businesses in the state are owned by Baby Boomers -- people born between 1946 and 1964. Most of them, she said, will retire over the next 10 years, a phenomenon that has been dubbed the "Silver Tsunami."

The bad news, Prophet said, is most businesses don't have a clear succession plan.

"In Massachusetts, we are fortunate to have a state government that recognizes the important role that employee ownership plays as a solution to the business succession crisis and as an economic development strategy that creates and preserves good quality jobs," she said.

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