As an organization, Ownership Capital Lab focuses on “strategies for financing employee ownership at greater scale.” Their mission is to increase these investments in employee-owned businesses by $1 billion within the next five years. This paper explores the upcoming generation of retiring business owners (the “silver tsunami”) and the opportunity that employee ownership has in transitionary models to address economic inequality.

OCL’s new white paper builds on Project Equity’s statistics on the upcoming retirements of business owners. There are 2.9 million small businesses whose owners are near retirement age and that have a total of 32 million employees. This silver tsunami is accompanied by “The Great Wealth Exchange,” where $124 trillion of wealth will be transferred to younger generations. With this wealth transfer, Ownership Capital Lab estimates that donor-advised funds will increase rapidly to $4.5 trillion.

Employee ownership has garnered bipartisan support, with recent legislation and endorsements from public officials (including the newly appointed Secretary of Labor) highlighting its momentum.

But why do this? One reason is to tackle wealth inequality. Wealth in the United States is highly concentrated, with the top 5% of households holding over 65% of wealth. Wages have stagnated, with marginalized communities getting hit disproportionately. Employee ownership helps shift wealth into the hands of workers. Amongst a retiring generation of owners, adopting employee ownership models—rather than selling or merging with another company—can redistribute wealth to the people who are producing it.

The paper outlines a few main points for employee ownership to take root among the silver tsunami:

• The case for investing in employee ownership right now

  • Small businesses make up 99% of businesses and half of all private sector jobs in the US

  • Only one in five business owners finds a buyer, leaving room for employee ownership

  • Employee ownership can improve the quality of jobs through higher engagement, productivity, and growth, with lower layoffs

  • Over time, employee ownership can generate hundreds of thousands of dollars in employee-owner retirement accounts

• Background on employee ownership in the US

  • 18% of the US have some form of ownership, usually through stock options (though at the Aspen-Rutgers Employee Ownership Ideas Forum, Joseph Blasi said that 51!% of Americans own shares—we’ll get to the bottom of this)

  • Employee stock ownership plans (ESOPs), employee ownership trusts (EOTs), and worker cooperatives are all viable forms of employee ownership

  • OCL believes that there is “untapped demand” for employee ownership

  • Barriers include limited availability of capital, complex transitions, and a lack of awareness

• Employee ownership funds

  • Employee ownership is underinvested. The $500M in assets under management by employee ownership funds represents 0.0139% of the $3.6 trillion (yes, trillion) of assets under management by private equity firms

  • Public investment like the SBIC program can help finance employee ownership transitions, which is how most employee ownership comes about

Read the full Ownership Capital Lab white paper here. Thanks for reading!

Mark: Before we get into the substantive stuff, can you share more with our readers about who you are and how you came to be interested in employee ownership?

Ellen: Sure. I started my career in HR consulting and saw firsthand how bad jobs hurt our clients’ bottom line, in addition to hurting workers, their families, and communities. We needed better data to work with to help companies know what to do to make jobs better and get better business results.

So, for my next act, I left consulting and earned my PhD at the University of Chicago where I got to work with the scholar whose research I had used in my practice for 15 years. When I finished, I continued my work at Washington University in St. Louis on the characteristics of jobs that benefit companies and employees alike. Employee ownership is one of the most powerful of those characteristics and I just fell in love!

Mark: More and more companies are exploring broad-based employee ownership, which is exciting. But it can also fall flat—companies make the structural change but never quite see the results they want, because they don’t make any steps to include workers in decision-making. We’ve known this since the 1980s, and Ed Carberry and co just published an article last year arguing that the mechanism for this is psychological ownership. Why do you think that isn’t more widely practiced?

Ellen: You’re absolutely right—and I’ve seen this happen again and again. Companies expect that giving employees an ownership stake will automatically lead to better performance or more engagement. But ownership structure alone doesn’t do that.

The key is understanding that ownership structure and ownership culture are distinct things. Structure is necessary, but not sufficient. Culture has to be intentionally built—through systematic changes to how companies operate.

Mark: You’ve said before there’s no “ownership culture fairy.” Can you explain what you mean by that?

Ellen: That’s a phrase we use a lot at WORC, half-jokingly. But it captures a common mistake: thinking that ownership is a magic fix. Leaders might hope that once the paperwork is signed and the ESOP or equity plan is in place, people will suddenly behave differently—be more accountable, innovative, invested.

But culture doesn’t work like that. You can’t just hand out shares and expect transformation. You have to change the way the company operates day to day—how managers lead, how decisions are made, what information is shared. Those things shape how employees think about their role in the company, which in turn shapes how they behave.

Mark: What does that culture shift actually look like?

Ellen: When companies get it right, employees start taking initiative. They solve problems, reduce waste, improve systems. They act like owners. But it only happens when leadership commits to reshaping the environment—not just in spirit, but in operations.

We think about it like this: what companies do—operational and managerial practices—affects how employees think about the company. That mindset drives whether they act like owners. It’s not magic; it’s systems.

Mark: One of my favorite books on this is Corey Rosen’s Beyond Engagement. Who else do you see as part of the broader movement to make ownership culture real?

Ellen: There’s a whole ecosystem here. The National Center for Employee Ownership (NCEO) has been at this for decades. Project Equity is doing great work helping companies and communities navigate transitions. Praxis Consulting Group works closely with leadership teams to align management practices with ownership principles.

We all bring different methods and tools, but we’re all working toward the same thing: making ownership work—not just structurally, but behaviorally and culturally.

Mark: You mentioned the Ownership Impact Index—how does that differ from what companies might already be using, like engagement surveys?

Ellen: Engagement surveys measure how people feel about work—satisfaction, emotional commitment, general motivation. But that’s not the same as ownership culture.

Ownership culture is about whether employees think like owners and act like owners. That’s what the Index measures. In a study we ran comparing it to two leading engagement tools, we found that 96% of what we measure isn’t covered by those tools. It’s like trying to evaluate cardiovascular health by asking about bicep curls—it’s just not the same thing.

Mark: Can you share a bit more about the scale itself? What kinds of things are you measuring that others don’t? And what kind of scale did you use when developing it?

Ellen: We’re measuring the two things that create an ownership culture – what companies do operationally and managerially and what employees do behaviorally. We call what companies do “Mindset Igniters” – practices that ignite an ownership mindset among employees – and we call what employees do “Ownership Behaviors.”

Mindset Igniters include things like involving workers in decision-making and communicating strategic goals in a way that helps employees understand how they can help the company reach them. Ownership Behaviors are things like making suggestions for cost savings and helping coworkers.

For your second question, do you mind if I nerd out for just a minute?

Mark: Sure…maybe just a little.

Ellen: I’ll keep it brief. The Ownership Impact Index was derived from the peer-reviewed scientific evidence base using advanced statistical modeling. We started by reviewing over 150 articles (and there were a couple of meta-analyses in there that covered another 200 or so). Our goal was to understand what was most important to measure and how others have been measuring it. Then, we drafted a LOT of test survey questions that were all written at a 7^th grade reading level, fielded the survey with 1,500 people, and did a lot of math called structural equation modeling (SEM). SEM allows us to essentially test whether we’re measuring the concepts we want to measure in the most valid and efficient way.

We did the math twice, once for the Mindset Igniters and once for the Ownership Behaviors. Then we did a time trial to be sure the final set of survey questions could be completed in no more than 5 minutes.

We ended up with a 4-minute survey with what’s called “excellent model fit.” And then we had a big party!

Mark: Okay, final question: if you had a magic wand—not the ownership culture fairy wand, but a regular magic wand—what’s one thing you’d change in the broader ecosystem to make ownership culture more common and sustainable?

Ellen: You means besides a LOT more money to fund research?! What I really want is for everyone who sits at the front end of the process – advisors, valuation professionals, trustees (in the case of ESOPs) – to believe with 100% certainty that building an ownership culture is the lynchpin for achieving maximum benefit and reducing risk, and that they would incorporate resources and supports early in the process to help companies to get there.

Dr. Ellen Frank-Miller is the founder and CEO of WORC, the Workforce & Organizational Research Center. Learn more about the Ownership Impact Index and WORC at worcimpact.com.

Employee ownership can actually be found in many South African (SA) mining and financial companies through the model of an Employee Stock Ownership Plan (ESOP). Many success stories of SA-ESOPs derive from the Black Economic Empowerment (BEE) policies introduced in the 1990s. These policies give incentives to “promote black ownership and management,” which is often seen through SA-ESOPs. Over the years, utilizing the BEE framework in Southern Africa has been more focused on compliance than enthusiasm toward employee ownership.

Difficulties with employee ownership can be attributed to the small percentage of shares given to a large number of employees, being funded by debt that companies accumulate. Oftentimes, “trusts have ended up holding shares worth less than the debt owed,” during times of economic downturn. Highly concentrated ownership is more commonly found in South African countries than broad-based ownership. PDI aims to analyze the barriers to employee ownership for Southern African economies to “promote inclusive growth and economic empowerment

PDI suggests a few main focuses to “locally optimize” their approach to employee ownership:

• Ensure Accessibility

  • Advises against approaches to employee ownership that require a purchase of shares before granted

• Create Near-Term Benefits

  • Design plans that give tangible benefits early to show workers the impact that employee ownership has on long-term growth

• Invest in Worker Engagement and Education

  • Assist with funding education towards financial literacy and EO programs

• Leverage Each Market’s Unique Resources

  • For example, the US utilizes low interest rates to incentivize owners to transition to employee ownership when selling their company

• Create The Right Incentives

  • Encourages plans that foster long-term retention and promote group performance

Employee ownership in Southern Africa has worked in the past (such as BEE policies) but plans to continue the growth of these models can help create more equitable economic conditions for individuals. If you want to read the entire playbook, you can find that here. Thanks for reading!

AI is finding its way into everyone’s lives, including even the Wendy’s drive thru. Although I think the AI hype is getting a little ahead of itself, as seen through inflated valuations of multiple companies throughout the stock market, it has taken its roots and is here to stay. Workers’ lives are going to change, and many believe for the worst. Is this true?

I generally hear negative perceptions of AI and its integration into everyone’s lives. I have heard concerns about job loss, students taking shortcuts through their education, and above all about privacy. Fears of automation taking jobs away are understandable, but I encourage people to take a look at innovation throughout history and its effects on the job market.

Personal computing came into the sphere in the late 70s and early 80s. In the US, this eliminated 3.5 million jobs at the time but then led to the creation of 19 million jobs. The internet? Killed 10 to 50 million jobs globally but led to the creation of 50 to 100 million jobs. The “app economy” accounted for 20% of all the new US jobs from 2008-2022. New technology affects all industries, and we will continue to see this happening as AI gets better over the years.

I generally take a positive view of AI and its incredible potential to improve the material conditions of individuals’ lives. Yes, AI will eliminate jobs and will hurt workers globally in the short term, but the potential it has for improving healthcare, productivity, and efficiency is exciting in the long run.

AI does feel different from previous innovations, though, and we aren’t quite there yet. So what do we do to protect workers along the way of this development?

Now more than ever, regulations and protections are essential to ensure proper care when implementing AI among employees in workplaces. Dr. Mary Gray recently published an article that stresses the importance of workers having control over workplace activity data. She identifies that AI is ineffective in workplaces without a large amount of data and appropriately large amounts of computing power to keep it online.

Dr. Gray believes that controlling and bargaining with workplace productivity data is essential while AI finds its way into workplaces. She is starting to draft “blueprints” with a team of community health worker organizations in California to bring “privacy techniques and data analytics” to their work. These groups want to start community-operated data trusts to protect workers’ data from company abuse of productivity findings.

Additionally, Dr. Gray believes that workplaces are filled with social opportunities and that this is conducive to working environments because of the collaborative work that often occurs. She identifies that AI could lead to increasing pressures on workers because of bosses’ attempts to squeeze productivity (profit) out of every second a worker has available to them.

Workers’ ability to leverage productivity data can allow for better application of AI within workplaces. Utilizing these new technologies in ways to assist collaboration and not punish socialization can combat many fears that exist in conversations about AI innovation and its effects on workers.

Let me know what you think about worker protections in AI development. Thanks for reading this week!

One way to stay informed and updated? Podcasts! In this post, I’ve rounded up some podcasts that dive into employee ownership. In no particular order:

The Owners at Work Podcast

• Produced by the Ohio Employee Ownership Center, Owners at Work brings you stories from the frontlines of employee ownership. The podcast series covers policy discussions to personal experiences. The podcast also features interviews with academics and individuals sharing their experiences with employee ownership.

The ESOP Podcast

• The ESOP Podcast offers listeners an inside look into the employee ownership movement. Featuring conversations with employee-owners business leaders, and industry professionals.

The Great Game of Business Podcast

• The Great Game of Business Podcast explores what happens when employees start to think like owners. With interviews featuring CEOs, business leaders, and thinkers, this podcast uncovers how financial transparency and ownership culture create stronger and more sustainable companies.

Bicycle For The EO Mind

• Zolidar’s podcast focuses on the challenges that small and medium-sized businesses (SMBs) face when trying to sell out. Their podcast shares stories from business owners who successfully transitioned through employee ownership and more.

Chat With Leaders

• The Chat with Leaders Podcast is dedicated to amplifying the voices of servant leaders who use their influence and businesses as a force for good. They dive into the experiences, challenges, and successes of leaders within the B Corps, conscious capitalism, and responsible business communities.

Focus on Employee Ownership Trusts

• Focus on Employee Ownership Trusts is dedicated to exploring the growing use of EOTs as a mechanism for transitioning businesses to employee ownership in the UK. This podcast explores how EOTs work, their benefits, and success stories from business owners.

The Employee Ownership Podcast

• Hosted by Co-operative Development Scotland, this series sheds light on businesses making the transition to employee ownership. Each episode features expert advice from industry professionals and business owners who have successfully made the shift.

Employee Ownership with Bob Whalen

• This podcast hosted by Bob Whalen, CEO of HB Global, dives into the benefits and challenges of employee ownership. Whalen shares real-world examples of how it can be used to transform businesses by sharing success stories.

Alternative Exit

• Alternative Exit discusses the various exit strategies for business owners, with a strong emphasis on employee ownership as a viable and sustainable option. This podcast features interviews with business owners, financial experts, and leaders.

Opportunity in America

• Opportunity in America is dedicated to exploring economic mobility and workforce development through the lens of employee ownership. Listeners can expect to hear about policy, innovation, and the impact of employee ownership on our communities.

ImpactAlpha Podcasts

• ImpactAlpha’s podcast series takes a deep dive into impact investing, with a special focus on how employee ownership contributes to sustainable, inclusive economic growth.

Journey to an ESOP & Beyond

• Journey to an ESOP & Beyond guides listeners through the process of transitioning to an ESOP. They cover both challenges and benefits for business owners who want to sell to their employees.

Next Economy Now

• Next Economy Now explores emerging economic models, including employee ownership, that prioritize community well-being and environmental sustainability. They feature interviews with leaders and practitioners working towards creating a new economy.

21 Hats

• This podcast focuses on the challenges and rewards of owning a business. The podcast offers insights from successful entrepreneurs who discuss their paths to creating and sustaining employee-owned companies.

Independence by Design

• Independence by Design dives into the concept of designing businesses with long term sustainability. They highlight employee ownership as a key factor in creating resilient and thriving companies. long-term

The Ownership Economy

• The Ownership Economy podcast focuses on the different ways the ownership economy is reshaping industries, communities, and the workplace. It also explores the broader implications of employee ownership and the role it’s playing in creating a more equitable economy.

Bonus!

This is not an EO Podcast, but an episode I like to recommend:

• Freakonomics Radio: 'Should Companies Be Owned by Their Workers?'

In this episode, host Stephen J. Dubner discusses the concept of employee ownership with experts, including NCEO founder, Corey Rosen.

These are just a few podcasts that highlight the growing movement of employee ownership and its impact on businesses, workers, and communities. What are we missing? Share in the comments below and I’ll add to the list.

Leave a comment

Employee ownership through Employee Stock Ownership Plans (ESOPS) sets up a trust that holds shares in the company on employees’ behalf, which they receive upon retirement or leaving the company. Benefits of ESOP ownership include boosted productivity, increased retention, reduction in the wealth inequality gap, and much more. Over 6,500 ESOP companies in the United States empower over 10 million employee-owners, including WinCo Foods, Publix Super Markets, and Brookshire Brothers.

Historically, ESOP regulations have been lacking, leading to a leveling off of growth in the number of ESOPs. Advocates argue that new regulations are necessary to reduce risks, cut costs, improve transparency, and assist companies in maintaining ESOPs. Last week, the Biden Administration dipped its toe in the water to address these issues.

Following the inauguration, President Trump froze all pending Executive Branch agency regulations, including the Department of Labor’s draft regulatory guidance published last week. Where do ESOP regulations stand, and where are we going?

A Brief History

In 1974, Congress passed the Employee Retirement Income Security Act (ERISA) to set minimum standards for employee benefit plans. This act outlined fiduciary responsibilities, rights of participants, and guarantees of termination of benefit plans. However, it didn’t provide any guidance regarding ESOP trustees until 14 years later.

In 1988, the Department of Labor proposed an “adequate consideration” regulation, but it was left untouched until 2022, when the Setting Every Community Up for Retirement Enhancement Act (SECURE 2.0) was passed. The lack of guidance from 1988 to 2022 contributed to a plateauing in ESOP formations over 34 years, but SECURE 2.0 introduced tax incentives to encourage business owners to adopt ESOPs.

On January 16th, 2025, the Biden Administration proposed a Notice of Proposed Rulemaking (NPRM) for ESOPS. But four days later, the Trump Administration took office and froze all Biden Administration proposals, including this one.

Two Regulations

The Department of Labor under the Biden Administration, proposed two regulations:

• Proposed Regulation Relating to Application of the Definition of Adequate Consideration

  • Defines “adequate consideration” and “govern the fiduciary determination of fair market value” for ESOPs AND ensures “good faith process”

• Proposed Safe Harbor Class Exemption For Initial Acquisition of Employer Common Stock by ESOPs from Selling Shareholders

  • Creates class exemption and EBSA safe harbor standards

The ESOP Association, the largest pro-ESOP lobbying group, didn’t like the regulations. They believe the Safe Harbor Proposal sets up an “impossibly high” standard and that the Adequate Consideration Proposal lacks clarity.

What To Expect Next?

A few things could likely happen from here now that the Trump Administration is in full swing. First, they could draft new regulations, using the proposed ones under the Biden Administration as an outline. Second, they could toss the proposed outlines and start from square one. And lastly (but hopefully not), these regulations could be left unaddressed. Luckily, the ESOP Association reports that it is in “high-level communication” with the Trump Administration to work on a regulatory and legislative track for the regulations.

1. Public opposition to the idea of employee ownership

2. Lack of supply of companies to convert

3. Lack of credit for employee buyouts

4. Investment banking models of ESOPs that are not attractive to retiring business owners

5. Lack of infrastructure to carry out ownership transactions through technical assistance

6. Excessive cost, complexity and regulation

7. Lack of support from political parties and social movements

8. Lack of support from Wall Street, the major financial services firms in the US and the growing private equity sector

9. The sale of employee-owned companies because of financial considerations

10. Governance structures that are not appealing to the working middle class in the US

11. Evidence that ESOPs replace wages and benefits

12. Lack of implementation, slow-walking or sheer outright opposition of employee share ownership initiatives within Presidential administration and Federal agencies

In order to overcome these barriers and harness the potential of ESOPs, we need to continue making supportive environments for ESOPs through policies, finances, and education. However, we also need to more empirical studies that focus on the different barriers to employee ownership including ESOPs.

In the publication, the authors emphasize the need for both quantitative surveys and qualitative interviews targeting retiring business owners in closely held companies, along with CEOs of publicly traded companies, to gain a clear understanding of the barriers impeding further growth of employee ownership. They highlight the Rutgers Institute for the Study of Employee Ownership and Profit Sharing (with which Dr. Hand is a fellow), noting its current research agenda aimed at providing a better understanding of these barriers.

Kicking off the event, Jennifer Chheang, the Vice President of Community Investment Impact shared the foundation’s motivation to invest in EO saying, “The most important social determinant of health is access to economic stability and opportunity.” This is a new investment for the foundation, inspired by the 70% of small business owners in Colorado who plan to retire in the next decade—and the 400,000 jobs that will be at risk as a result. 

This wave of retirements, known as the ‘Silver Tsunami,’ is a motivator for many in the EO ecosystem, and the gathering brought together people and organizations in the space to discuss how to strengthen the movement in Colorado and attract more support. Colorado is a known leader in the EO space. The state is one of only three states with an official Employee Ownership Office, and it recently established a new $1.5 million annual tax credit program to incentivize conversions to employee ownership. The gathering offered a chance for those outside of Colorado to learn more about its success and its challenges and for attendees to get a collective understanding of national innovations advancing EO.

Lessons from Colorado

The evening featured two panels. The first focused on key people and organizations driving the EO movement in Colorado. Moderated by Catherine Toner of Gary Community Ventures, the discussion brought together representatives from the Rocky Mountain Employee Ownership Center (RMEOC), the Center for Community Wealth Building (CCWB), SkyBlue Builders, a local ESOP, and Mujeres Emprendedoras, a Colorado-based worker cooperative.

Marion Champoux-Pelligrin of RMEOC offered stories of the positive response she’s received in her work promoting EO to rural business owners and emphasized the urgency of expanding the EO model to rural areas. According to Champoux-Pelligren, “when a business in these communities closes, it often doesn’t reopen.” The closures that are on the horizon, due to owners retiring, could result in the loss of essential services and community resources. This would have a huge impact on residents in already resource-strained areas.

Mowa Haile, CEO of SkyBlue Builders, shared the transformation that EO created for his company in its transition to employee ownership. With support from RMEOC, Colorado’s tax incentives, and the guidance of Apis & Heritage he was able to make his employees owners. Haile talked about the significance of SkyBlue’s conversion saying, “Employee ownership is truly a game changer in building wealth for our community.”

Even though Colorado is a leader in the EO movement, businesses in the state still struggle to operate as employee-owned entities. Irma Diaz, a co-owner at Mujeres Emprendedoras Cooperative openly discussed how the complexity of the coop form, service providers’ lack of understanding, and the tax burden make it difficult to operate her cooperative. The relative nascency of the movement is a barrier. Yessica Xytlalli Holguin from CCWB communicated her concern that Colorado is, “just getting started and we’re the model.” More awareness and funding are required to address the demand and make EO a viable solution for business owners.

National Solutions

With Alison Lingane of Ownership Capital Lab guiding the discussion, the second panel focused on programs and solutions that address some of the challenges the Colorado group raised. Zen Trenholm from DAWI talked about the Workers to Owners Collaborative initiative which engages in place-based work and coordinates with cities and community partners to shape solutions that address specific economic security issues in cities such as employment barriers or the preservation of businesses.

Responding to the ongoing challenges of funding and access to capital, Michael Brownrigg of Apis & Heritage Capital Partners shared the firm’s innovative approach to funding conversions that makes the process more accessible to owners. He reflected on the burden that owners are asked to carry—when what they seek is retirement, selling to employees can be an unsatisfying proposition, “We ask them to carry a seller's note for about ten years. That’s not retirement.” The Apis and Heritage approach is to buy the company so the owner doesn’t have to wait for their payout from the employees. Brownrigg made the case for more funding solutions like this to make EO conversion more realistic for retiring owners. 

Normalizing Employee Ownership

A common thread throughout the evening was the need to normalize employee ownership. Trenholm highlighted the importance of socializing the concept of shared ownership through programs like DAWI’s Shared Equity and Economic Development Fellowship. The program addresses the friction between entrenched beliefs about ownership by elevating everyday examples of EO in practice. Champoux-Pelligrin of RMEOC echoed the sentiments of Trenholm saying, “The people that convert are the people who hear the stories.” 

After the event, I asked a few attendees what they thought of the event. Julie Menter of Transform Finance said, “I witnessed real-time problem-solving between business owners, investors, and representatives of the Colorado EO Commission. You could see how well-connected, and collaborative, the funders, investors, technical assistance providers, and field builders are. It's great to see this is happening in Colorado.”

There was a buzz at the end of the program and the discussion clearly generated ideas for ways that Colorado’s work can be improved and also how it can be replicated across the country. Although the EO movement has been building for a long time, I left with the feeling that we’re just at the beginning. It’s promising to see organizations like the Colorado Health Foundation invest in the ecosystem and hopefully, they will inspire a larger cross-section of groups and policy-makers to see the value and possibility of employee ownership. With new connections made and solutions surfaced, more work can be done together to advance employee ownership.

A highlight of the event was Rodrigo Zuloaga’s presentation. Rodrigo is one of the 3 founders of SOMOS Foods, who shared his inspiring entrepreneurial journey among the youth. The founders, Daniel Lubetzky, Miguel Leal, and Rodrigo all previously worked at KIND Snacks, where they developed a vision to share the best of Mexico with the rest of the world. At KIND snacks they were also able to convert employee stakes into startup capital for their business.

At the conference, Rodrigo developed a compelling presentation on access to capital alternatives for Latino entrepreneurs. This segment was particularly significant as lack of access to capital is a major barrier for many aspiring business owners, especially among minorities. Here is the capital breakdown:

• Pre Launch Funding Options: Savings, friends & family, angel investors, incubators, and crowdfunding

• Starting Funding Options: Supplier financing, SBA loans, factoring, asset-based lending, purchase order financing, crowdfunding, crowdlending, and accelerators

• Later Stage Funding: Bank loans, venture capital, employee ownership, and private equity (+5 years)

The emphasis on employee ownership was particularly empowering for the youth since it is not a topic commonly discussed among us. While there, we got to learn not just its significant benefits but also how it serves as a springboard for entrepreneurship, particularly through the innovative concept of converting employee stakes into startup capital. Employee ownership models should be embraced in LATAM as a powerful tool for social change. It has the potential to enhance wages, improve working conditions, and strengthen local economies. I felt a deep sense of gratitude to hear this concept being shared within my community and hope it continues to be used as a tool to drive meaningful change in our local economies.

Check This Out:

• Employee Ownership In the Americas: A Path to Shared Prosperity — A book by collaborative efforts that includes Rodrigo himself and other experts!

• From Kind To Bold, SOMOS Foods Brings Together The Essence Of Mexican Cuisine And A New Age Of Latino Entrepreneurship

Colin Birkhead, Noah Gibson, and Dr. Hand just published their paper, “Where Employee Ownership Works Best.” Their paper examines the complex relationship between EO firms and the kind of communities in which they operate. Their central thesis:

ESO firms can achieve legitimacy by aligning their operational exchange systems with those prevalent in their local environments. Their paper offers practical insights for entrepreneurs and policymakers, suggesting that aligning organizational practices with the dominant exchange systems in their communities can enhance legitimacy and improve survival rates for ESO firms.

Before we dig in, some important vocabulary:

“Direct exchange involves two actors, A and B. Actor A shows generosity to actor B because B will show generosity back to A in the future. In direct negotiated exchange, A and B exchange according to jointly agreed upon terms. In generalized exchange, A shows generosity to B, who is then motivated to show generosity to another actor. Generalised exchange systems could be seen at a school where one teacher covers a missed class for another, with the expectations that some future missed class is likely to be covered by another teacher at the school.”

The Results

By examining ESO firms in California between 2009 and 2019 and using data on volunteering behaviour as a proxy for generalised exchange, their analysis revealed that communities with higher levels of generalised exchange have higher proportions of firms that are ESO. Their study revealed that ESO firms thrive in environments that have high levels of generalized exchange because of trust, unity, and other attributes that are essential for the success of ESO firms. They also find that survival rates for these firms are more resilient in communities with strong generalized exchange practices, especially new ones that are often more susceptible to failure.

Analysis

The results of their study highlight the role community exchange systems play in shaping the legitimacy and survival of EO firms. The benefits associated with EO firms are not universally applicable and tend to concentrated in areas where such behaviors are already prevalent. Therefore, future leaders should prioritize aligning the practices with the values of local communities with their firms to foster something greater.

Zolidar, a California-based company on a mission to increase the wealth of everyday Americans recently launched its website, providing valuable resources for small business owners. As Matthew Epperson (Employee Ownership Domain Expert at Zolidar) highlighted in a recent LinkedIn post, Zolidar stands out as the only software solution dedicated to simplifying the transition to employee ownership.

The Zolidar Mission

Their mission focuses on a pressing issue: the $10 trillion crisis confronting America’s small businesses. On their website, they offer resources for both owners and advisors, and in their blog they discuss outlined milestones for their first epoch:

“We expect that our first few milestones will most appeal to the smallest businesses out there, those with ~3 to 50 employees. These businesses form the largest volume in the market (~5.1M of the 6M businesses) yet they tend to be the most under-served of all. As we add more features, our product will become relevant to larger businesses, including those backed by private equity as outlined in KKR’s Pete Stavros interview on EO in PE.”

The Website

Zolidar offers three key features on its platform, enabling business owners to navigate their options effectively:

1. Day Zero Guide: On day zero of their exit journey, business owners can get personalized insights that help them benchmark EO against all other exit options. This feature allows you to explore exit options tailored specifically to your business which begins with a 10-minute survey.

2. Aha! Planner: Business owners can get a financial assessment of the health and potential value of their business to understand the feasibility of each exit path.

3. Zolid AI: Business owners meet their exit journey companion and obtain context-aware support through Zolid AI as their exit journey companion. 

Learn More

• Check out the Zolidar Blog

After doing a bit of research on the term, I found a paper by the Oxford Saïd Business School titled, “Psychological Ownership: Effects and Applications.” It laid out a few crucial aspects:

The Origins of Psychological Ownership: Psychological ownership often develops through employees’ learning about the organization and investing significant time and effort into it. This investment manifests itself in several forms such as a deeper engagement, commitment towards the company’s goals, and personal contributions to its overall success.

The Positive Outcomes: Psychological ownership is also strongly associated with positive organizational outcomes. It often leads to increased motivation, heightened company stewardship, and proactive behavior that contributes to the company’s success.

The Negative Outcomes: Despite its benefits, they also listed negative effects. For example, it can lead to territorial behavior where employees become too protective over their roles and contributions which could impede collaboration.

Why Does This Matter?

The concept of psychological ownership closely intersects with employee ownership. In employee-owned companies, the legal ownership of shares or equity is complemented by the psychological sense of ownership employees experience. This dual aspect can enhance the positive effects seen in psychological ownership alone.

Both employee ownership and psychological ownership can significantly empower employees by enhancing inclusivity and engagement. Organizing regular team meetings where employees can voice their opinions and contribute new ideas, in return can heighten their sense of ownership. When employees experience both employee ownership and psychological ownership, their engagement is also strengthened. They are not only motivated by the financial rewards of employee ownership but also inspired by the emotional commitment fostered by psychological ownership.

What to Read Next:

• Avey, James B., et al. “Psychological Ownership: Theoretical Extensions, Measurement and Relation to Work Outcomes.” Journal of Organizational Behavior, vol. 30, no. 2, Feb. 2009, pp. 173–191, https://doi.org/10.1002/job.583.

• Dawkins, Sarah, et al. “Psychological Ownership: A Review and Research Agenda.” Journal of Organizational Behavior, vol. 38, no. 2, 12 Oct. 2015, pp. 163–183, https://doi.org/10.1002/job.2057. Accessed 11 Apr. 2019.

• Zhang, Yucheng, et al. “Psychological Ownership: A Meta-Analysis and Comparison of Multiple Forms of Attachment in the Workplace.” Journal of Management, vol. 47, no. 3, 4 May 2020, pp. 745–770, https://doi.org/10.1177/0149206320917195.

The April 11th Washington D.C. Purpose Trust Convening

Project Equity, EO+WD, and Purpose Owned hosted a one-day convening focused on advancing and expanding the field of purpose trust ownership in Washington, D.C. It was an enriching experience that allowed us all to connect with a diverse group of people, including attorneys, academics, consultants, and funders, each bringing varying levels of expertise. One of the questions we asked was: How do we bring awareness among business owners? The responses (pictured above) hold significant potential and prove that together we can draft up brilliant ideas to drive this field forward.

Employee Ownership & The Wealth Gap

Learning about all the benefits of employee ownership is something I would also like to reflect on. A while back I read a paper by the Harvard Business School titled “Employee Ownership and Wealth Inequality: A Path to Reducing Wealth Concentration.” The paper explained how a widespread shift to broad-based employee ownership could impact wealth distribution in the United States. They used government data that showed that if all private firms became 30% employee-owned, the wealth distribution would be significantly impacted and the individuals at the bottom 90% of the wealth distribution would acquire substantial gains, particularly benefiting marginalized communities.

- Employee ownership is not commonly discussed as a solution when people talk about the wealth gap we face today, which is why this paper particularly caught my attention. It offered a compelling perspective on how employee ownership can help aid a prevalent issue in our country. I truly think it’s a valuable read for anyone interested in exploring innovative approaches to economic fairness.

Bernie Sanders at the 2024 Employee Ownership Ideas Forum

On April 9th, Bernie Sanders spoke at the 2024 Employee Ownership Ideas Forum. Something I did not know and was happy to learn, Sanders has long championed employee ownership since his early days in politics. In his speech, he argued that democracy must be something that extends beyond the ballot box, permeating every aspect of life including our workplaces. Sanders also emphasized ongoing congressional efforts to expand opportunities for employee ownership.

One last thing,

A quick shoutout to those of you working to advance employee ownership efforts. Your hard work and commitment are greatly significant. Great job and keep up the hard work.

Employee Ownership Resources, in No Particular Order

• Employee Ownership Equals (EO)

• National Center for Employee Ownership (NCEO)

• Employee Ownership Expansion Network (EOX)

  • The West Virginia Center for Employee Ownership (WVCEO) is the newest and 23rd state to open a State Center for Employee Ownership!

• Democracy at Work Institute (DAWI)

• Rutgers Institute for the Study of Employee Ownership & Profit Sharing

• The Aspen Institute

• U.S. Federation of Worker Cooperatives

• The ESOP Association

• Employee Owned S Corporations of America (ESCA)

Some Research & Data for Employee Ownership

• Curriculum Library for Employee Ownership (CLEO)

• Key Studies on Employee Ownership and Corporate Performance | NCEO

A Few Academic Papers on Employee Ownership

• Kruse, D.L., & Blasi, J.R. (1995). Employee Ownership, Employee Attitudes, and Firm Performance. LSN: Employee Benefits Law (Topic).

• Kruse, Douglas. (2002). Research Evidence on the Prevalence and Effects of Employee Ownership. Journal of Employee Ownership Law and Finance. 14.

• O’Boyle, E.H., Patel, P.C., & Gonzalez‐Mulé, E. (2016). Employee ownership and firm performance: a meta‐analysis. Human Resource Management Journal, 26, 425-448.

Finally, I’d like to include two podcast episodes from The Mindful Marketplace with Joel Skene featuring two EO+WD contributors, Dr. Hand & Jenny Everett. The two episodes are geared to audiences who are new to employee ownership:

• Financial Strategies Empowering Local Communities and Workers

• Empowering Workers through Ownership Models and Democratic Practices

What are we missing? Share in the comments below and I’ll add to the list.

A fun aside before we get into it: The Tabard Inn, according to its menu (get the burger!) is the longest-running inn in Washington, D.C.:

It is also Certified Employee Owned, having had an employee ownership stock plan (ESOP) since 1993. It was just the right place to stay (Thx Ashlyn) for a one-night trip to DC for the first ever White House gathering on employee ownership.2

Who was there: The convening was organized by Vaishant Sharma and Alejandro Molina from the National Economic Council, held in the Indian Treaty Room, and included employee ownership advocates, investors, philanthropists, academics (🫡) and high level officials from the NEC, USDA, DOL, Treasury, and SBA:

What went down: Squint at the panel topics above if you like. Here are some takeaways, big and small and random:

• These agencies really want to support employee ownership. USDA has a hundred-year history with cooperatives. SBA has updated a number of regulations to make it easier for its lenders to work with employee owned firms. DOL now has a Division of Employee Ownership, wants to be an advocate in addition to a regulator, and recently hired longtime employee ownership advocate Hilary Abell to help do it. Joseph Blasi recently worked inside the Treasury to expand its State Small Business Credit Initiative (SSBCI) to include employee owned firms.

• Just about every form of employee ownership was represented in the room. The focus was (rightly) on ESOPs and worker cooperatives, which make up most of the broad-base employee ownership in the US. But equity compensation, direct ownership, private equity employee ownership, and employee ownership trusts were all represented in the content and on the invite list. Occasionally you’ll hear these groups don’t play well with one another. I haven’t seen that, and they were certainly all playing ball this week. Maybe there used to be more beef and division in this space. In my short two years writing about this stuff, I’ve found a healthy level of tension among employee ownership advocates, sure, but mostly there are good vibes—or at least the industry equivalent of people agreeing not to talk about politics over Thanksgiving dinner.

• Scale is clearly the shared goal here, especially in the face of the coming tsunami of small business owner retirements. The finance-oriented folks, of course, think access to capital is the primary obstacle; the policy-oriented folks believe policy is the lever for scale. The nonprofit advocacy folks tended to argue for awareness-raising. No one made the argument that we really desperately need are more peer-reviewed academic papers. Sorry, fellow nerds!

• For the first time in a long time, I’m told, a union representative was at this employee ownership meeting. I think that a brilliant stroke by the organizers—there is so much potential there. One puzzle to solve is finding legal and cultural structures that align employee ownership advocates and labor activists, two branches of the same tree. One example: the employee ownership folks in the room used the word ownership to talk about financial asset-building, as in an ESOP, and voice in reference to worker participation in decision-making. But the union leader used the word ownership to mean worker participation in decision-making, and benefit plan to talk about financial asset-building. What might sound like splitting hairs about word choices, I would argue, reflects deeper philosophical positions about what is most important about worker ownership, that will need to get ironed out together. I wonder if there’s policy space for multiple kinds of worker ownership, incentivized in different ways. There’s no reason, in theory at least, why the US couldn’t have one program that rewards companies for building employee wealth (like ESOPs do) and another program that rewards companies for structurally incorporating owners into decision-making (called codetermination).

• One of the repeated messages was the resilience of employee owned companies are—something reflected, perhaps, in the longevity of the Tabard Inn. NCEO is going to put resources to some studies on that here, but employee owned firms last longer in the Department of Defense’s procurement program, survived the pandemic better, and in the US agriculture sector have been around for decades, some for over 100 years, according to Megan Moriarty.

• It was hard not to imagine what might be possible, given this broad and now consolidating support for worker ownership across the federal government. Two things jumped out at me. First, some of the agency folks talked about wanting to “hit the road” to make sure the people they worked with understand employee ownership as an option for transitioning businesses. One way to do that would be to use the White House’s convening power to pull together different groups of service providers that they interact with—lenders, lawyers, accountants—to educate them specifically on employee ownership. A second path would be to go local. I’d love to recreate this week’s national gathering in Texas, with each agency’s local representatives championing employee ownership at the state level, in conjunction with state level agencies (here’s looking at you, TXCEO).

• At EO+WD, we spend quite a bit of time focused on purpose trusts, including ownership trusts (see our recently released policy recommendations on those). I couldn’t help but hear the case for them in the room, especially for small businesses. ESOPs don’t work for businesses with <$2m in EBITDA, and really more like <$5 million.3 Worker cooperatives can work there, if owners are ready to make the jump on both financial ownership and worker control. EOTs are another tool that could fill this gap, if they’re not.

• I have to say, though, my favorite moment of the day was when Terrell Cannon from Home Care Associates, a home health care cooperative in Philly, talked about how they help their worker-owners understand finance: sheet cakes! They use the cake to show where revenues go, what profit remains, and how it’s distributed. Maybe it’s just because I’m nostalgic for the white icing on cookie cakes, but I thought that pretty clever. Terrell shared with me, too, that one of the worker owners had suggested it as a way to help educate her colleagues. That—plus the actual sheet cake and Tabard Inn’s employee owned burgers—is the good stuff.

Mexico

Mexico, like several countries, has tax laws to accommodate ESOPs. Employers are required to allocate a portion of pre-tax profits to employees; however, these contributions are non-deductible and taxed upon receipt. In contrast, contributions to employee savings funds, including those structured as ESOPs, can be exempt from taxation for employees and tax-deductible for employers, enhancing the appeal of such plans.

Despite favorable tax treatments for ESOPs, the actual implementation and adoption of employee ownership is limited and underdeveloped. Mexico relies primarily on profit-sharing schemes, which distribute a portion of taxable income to employees without transferring ownership rights. In 2013, Maria Zorrilla wrote:

“It was hard to find recent evidence of legislative efforts towards implementing employee ownership in Mexico, but some have been done in the past. In 1990, the Financial Advisory Services Division of the World Bank explored the feasibility of enabling employees to purchase the SIDERMEX Steel Complex from the Government of Mexico through an ESOP. And in 1993, at the request of the Mexican Ministry of Finance and funded by the Inter-American Development Bank, the Equity Expansion International in collaboration with a highly respected private university, the Instituto Tecnológico de México, prepared a study resulting in ESOP legislation for Mexico, “Plan APOYE” (which stands for Plan de Acciones Para Obreros y Empleados - Plan of Actions for Workers and Employees). However, “Plan APOYE” never became an active part of the legislation. Therefore, my research investigation on other efforts about equity compensation was difficult to come by for this article".

Useful papers for employee ownership in Mexico

• William G. Hopping, The Case for Employee Ownership in Overseas Operations of U.S. Multinational Enterprises in Central America, 8 MICH. J. INT'L L. 247 (1987). Available at: https://repository.law.umich.edu/mjil/vol8/iss1/10

• Zorrilla, Maria. In Search of Employee Ownership Plans in Mexico. June 2013.

Argentina

Argentina has something called “empresas recuperadas” (recovered businesses). This movement emerged as a response to economic crises, particularly after the severe one in 2001 when Argentina defaulted on its sovereign debt. During this, many businesses went bankrupt or were simply abandoned by their owners. In many cases, workers who were left jobless began to take matters into their own hands by occupying these factories and companies. Although the prevalence and adoption of formal employee ownership plans vary and are not widespread or as structured as in other countries like the United States, I was able to find a few companies that are now employee-owned as a response to economic crises.

• Farmacoop, a laboratory recovered by its employees in Buenos Aires

• Mielcita Cooperativa Argentina Ltda, a candy and sweets factory run by 88 workers, mostly women in the outskirts of Buenos Aires, where they lost their jobs in mid 2019

In conclusion, while Mexico has tax laws fit for ESOPs, the implementation of employee ownership remains constrained by historical and regulatory challenges. Empresas recuperadas in Argentina is a great example of a grassroots approach where employees reclaim the businesses they once worked for amidst economic turmoil. Looking ahead, there is hope for further development of employee ownership not only in the United States but in other parts of the world where inclusive economies are constructed and employees share the benefits of their own labor.

Last week I attended the Pixies & Modest Mouse concert, an electrifying experience that got me thinking about the dynamics of the music industry from beyond the stage. Dr. Hand’s recent article covering George Straight’s concert further sparked my curiosity about the inner workings of the industry. I began to think how employee ownership could potentially address some of the longstanding challenges faced by musicians and labels alike.

Of course, the music industry, while glamorous to us on the surface, grapples with issues that affect artists and employees behind the scenes. The issues we’ll focus on:

• Artist Exploitation

• Revenue Transparency

Many artists, especially emerging ones, often face exploitation because of unfair contracts, opaque calculations, and a lack of bargaining power. In traditional music labels, artists can find themselves in unequal power dynamics where the decisions that will impact their careers and life trajectory are being made by the executives and shareholders with little input from the artists themselves. On top of this, labels and management typically prioritize short term profits over the long term welfare of their artists. There is also an opacity surrounding revenue streams in the music industry, which is a major concern. Artists frequently struggle to track and verify their earnings from digital platforms, live performances, and merchandise sales, often leading to mistrust and disputes.

The Promise of Employee Ownership

Employee ownership can drastically shift the dynamic by giving artists and other staff a direct stake in the labels success and decision making processes. Research shows that when employees have a financial stake in the company they work for, they tend to be more motivated, engaged, and overall committed to its success (Blasi et al., 2018). This principle can be applied to the music industry as well, where artists and employees have the potential to become co-owners invested in promoting the labels long term success.

Employee ownership can mediate the risks of exploitation by aligning incentives between artists, employees, and management. Moreover, this structure also encourages a space where decisions are made to prioritize the collective interests of all rather than short term financial gains. With an employee ownership structure, artists and employees can participate in governance structures such as board meetings where they can voice their opinions, concerns, and oversee the label’s operations. Employee ownership can also help with revenue transparency by setting up clear financial reporting practices. Artists and employees could have access to these reports, enabling them to track how much income their music is generating as well as the financial assets of the label.

While employee ownership remains relatively nonexistent in the music industry, this awareness is important to advocate for greater autonomy and fairness for artists. By having these conversations, the momentum for change could be built.

Some examples of employee ownership in the music industry down below:

• Kudos Records - A UK music distribution company

• Taylor Guitars - An American guitar manufacturer

• Moog - An American company that specializes in electronic musical instruments

A discussion hosted jointly by the Aspen Institute and the Institute for the Study of Employee Ownership and Profit Sharing at Rutgers University titled “Rebuilding the Middle Class through Employee Ownership,” included experts

• Veronica Ortiz (Business Systems Analyst Manager, Worker-Owner, Web Industries)

• Stephen Smith (Chairman, President, and Chief Executive Officer, Amsted Industries Incorporated)

• Steve Storkan (Executive Director, Employee Ownership Expansion Network

• Tomás Durán (President, Concerned Capital)

• Moderator Abha Bhattarai (Economics Correspondent, The Washington Post)

They explored the transformative potential of employee ownership in aiding wealth inequality. Here is a selection of key points that stood out to me!

Stephen Smith 

Smith from Amsted Industries greatly emphasizes that employee ownership provides a competitive advantage because employees directly benefit from both their labor and the capital of the company. Smith says that during the pandemic, Amsted Industries demonstrated the resilience of EO because employee-owners were committed to sustaining the business which showcased employee ownership’s adaptability and efficiency in challenging times.

Smith also highlights that since becoming an ESOP in 1985, the company has created over 2,500 millionaires among its employees. This wealth accumulation through ownership enables employees, including those starting with modest incomes, to achieve financial security and comfortable retirements, which are essential for bolstering the middle class. 

Steve Storkan 

Steve Storkan, Executive Director of the Employee Ownership Expansion Network, highlights the significance of the Work Act passed in 2022, which allocates $50 million for state-level education and outreach on employee ownership. This initiative clearly aims to bolster the employee ownership movement but also enhances its impact on middle class growth.

Storkan also highlights the role of state centers in promoting employee ownership as a model that benefits not only the individual workers and businesses but also local economies. Storkan also makes a good point, these centers provide unbiased advice and support which makes EO accessible and sustainable for a diverse range of companies. 

Tomás Durán

Duran of Concerned Capital emphasizes the impact employee ownership has in Southern California, particularly in combating gentrification and creating pathways for the middle class workers in job shop manufacturing.

Duran also argues that employee ownership aside from benefiting businesses, also serves as a tool to bypass systemic barriers, such as institutional racism, enabling broader economic empowerment and wealth creation in underserved communities. 

WaterBottle

WaterBottle, an employee-owned cooperative, is making a significant impact in West Baltimore, by giving vacant homes and people a second chance. According to The Baltimore Banner, the business employs a diverse workforce, many of whom come from nontraditional backgrounds including carpentry, building, project management, and general contracting. Some team members have faced challenges such as previous incarceration, difficulty finding employment, recovery from substance use disorder, and immigration to the US.

WaterBottle currently owns 22 properties in West Baltimore, focusing on restoring homes and making them available for rent. Employees have priority access to these rehabilitated homes, reflecting the cooperative's commitment to its workforce. Newly hired workers participate in grueling construction projects for 60 days before becoming eligible to become employee-owners who share in the cooperative's profits. This model not only provides jobs but also fosters a sense of ownership and stability among its workforce, contributing positively to both the local community and the individuals involved.

Sunshine Renewable Solutions

Sunshine Renewable Solutions Co-op, based in Austin, Texas, is another employee-owned cooperative dedicated to promoting meaningful change through sustainable practices. This business was founded by a group of solar energy enthusiasts who install and maintain solar panel systems for residential and commercial properties across the city. At Sunshine, employee ownership is integral with each team member participating in their decision-making process and having shares in the company’s financial success. Beyond their workforce impact, like WaterBottle, they also actively recruit individuals from diverse backgrounds.

Technology for All

Technology for All is another co-op making a positive impact on their community. Tech for All is headquartered in San Francisco, California, and focuses on promoting digital literacy among underserved communities. Aside from operating a public wireless network, they also train people to participate in the digital world and provide public computer centers as well as training programs and workshops on computer skills, coding, and cybersecurity.

Why Does This Matter?

Reflecting on the efforts made by WaterBottle, Sunshine Renewable Solutions, and Technology for All, one thing is certain: when we prioritize our community, we not only address immediate needs but also sow seeds of empowerment and opportunity. From providing second chances to individuals overcoming adversity in West Baltimore, to installing solar panels that pave the way for a sustainable future in Texas, to fostering more digital inclusion in San Francisco, these are all great examples of how cooperative models can prioritize employees, community, and even our planet.

What does this mean?

Under the new law, eligible businesses can receive a refundable state income tax credit for costs associated with establishing or transitioning to employee ownership plans. This tax credit covers 50% of qualifying costs, granting up to $50,000 annually in savings. Businesses qualify if they have been partially or entirely owned by employees for fewer than 7 years. The employee ownership office within the Office of Economic Development and International Trade (OEDIT), now a statutory entity as part of HB24-1157, will administer these tax credits.

Additionally, the law extends a refundable income tax credit for the years 2025 to 2029, covering up to 50% of specified costs incurred by new employee owned businesses, not to exceed $50,000. New employee owned businesses, defined as those owned by employees for seven years or fewer, are eligible. The employee ownership can allocate up to $1.5 million in tax credits annually. For the 2024-25 state fiscal year, $145,847 is appropriated from the general fund to the office of the governor for use by the employee ownership office.

How will it impact employee ownership in Colorado?

The enactment of HB24-1157 is poised to have a significant impact on the landscape of employee ownership in Colorado, the law will likely pave the way for increased adoption for these structures across various industries. The stability that HB24-1157 will provide also makes it easier for employee-owned businesses to stick around and grow. The new tax breaks are also greatly significant because they make employee ownership more appealing for businesses considering it. By providing financial benefits for starting or expanding employee ownership plans, this legislation encourages more companies to consider adopting these structures and could potentially diversify Colorado’s economy. Overall, HB24-1157 is a big step forward for employee ownership in Colorado, signaling a commitment to fostering inclusive and sustainable economic development strategies that prioritize the well-being of workers and overall communities.