As the rising, inclusive, more equal opportunity and sustaining outcome Stakeholder Economy takes shape, buttressed by non-purpose washing ESGs & SDGs practiced for real by social enterprises, impact investors, philanthropy, and government innovators; socioeconomic cracks are beginning to appear which, if unresolved, can widen problems instead of expanding solutions. A rapidly appealing, immediate postpandemic enterprise conversion imperative risks stumbling into a contentious pit of unfair tax structure differences, unaligned vocabulary, uncorrected and outdated misperceptions and in some cases, intentional misinformation on the part of one about the other.
This creeping multi-dimensional imbalance is further exacerbated by the rising origin and outcome differences between potential worker and existing employee owners. The former exceeds the latter in terms of diversity and population acceleration as gig economy “work more for less” and egregious worker misclassification practices advanced by grifter corporations deliberately confuse consumer choice with workplace justice.
1worker1vote and ASBC/SVC through our “Ownership4All” campaign believes that we have a once in a generation opportunity to move the needle on seeding civil society enriching worker and employee ownership. This is especially relevant following the 2020 pandemic’s economic ravages exposing mortality-enhancing inequalities underlining the mandate to go much farther than the 2018 passage of the bipartisan Main Street Employee Ownership Act that targeted, but has not yet succeeded in opening up the US SBA to hybrid ownership models for greater SBA loan access.
To reunite the country and heal the inequities of our COVID-recovering economy, metrics show that broad-based, worker ownership social enterprises and ecosystems through shared high road principles and practices are more stable, inclusive, equitable, democratic, and competitive with fewer job losses, especially during downturns. Research proves that combining an equity stake with participatory ownership culture (essentially the definition of a worker cooperative) creates better businesses. The basic democratic principle valued in nation-states and shared-ownership models is one-person-one-vote. An equity share is the right to vote and provides the basis for a new power-paradigm-changing culture that builds community wealth and stability, civic-solidarity, self-reliance, and more secure retirements.
Today, “flattening the curves” means reconciliation not just of opposites but of those who should be collaborating instead of falling into a classical, unproductive “us-versus-them” traps sapping momentum, inspiration, outcomes and sacred time. All too often, demeaning one to advance the other results in a circular firing squad liquidating everyone in vicinity. The vicious cycle we most want to avoid is allowing those with wealth and power to subdivide and then exploit those without enough of either. Enablers who take the proffered thirty pieces of silver are even more guilty especially those purportedly selling two versions of workplace democracy and aspiration, one to the owners who pay them and one to the workers trying to believe them.
Five recent examples of potential successes and failures include:
- Project Equity & Gimme Coffee (Ithaca/NY) decertifying a union to form a worker coop (see attached Workers United letter); Gimme Coffee is on its way to becoming exhibit one for a values-misaligned process can thwart a national organizing campaign instead of the opposite (a progressive union-coop CBA, empowering and inclusive by-laws, and “fair valuation” protocols verified by outside experts)
- Democracy Collaborative and The Democracy Collaborative Workers’ Union (“The Democracy Collaborative and The Democracy Collaborative Workers’ Union agree to fair severance package for laid-off staff” – https://democracycollaborative.org/learn/blogpost/democracy-collaborative-and-democracy-collaborative-workers-union-agree-fair)
- Venture Capital and Private Equity firms sowing “fake news” about raiding workers’ 401k as down payments to restructure into a union-coop by using the workers’ monies to pay Wall Street – Wisconsin paper mill example
- NYC law -New York City’s newly announced “Owner to Owners” initiative (https://www.owner2owners.nyc/) – https://www1.nyc.gov/office-of-the-mayor/news/826-20/mayor-de-blasio-launches-employee-ownership-nyc-nation-s-largest-municipal-initiative-support where the announced “partners” in the press release will understandably focus on the deal and deal flow opportunities, the art of doing the deal, being part of the deal and working with existing owners on the new enterprise and structuring capital begging the question of “who represents the workers”?
- Downtown Crenshaw Rising (DCR) campaign and the power of the “Solidarity Dividend”– see attached
- 40-Acres & a Mall: Black Co-operativism in Los Angeles
- https://everything.coop/episodes/niki-okuk-and-damien-goodmon-members-of-downtown-crenshaw-rising-discuss-plans-to-reinvent-crenshaw-mall-as-an-urban-village/ – Niki Okuk and Damien Goodmon, Members of Downtown Crenshaw Rising, Discuss Plans to Reinvent Crenshaw Mall as an Urban Village on Everything Co-op.
The “Ownership4All” campaign holds that “building it back better” must include “fairer” to guarantee aspiring worker and employee owners receive transparently “best” practices. Learning the hard way that everything is downstream from culture, this campaign allows for hosting neighborhoods, barrios, boroughs and their emerging local worker-owner stakeholders shouldering these new social enterprises to have the freedom to choose the model and approach best culturally suited for them. Increasingly, ESG/SDG impact investor practitioners are learning that human, social and natural capitol can make or break financial capital starting with shared culture driving shared profitable returns on balance sheets uplifting those who do the work, their families, and communities.
Furthermore, a clear differentiation between retirement plan and ownership plan incentives and how to reach higher ground on both benefits workers pursuing these structural goals:
- single class stock for all worker owners (engenders solidarity and purpose-driven culture)
- independently verified fair and transparent market valuations (avoids criminality)
- investors who cash out only based on company performance over time (shared risks/shared rewards)
- high impact democratic workplace participation (worker owners exhibit higher business financial literacy)
- a workforce that ends up owning the majority of company stock (how the Stakeholder Economy rises)
- and anti-demutualization and outsourcing/offshoring provisions so that the jobs and the enterprise stay local (more important in a pandemic-recovering economy than ever before since the Great Depression).
Groundbreaking legislation points the way forward. California’s Cooperative Economy Act (CEA), https://leginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill_id=202120220AB1319, empowers “gig and freelance” workers as owners. An ‘economy that works for all’ must envision a new form of labor market intermediary, representing a new employment paradigm where both traditional employees and “gig” workers not only receive employment protections, but also own and govern their workplaces.
The CEA defines a new class of worker, a “Cooperative Labor Contractor” status that protects workers, adds worker ownership, provides employment protections and benefits (such as minimum wage, paid sick leave, and unemployment), and accelerates misclassified workers’ economic recovery from both pandemics, COVID & Structural Inequalities including Racism. CEA’s goal: to push back hard on deliberate corporatist labor misclassification that avoids paying living wages and benefits by empowering a strategically positioning staffing intermediary in each affected industry sector that does pay living wages and benefits, is unionized, and facilitates worker ownership and workplace democracy practices
- https://www.cooperativeeconomyact.org/- CEA site
The ASBC/1worker1vote “Ownership4All” campaign pursues four additional foundational policy goals:
- Tax Policy parity with ESOPs for hybrid and diverse ownership models including worker and union cooperatives, as well as other emerging, hybrid shared ownership structures (HSOS)in federal laws.
- There are several models of worker ownership, and this variety contributes to the fragmentation of the law. Tax laws treat cooperatives differently than ESOPs, and S Corp ESOPs are treated differently than C Corp ESOPs.
- Such laws must be changed to make tax treatment more uniform for all worker ownership models so hosting communities and their emerging worker-owners can choose the model and approach best for them. Tax parity leads to more inclusive, fair and integrated civic culture
- A first step would be to implement a leveled tax policy playing field offering an S-Corp ESOP-like corporate income tax exemption, and the ability to deduct both interest and principal on a worker cooperative loan. This way, ESOP/employee ownership successes in wealth creation can be extended to worker coops, union-coops, and other hybrid worker ownership structures. Hybrid worker ownership structures will become the norm, not the exception, as this practice community expands.
- Enabling paths to transition: The transition to worker ownership requires technical help in the form of business and market assessments, legal assistance in structuring the transition, and training employee purchasers to run the business. o On a regional basis, this can be integrated into shared services cooperatives within structures of existing organizations already working closely with ASBI and 1worker1vote (e.g., The Ohio Employee Ownership Center, the Vermont Employee Ownership Center, the Rocky Mountain Employee Ownership Center, Coop Cincy and Coop Dayton).
- A shared-services cooperative approach would help lower regulatory compliance costs for small businesses.
- Access to capital: Many traditional banks don’t know enough about worker-owned businesses to feel comfortable lending to them. Legislation can create ways to raise funds, either through changes to tax law or an increase in government loans. ASBC member, the South Carolina Small Business Chamber of Commerce led by ASBC board member, Frank Knapp, has launched the “Reform the SBA” campaign – https://scsbc.org/sc-group-calling-for-changes-to-the-sba/
- Equalize the EB5 immigrant investor visa $500,000 benefit to allow worker and union coops and other hybrid shared ownership structures (HSOS) to provide equal visa access to documented and undocumented union coop worker owners by similarly validating the ownership equity value in their enterprises as “skin in the game” entrepreneurial capital, similar to any other investor.
To conclude, the 1worker1vote/ASBC/SVC “Ownership4All” campaign confronts yesterday’s zero-sum, socioeconomic class-burdened mindset and seizes the opportunity to build a more equitable and just economy by advancing deepened and broadened worker and employee ownership practices and practitioners. As 1worker1vote states and examples like Black LA’s DCR campaign prove, “although it is well known that ‘nothing about us, without us, is for us’, also the reverse is true, that ‘everything cooperatively about us, with us, is for all of us’. Heather McGhee in “Rise of the Rest of Us” calls this the ‘Solidarity Dividend’ which when put into motion is highly short-mid-long-term human, social and financial capital profitable.” “Ownership4All” serves as the “secular civic inclusive prosperity & opportunity commons” restitching, outreaching to and reuniting all of the country starting in its most damaged places.