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senate Bill S. 1666

Should the Federal Gov’t Fund Programs Promoting Employee Ownership?

Argument in favor

At a time of wage stagnation, employee ownership in companies is a way to help workers become more financially stable and build more wealth. Employee-owned companies are stronger, more likely to treat their workers well and less likely to outsource jobs overseas.

jimK's Opinion
···
08/11/2019
I like it. Employee ownership relies upon and rewards everyone working together to define company objectives and deliver outstandingly beneficial and competitive products and/or services. It is the kind of capitalism that built this country, not the crony-capitalism often practiced today. Success depended upon delivering useful and affordable products or services and not upon ‘stacking the deck’ by purchasing political favor. Everyone pulling together is always more effective than relying on a few strongmen with connections who are directing traffic. Also, it lets employees see and participate in the struggles needed to get and keep a company in business and the ‘hard decisions’ often needed along the way- something that employees generally neither see nor appreciate.
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burrkitty's Opinion
···
08/12/2019
I approve. From 1979 to 2018, net productivity rose 69.3 percent, while the hourly pay of typical workers essentially stagnated—increasing only 11.6 percent over 39 years (after adjusting for inflation). This means that although Americans are working more productively than ever, the fruits of their labors have primarily accrued to those at the top and to corporate profits, especially in recent years. During these decades of wage stagnation, employee ownership in companies is a way to help workers become more financially stable and build more wealth. Employee-owned companies are stronger, more likely to treat their workers well and less likely to outsource jobs overseas. I think that’s a win win situation and should be encouraged.
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···
08/11/2019
Absolutely. I would like to see union-minded employees just build companies that are 100% employee owned and compete against the corrupt corporations. With this model, there is no need for unions, because the company is “The People”. Once you remove the “Make profits at all costs” greed of typical corporations, you will have a company that actually cares for its people, strives to offer quality and hospitable services and the Customers will receive a higher quality service and product. Everyone wins.
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Argument opposed

The literature on employee-owned companies’ performance is mixed; so it’s hard to sure that employee ownership is the best thing to promote from a business perspective. Additionally, given that many Americans already have ownership in their companies through stocks, pensions and other plans, it’s not clear how necessary this bill is.

Gopin2018's Opinion
···
08/11/2019
I oppose anything that is proposed by Comrade Communist Sanders. He is a confirmed anti capitalist who would nationalize all free enterprise. #MAGA
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JTJ's Opinion
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08/12/2019
This is not an appropriate function of government. Stop wasting our money on stupid stuff.
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Cherie65's Opinion
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08/12/2019
BERNIE! Stop spending our money. You've got millions, you first! People, democrats want your hard earned bucks. #trump2020
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bill Progress


  • Not enacted
    The President has not signed this bill
  • The house has not voted
  • The senate has not voted
      senate Committees
      Committee on Health, Education, Labor, and Pensions
    IntroducedMay 23rd, 2019

What is Senate Bill S. 1666?

This bill — the Worker Ownership, Readiness, and Knowledge (WORK) Act — would create an Employee Ownership and Participation Initiative within the Dept. of Labor’s Employment and Training Administration (ETA). It would authorize ETA to award grants to employee ownership and participation programs throughout the country for 1) education and outreach; 2) participation training; 3) technical assistance, including prefeasibility studies, and support for the carrying out of third party feasibility studies and preliminary business valuations; and 4) activities facilitating cooperation amongst employee ownership firms. 

The employee ownership programs would be intended to: 

  • Provide outreach to inform about employee ownership, business ownership succession and employee participation;
  • Provide technical assistance to employees seeking to become owners or start new employee-owned businesses and to business owners considering selling to their employees; and
  • Provide training activities in the various aspects of employee participation.

Grants would be limited per grantee as follows: 

  • $300,000 in FY2020
  • $330,000 in FY2021
  • $363,000 in FY2022
  • $399,300 in FY2023
  • $439,200 in FY2024

The authorized appropriations for grants under this bill are: 

  • $3.85 million in FY2020
  • $6.05 million in FY2021
  • $8.8 million in FY2022
  • $11.55 million in FY2023
  • $14.85 million in FY2024

These appropriation levels would allow 12 employee ownership grants in FY2020, 22 in FY2021 and 31 in FY2022.

Impact

Employees; businesses; employee ownership in businesses; promotion of employee ownership; and the Dept. of Labor.

Cost of Senate Bill S. 1666

A CBO cost estimate is unavailable.

More Information

In-DepthSen. Bernie Sanders (I-VT) introduced this bill to provide over $45 million in funding to states to establish and expand employee ownership centers to provide training and technical support for programs promoting employee ownership

“By expanding employee ownership and participation, we can create stronger companies in Vermont and throughout this country, prevent job losses and improve working conditions for struggling employees. Simply put, when employees have an ownership stake in their company, they will not ship their own jobs to China to increase their profits, they will be more productive, and they will earn a better living."

When he introduced this bill in the 115th Congress, Sen. Sanders said

“Instead of giving huge tax breaks to corporations who shut down in the United States and send jobs abroad to low wage countries, we must invest in creating worker-owned companies. When employees own their own companies, when they are involved in the decision-making that impacts their jobs, the results are almost always positive – absenteeism goes down, worker productivity goes up and people stay at their jobs for a longer period of time. When workers are respected on the job as full human beings who can help make the decisions for a profitable company, morale goes up. Employee-owned companies will not provide starvation wages to workers and huge compensation packages to CEOs. They will not allow for unsafe working conditions. They will not shut down and send their own jobs to China. In fact, study after study has shown that employee ownership increases employment, increases sales and increases wages in the United States… By giving worker-owned businesses the tools to succeed and educating retiring business owners and employees about the benefits of worker ownership, we can allow the employee-ownership model to realize its true potential and create an economy that works for all of us, not just the 1 percent.”

Sen. Sanders adds that empowering workers is part of democracy:

“We can move to an economy where workers feel that they're not just a cog in the machine—one where they have power over their jobs and can make decisions. Democracy isn't just the opportunity to vote. What democracy really means is having control over your life."

When this bill was introduced in the 115th Congress, Rep. Mark Pocan (D-WI), who is this bill’s House sponsor in the current Congress, said:

“With 29 years of experience as a small business owner, I've seen firsthand how both businesses and workers benefit when growth is shared between labor and management. Employee stock ownership plans are an excellent way to promote shared prosperity. I'm proud to be an original cosponsor of the WORK Act in order to help the Department of Labor promote employee-ownership while also ensuring that workers' rights are protected.”

David Fitz-Gerald, former chair of the ESOP Association and CFO at Carris Reels, a 100% employee-owned manufacturing company based in Rutland, Vermont, says that increasing employee ownership “creates and maintains more productive companies that sustains American jobs at a higher rate than do conventionally owned companies.”

This bill has seven Democratic Senate cosponsors in the 116th Congress. Its House companion, sponsored by Rep. Mark Pocan (D-WI), has one cosponsor, Rep. Donald Beyer (D-VA). As of August 2, 2019, neither bill had received a committee vote.

In the 115th Congress, this bill had six Democratic Senate cosponsors. Its House companion, sponsored by Rep. Jared Polis (D-CO), had three Democratic House cosponsors. Neither bill received a committee vote.  


Of NoteAccording to a Rutgers University study, employee ownership increases company productivity by 4%, shareholder returns by 2% and profits by 14%. Joseph Blasi, director of the Rutgers University Institute for the Study of Employee Ownership and Profit Sharing, notes that “looking at employee ownership and profit-sharing is a compelling way for the middle class to get a share of the benefits of ownership” as wages remain largely stagnant.

Over the period 1974-1974, employee stock ownership plans (ESOPs) helped the number of partially- and fully-employee-owned companies in the U.S. grow from ~1,600 to ~8,100. In a 45-ESOP and 238-comparable company study published in the September 1987 issue of the Harvard Business Review, Corey Rosen and Michael Quarrey found that ESOP companies grew faster than comparably-sized businesses and provided meaningful returns to employees who bought into them.

However, in their 2005 working paper “When Labor Has a Voice in Corporate Governance,” Olubunmi Faleye, an assistant professor of finance and insurance at Northeastern University, and Vikas Mehrotra and Randall Morck, both members of the finance faculty at the University of Alberta, reported that companies with significant levels of employee control systematically underperform, in large part because workers can hold management hostage to their short-term concerns. Using a broad range of financial measures for over 2,100 companies from 1995-2011, the researchers found that employee-controlled companies underperformed on several measures, including Tobin’s q (a common measure of shareholder wealth creation), productivity, sales per employee and total-factor productivity growth. They also found that companies with significant levels of employee ownership typically had less long-term investment as well as lower risk (and consequently lower growth). 

In 2015, 32 million Americans owned stock in their companies through pension and profit-sharing plans and share-ownership and share-option plans. 


Media:

Summary by Lorelei Yang

(Photo Credit: iStockphoto.com / designer491)

AKA

WORK Act

Official Title

A bill to establish an Employee Ownership and Participation Initiative, and for other purposes.

    I like it. Employee ownership relies upon and rewards everyone working together to define company objectives and deliver outstandingly beneficial and competitive products and/or services. It is the kind of capitalism that built this country, not the crony-capitalism often practiced today. Success depended upon delivering useful and affordable products or services and not upon ‘stacking the deck’ by purchasing political favor. Everyone pulling together is always more effective than relying on a few strongmen with connections who are directing traffic. Also, it lets employees see and participate in the struggles needed to get and keep a company in business and the ‘hard decisions’ often needed along the way- something that employees generally neither see nor appreciate.
    Like (87)
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    I oppose anything that is proposed by Comrade Communist Sanders. He is a confirmed anti capitalist who would nationalize all free enterprise. #MAGA
    Like (33)
    Follow
    Share
    I approve. From 1979 to 2018, net productivity rose 69.3 percent, while the hourly pay of typical workers essentially stagnated—increasing only 11.6 percent over 39 years (after adjusting for inflation). This means that although Americans are working more productively than ever, the fruits of their labors have primarily accrued to those at the top and to corporate profits, especially in recent years. During these decades of wage stagnation, employee ownership in companies is a way to help workers become more financially stable and build more wealth. Employee-owned companies are stronger, more likely to treat their workers well and less likely to outsource jobs overseas. I think that’s a win win situation and should be encouraged.
    Like (45)
    Follow
    Share
    Absolutely. I would like to see union-minded employees just build companies that are 100% employee owned and compete against the corrupt corporations. With this model, there is no need for unions, because the company is “The People”. Once you remove the “Make profits at all costs” greed of typical corporations, you will have a company that actually cares for its people, strives to offer quality and hospitable services and the Customers will receive a higher quality service and product. Everyone wins.
    Like (34)
    Follow
    Share
    I agree 100% with jimK with regards to the below statement. I like it. Employee ownership relies upon and rewards everyone working together to define company objectives and deliver outstandingly beneficial and competitive products and/or services. It is the kind of capitalism that built this country, not the crony-capitalism often practiced today. Success depended upon delivering useful and affordable products or services and not upon ‘stacking the deck’ by purchasing political favor. Everyone pulling together is always more effective than relying on a few strongmen with connections who are directing traffic. Also, it lets employees see and participate in the struggles needed to get and keep a company in business and the ‘hard decisions’ often needed along the way- something that employees generally neither see nor appreciate.
    Like (15)
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    This is not an appropriate function of government. Stop wasting our money on stupid stuff.
    Like (15)
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    When business or corporate owners close down companies they damage the communities their operations support. If the company is manufacturing something that can no longer be marketed because there is no longer demand for the product, business closure may be appropriate. However, there are many instances in which the closure of the business or factory would be unnecessary if the employees of the company could find a way to purchase the company collectively and maintain its production, the incomes and the community support the company’s income provides. In some cases, this can provide a transitional base for the community to reinvent itself based on another local economic base. This should be encouraged at the national level. This is the foundation of the cooperative movement which offers an alternative to corporate structures in producing goods for the market. Such alternative forms of business structure are well known and extremely effective, e.g.The Mondragón Corporation of Spain: https://en.wikipedia.org/wiki/Mondragon_Corporation
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    At a time of wage stagnation, employee ownership in companies is a way to help workers become more financially stable and build more wealth. Employee-owned companies are stronger, more likely to treat their workers well and less likely to outsource jobs overseas.
    Like (13)
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    BERNIE! Stop spending our money. You've got millions, you first! People, democrats want your hard earned bucks. #trump2020
    Like (12)
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    👎🏻S-1666 AKA the Worker Ownership, Readiness, & hitch Knowledge (WORK) Act 👎🏻 I’m opposed to the Senate Bill. S-1666 AKA the Worker Ownership, Readiness, and hitch Knowledge (WORK) Act which would create an Employee Ownership and Participation Initiative within the Dept. of Labor’s Employment and Training Administration (ETA). It would authorize ETA to award grants to employee ownership and participation programs throughout the country for: 1) education and outreach; 2) participation training; 3) technical assistance, including prefeasibility studies, and support for the carrying out of third party feasibility studies and preliminary business valuations and 4) activities facilitating cooperation amongst employee ownership firms.  The literature on employee-owned companies’ performance is mixed; so it’s hard to sure that employee ownership is the best thing to promote from a business perspective. Additionally, given that many Americans already have ownership in their companies through stocks, pensions and other plans, it’s not clear how necessary this bill is. SneakyPete.......... 👎🏻👎🏻👎🏻👎🏻👎🏻👎🏻👎🏻👎🏻👎🏻. 8.11.19..........
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    VOTE NO on WORK act, S. 1666. This is another encroachment by the Federal Gov’t into an area that the Constitution does not authorize. You are to PROMOTE, not provide for the general welfare. STOP BANKRUPTING MY COUNTRY!
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    That is one way for employees to benefit from the profits their company makes.
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    I do not see this as Federal business.
    Like (7)
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    There are already programs like this available, just another way to hand out tax payers money to someone else!!
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    Fiscal responsibility comes first! Stop spending!!
    Like (6)
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    Employee-owned companies are likely to be more successful then a typical business. This is because all the employees in a business will have a say in how the business is run instead of just a few people at the very top. Also, the pay discrepancy between the people at the top and least-paid employee will be a lot less. This absolutely the kind of business structure that should be encouraged!
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    Government needs to stay out of areas they have no business in and this is another one of those areas. We ARE NOT a socialist nation and I don’t want to move any closer to socialism. Those in government need to read and understand our constitution and bill of rights as well as the federalist papers in order to get them back on track. There are far too many socialist ideas infested within our government and they need to be removed!
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    Fail to see the necessity for this. Employees already have ownership in companies via stock, pensions and other plans.
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    I’m all for a free society in which employees can start their own workers cooperatives, but government beaurcracy at the hands of taxpayers to support them, or any business for the matter, is wasteful spending.
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    No. Again government intruding into the private sector. Yes, the argument is correct that employee ownership in companies is a stable way to build more wealth. Some companies know this and will move towards this idea. But the government cannot control doing the operations. Government rules will always be in the realm of affirmative action which always results in the highering of below qualified people in order to please a government rule. Promotions should always go to the one who qualifies the best, and not fill a government quota.
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