Phillips Leads Legislation to Boost Employee Ownership in Small Business
New bipartisan, bicameral bill will preserve jobs, build wealth for workers in American communities
Washington, May 16, 2023
WASHINGTON, D.C. – Today, Rep. Dean Phillips (D-MN), alongside Sens. Van Hollen (D-MD) and Rubio (R-FL), and Reps. Blake Moore (R-UT), Chrissy Houlahan (D-PA), and Dusty Johnson (R-SD), introduced bipartisan, bicameral legislation to support small business owners who pursue an employee-owned business model. Their Employee Equity Investment Act (EEIA) reduces cost barriers small business owners currently face when transferring ownership to their employees, empowering them to preserve family legacies and community jobs – even after their retirement.
Nearly half of all private businesses are owned by individuals who are at or near retirement age, and together, those businesses employ more than 32 million workers across 2.9 million firms. Yet, fewer than 15% of owners who are expected to retire over the next decade have a succession plan in place. Many will sell their businesses to buyers in the mergers and acquisitions (M&A) market or close their doors, resulting in the loss of jobs and businesses across the country. By supporting the sale of businesses to employees, the Employee Equity Investment Act would return a greater share of American profits to American workers.
“My family taught me that business is a means to an end; and that end is ensuring success is shared with the people and communities who help create it,” said Rep. Phillips. “Over the coming years, millions of small business owners will reach retirement age and sell to competitors or other buyers in the mergers and acquisitions market - which often results in jobs leaving the communities that rely on them. Expanding opportunities for employee ownership will help keep businesses and jobs local, allow American workers to build wealth for their families, and result in more sustainable and resilient communities. Employee ownership is both good business and good for business."
“American workers are the true power behind our economy. By investing in employee ownership, we’re investing in our workers and putting more of their hard-earned dollars back in their pockets, instead of sending U.S. profits overseas. This bipartisan bill will offer up-for-sale businesses the tools to transition to employee ownership – empowering workers and keeping jobs and opportunity here at home,” said Senator Van Hollen.
“Employee ownership empowers workers and improves productivity. The Employee Equity Investment Act would help facilitate and promote the sale of companies to their employees. By encouraging a system that allows employees to invest in themselves and the companies they work for, we can strengthen our economy and keep American companies in America,” said Senator Rubio.
“Utah boasts a flourishing ecosystem of employee-owned businesses that create value for both their customers and employees. We must ensure that our federal programs do not inadvertently hinder opportunities for companies to transition to an employee-ownership model, and the EEIA is designed to accomplish this goal without imposing any additional burden on taxpayers,” said Rep. Moore.
“Pennsylvania is home to hundreds of employee-owned businesses. This business model can lead to greater employee empowerment, make companies less likely to close and move out of state, and even extend the life of a company by enabling them to operate for longer,” said Rep. Houlahan. “I’m proud to introduce this bipartisan legislation to make it easier for small and medium-sized businesses across the country and Commonwealth to convert to employee-owned businesses when undergoing ownership change.”
“As the former Vice President of an ESOP, I saw firsthand the benefits of employee-owned businesses. I am proud to support this effort to ensure more businesses have the flexibility and opportunity to transfer ownership to employees,” said Rep. Johnson.
The Employee Equity Investment Act is endorsed by: The ESOP Association, Ownership America, National Cooperative Business Association, Employee-Owned Contractors Roundtable, Economic Innovation Group, Small Business Majority, U.S. Impact Investing Alliance, and more.
Full EEIA text is available here.