An Act Promoting Entrepreneurship Through Employee Ownership – H.503/S.305
VAWC has been lead support for ten worker co-ops since 2008. This has created or retained nearly 100 jobs in industries from design build companies and farms to marketing agencies and permaculturists, all without legislative support. This legislation would be a boon for us to continue our work on a larger scale to preserve even more of the business community and infrastructure in Massachusetts. See our fact sheet here.
Why is This Bill Needed?
The “Silver Tsunami” – a broad-based exit of business ownership – is threatening business and tax base in Massachusetts. Nearly half of businesses are owned by Baby Boomers, most with no succession plan:
• Only 15% of businesses succeed to the second generation.7
• Over 50% of businesses in Massachusetts are owned by those aged 55+, 20% are 65+.1
• Only 20% of business owners in the Northeast have a succession plan and only 18% of businesses with $1 million in revenue or less sell at all.2
• 80% of businesses don’t sell at all.2
Why Are Worker Cooperatives A Solution?
Selling to workers preserves the skills sets and relationships that keep business going without risking a giant shift from the purpose or mission of a business. Democracy in the workplace increases civic activities and participation in political democracy. Workers are happier, build business acumen, and often go on to support start-ups and other innovations. Lastly, worker co-ops are made of people in their community and want that community to be healthy, sustainable, and a place of productivity. Worker cooperatives:
Retain business legacy and infrastructure in Massachusetts
Experience 5% more productivity than traditional businesses3
Are 7% more likely to survive their first decade4
Have 15% less employee turnover3
Have broad appeal: 57% of worker members are people of color, 62% identify as women3
Why Support Opportunity to Own (OTO)?
A Built-In Pathway for Business Retention – OTO will support both business owners and workers by providing informed buyout offers.
Sellers Receive Financial & Social Capital – Sellers to worker buyouts will save on capital gains tax and will be revered as preserving jobs and community services.
OTO Works with Common Timeframes – Businesses in the Northeast sat on the market for an average of 200 days. OTO asks for 30 days to accept a worker buyout, then 180 days for financing.
View Business as Source of Equity & Innovation – Innovation, partnerships, and growth need to relate to those within any company. Worker co-ops leverage this connection and incentivize workers to improve and innovate their business and how it is run.
A Majority of Workers Prefer Worker-Owned – Almost three-quarters (72%) of all workers across political the spectrum prefer to work for employee-owned companies, compared with 19% who prefer a company owned by investors and 9% who prefer a company owned by the state6.
Contact your legislators today to urge them to support H.503/S.305.
We are part of the Coalition for Worker Ownership and Power, who have done amazing work with this bill. Learn more about them at cooperativema.org
1 – Fed Small Business – https://www.fedsmallbusiness.org/search?q=massachusetts
2 – Northeast Transition Initiative – https://ownershiptransition.org/planning-for-the-future-of-your-business/
3 – Abell, Hilary. “Worker Cooperatives: Pathways to Scale” – https://project-equity.org/wp-content/uploads/2023/06/Worker-Cooperatives-Pathways-to-Scale.pdf
4 – Democracy At Work Institute, 2019 State of the Sector – https://democracy.institute.coop/2019-worker-cooperative-state-sector-report
5 – Murray, Anthony. “Co-Operatives Make for a Happy Place to Work.” Co-Op News, 2013- https://www.thenews.coop/co-operatives-make-happy-place-work/
6 – Aspen Institute – https://www.aspeninstitute.org/wp-content/uploads/2023/05/Race-and-Gender-Wealth-Equity-and-the-Role-of-Employee-Share-Ownership.pdf
7 – Nonprofit Quarterly – https://nonprofitquarterly.org/voice-field-employee-owned-businesses-can-boost-local-economies/