Opportunity to Purchase Laws Are a Viable Path to a Worker-Owned Economy
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For over a decade, Bill S.3419 has sat untouched in the Senate. While “the world’s greatest deliberative body” is quick to pass war funding and dress codes, what is arguably the most pro-worker law ever introduced has gone entirely ignored. This is a shame, as S.3419 holds two provisions that could radically shift the American economy from one of private ownership to one of worker ownership.
The bill’s primary purpose is to establish the United States Employee Ownership Bank, which would finance worker buyouts of their companies so they could turn them into worker cooperatives. (I wrote about how this bank would work a few years ago.)
The second provision, which would be easier to enact, is known as an Opportunity to Purchase clause. If passed, such a law would not only open a path to worker ownership but would go a long way to curtail offshoring, the practice of moving factories overseas that has devastated many of America’s working-class communities.
Section 5 paragraph 1 of Bill S.3419 reads:
“If an employer orders a plant or facility closing in connection with the termination of its operations at such plant or facility, the employer shall offer its employees an opportunity to purchase such plant or facility through an employee stock ownership plan or an eligible worker-owned cooperative that is at least 51 percent employee owned.”
To put this in normal language, if a company wants to relocate a factory or plant, it must first offer its workers the chance to purchase the plant and run it as a worker cooperative. The bill also requires that the plant must then become “at least 51 percent employee-owned,” ensuring that the workers would maintain majority control of the plant and would therefore be the determiners of its operations.
To do so, the transfer of ownership would happen through an employee stock ownership plan, or “ESOP.” While the bill’s opportunity to purchase clause is groundbreaking, ESOPs are actually quite common. According to the National Center for Employee Ownership, there are about 6,500 active ESOPs in the United States covering over 14 million workers. Almost two-thirds of these ESOPs are being used to transition to worker ownership, usually in the case of an outgoing owner wanting to preserve the business instead of selling it to another private capitalist. This is what happened with Beau Jo’s Pizza in Idaho Springs, Colorado. After 50 years of running the pizza shop, owner Chip Bair decided to sell the local chain to the workers instead of an external buyer, as he wanted to enshrine the chain’s positive impact on its workers and the small town of Idaho Springs.
The remaining one-third of active ESOPs aren’t used to transition ownership but are rather a means to attract labor. These offer workers a small share of company profits, but as the stock comes with no voting power, they only serve to supplement traditional wages.
The Potential of Opportunity to Purchase Laws
While the scope of Bill S.3419 is limited (it only offers a worker buyout if the owner plans to relocate outside the United States), its opportunity to purchase clause lays out a simple method to transition the American economy from dictatorial, private control to democratic worker control en-masse.
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