Incentives for Employee Ownership

Definition

States that promote employee ownership through tax incentives, state mandated assistance and employee ownership programs, 2012.

Description

Employee ownership builds wealth through shared ownership of the company for which a person works. Two approaches to enabling workers to gain an ownership stake in businesses where they work are Employee Stock Ownership Plans (ESOPs) and worker-owned cooperatives. In an ESOP, employees receive company stock as part of their benefits package. Worker-owned cooperatives are companies that are fully-owned by their workers and embody a democratic approach to management of one worker/one vote.

In recent years, state budget shortfalls have led to funding cuts for state employee ownership centers, despite the assistance they provide to local firms. In addition to employee ownership centers, states can adopt additional policies that help firms establish business conversion to employee ownership:

• Fund preliminary feasibility studies about conversion to employee ownership using WIA monies: The Federal Workforce Investment Act (WIA) includes layoff aversion provisions that permit states to fund preliminary feasibility studies with WIA dollars. These studies gauge whether establishments threatened by shutdown or major layoffs can continue operation through alternative ownership. Such studies provide objective analysis to understanding the feasibility of firm conversion to employee ownership.
• Provide direct assistance for establishing employee-owned firms: Upon request, state law can provide active state assistance for establishing employee-owned firms under one or more circumstances. Assistance can include providing information and technical assistance on employee ownership, financing an analysis of feasibility, and making available economic development lending to employee-owned firms.

For more information on employee ownership, please visit the Ohio Employee Ownership Center at Kent State University.

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Incentives for Employee Ownership

Source

Data provided by the Ohio Employee Ownership Center at Kent State University in 2012. CFED thanks Roy Messing and Felicia Wetzig of the Ohio Employee Ownership Center for their assistance in developing and reviewing this data.