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Employee Ownership Builds a Sustainable Economy

The U.S. economy added 156,000 jobs last month and is near full employment with a reported unemployment rate of 4.4%. Stock markets and corporate profits are at record highs. But according to Gallup, more Americans think the economy is getting worse than those who think it is getting better.

Economists and pundits point to several factors that help explain this disconnect: slow wage growth, widening income disparity, the decline of traditional careers, and the rise of a new “gig economy”. In each case, what’s needed is a stronger connection between profits and people. That’s why I believe that employee ownership provides a promising path to an economy that offers good jobs, more security, and broader wealth creation.  

Employee-owned companies have been quietly growing in America over the past 40 years. Today thousands of employee-owned companies employ 1.5 million Americans. They operate in every state and nearly every industry. In some sectors, such as grocery retailing, they account for nearly 10% of the market. The group includes giants such as Publix Supermarkets, Parsons, Lifetouch, and WinCo Foods. It also includes ASBC members such as New Belgium Brewing, Dansko, Clif Bar, Future State and Eileen Fisher.

Employee-owned companies allow people from all walks of life to build wealth over time. Academic studies show that they often pay higher wages and offer better benefits than their traditionally owned counterparts. They’re also more productive, and less likely to lay people off in a downturn. A city or region with many such companies would be more stable, and it would enjoy more broadly based prosperity.

There are a number of ways to support this vital movement.

At the individual level there are two main avenues of action. For one thing, American consumers wield tremendous power with their wallets. Shifting even a fraction of the nearly $12 trillion in annual consumer spending to employee-owned companies would create tens of billions of dollars of wealth for working people. At the same time, looking for work at an employee-owned company is great for the economy and for the individual. Job seekers will find greater pay and more job security with employee ownership. Why be a hired hand when you can be an owner?

Managers and executives at companies have many ways to support employee ownership. Doing business with an employee-owned company can be a good business decision and can help the local community. Of course, companies can also give their employees an ownership stake to increase engagement and ensure broad-based wealth creation. Becoming employee-owned is a great succession plan for exiting business owners. And those at employee-owned companies can get involved in public policy initiatives aimed at raising the profile and influence of our community such as ASBC’s Worker-Owned Companies campaign.

Local institutions like governments, hospitals, and universities can choose employee-owned suppliers to keep money in the local economy. As a resident, a customer or an alumnus, we can grow employee ownership by encouraging these institutions to do business with employee-owned businesses.

Employee ownership has much to offer America at this moment in time. It’s good for business, good for employees, and good for local economies. By supporting and expanding employee ownership we move ourselves closer to a sustainable and equitable economy.

Thomas Dudley is co-founder and CEO of Certified Employee-Owned.