Dear Legislative and Budget Leadership:
The undersigned businesses, investors and organizations write in support of a request for a one-time budget allocation of $20 million to fund Senate Bill 1407 (Becker), which will preserve California small businesses, bolster California workers, and create an overall more equitable economy by increasing awareness of and pathways to employee ownership. SB 1407 will establish a dedicated hub within the Governor’s Office of Business and Economic Development (Go-Biz) that will help educate stakeholders, assist business owners and workers in navigating available resources, provide funding for technical assistance, and streamline and reduce barriers to the existing business transition process. These measures are critical to both increasing awareness of worker ownership and decreasing barriers to the model. The bill also establishes the Employee Ownership Education and Outreach Grants Program to expand education on employee ownership, and the Employee Ownership Conversion Technical Assistance Grants Program to reduce barriers for businesses considering or executing a conversion to employee ownership. This bill will help pave the way toward a regenerative and strong new economy. Employee ownership, in the forms of worker cooperatives, Employee Stock Ownership Plans (ESOPs), and employee ownership trusts, is proven to benefit businesses, workers, and local economies. Worker-owned firms see stronger overall business performance and resilience. Workers at these firms see greater wealth-building opportunities and increased job security compared to their counterparts at traditional businesses. And employee-owned companies were four times more likely to retain employees during the darkest days of the COVID-19 pandemic, as they have been in many past recessions.
Both evidence and experience suggest that employee ownership is a particularly powerful wealth-building opportunity for workers and communities of color. Providing additional pathways for workers of color to become employee-owners is an essential component of any strategy to address the racial wealth gap. Now is the time for California to harness the power of worker ownership. Prior to the pandemic, California small businesses faced mounting pressures from an impending wave of retirement amongst business owners. Baby boomers own approximately 359,000 businesses in California, which employ 3.9 million people. A majority of business owners do not have a formal succession plan, and most owners who try to sell their businesses cannot find a buyer. These challenges have been compounded by the economic impacts of the COVID-19 pandemic, which has brought mass business closures. This dual crisis requires immediate and bold action. As California continues to recover from the economic impact of the pandemic it has the opportunity to not only rebuild workplaces, but to proactively invest in models that are proven to create more resilient businesses, workers, and communities.
For these reasons, the American Sustainable Business Network, the Worker-Owned Recovery California (WORC) Coalition and these additional businesses, investors, and organizations support SB 1407 (Becker) and respectfully request your “Aye” vote on the bill and the budget proposals that will fund its implementation.