Senator Sanders Introduces Legislation to Promote Employee Ownership

Senator Bernard Sanders (I-VT) has introduced two bills to encourage employee ownership. The first, S. 2909, provides funding for states to set up employee ownership programs. Vermont and Ohio both have very successful programs and, in the 1980s, New York, Oregon, and Michigan also had very active programs. Massachusetts has had a much smaller program. NCEO research on the programs in the late 1980s showed that they increased the incidence of employee ownership plans in the states by about 20% to 33% above what would have otherwise been the case. I have long believed that these kinds of programs are the most cost-effective way to move employee ownership forward given the existing tax benefits the plans already have. The bill so is currently being cosponsored by Senators Patrick Leahy (D-Vt.), Robert Menendez (D-N.J.), and Sherrod Brown (D-Ohio).

The second bill, S. 2914, is sponsored by the same four senators. It would create a federal loan guarantee program to save jobs in specified circumstances when the result of the financing would be a company owned 50% or more by the employees.

The texts of the bills were not yet available when we went to press. The legislation marks the fourth and fifth bills introduced this year to encourage employee ownership. Others include the ESOP Improvements Act (S. 1612), a concurrent resolution to encourage employee ownership (H. Con, Res. 204), and the S Corporation ESOP Promotion and Expansion Act of 2009 (H.R. 3586).