What Local Communities Need to Know about Employee Ownership

Employee ownership can help to build and preserve local economic vitality. Employee buyouts can save viable companies that might otherwise shut down, but can also be part of a larger economic development strategy to root capital ownership in your community. Employee-owned companies are often resilient enterprises that help to build communities’ foundation of wealth and business savvy.
  • Educate local stakeholders: Email to explore ways to educate local businesses, community members, elected leaders, and other stakeholders about employee ownership
How It Can Help
  • Less likely to relocate: We’ve all seen companies move to secure a generous incentive offer or some other cost advantage, even if they were doing perfectly good business in their old location and the financial upside of moving is relatively modest. When employees own and manage companies, their deep ties to family, friends, and community can make it far less appealing to move in search of a fleeting financial advantage.
  • More competitive: Employee-owned companies are often the kind of businesses that you can build a local economy around. When employees have a direct stake in a company’s success, and have a say in how it is managed, they are often more motivated to solve problems, keen to eliminate waste, and are less likely to take their skills and knowledge to a different firm. As a result, evidence shows that employee-owned companies are often more competitive and profitable. 
  • Less likely to lay employees off during recessions: Employee-owned firms often ride out economic downturns without resorting to widespread layoffs. Evidence shows that when recessions occur, employee-owned companies are more likely to reduce hours, stomach temporary pay cuts, or devote more staff time to training. This behavior both insulates families from the worst effects of a recession and means that these companies are ready and able to ramp production back up once the economic climate improves.
  • Create consumer demand and family wealth: Employee-owned companies can turn entire families’ financial fortunes around, and create the single most important thing for the health of local economies, consumer demand. Employee-owned firms are still places where someone can start out in an entry level position and retire as a millionaire. More prosperous and stable families also mean more willing consumers that can create economic opportunity for the entire community.

Local Tools to Support Employee Ownership

Down Home Capital: How Converting Businesses into  Employee-Owned Enterprises Can Save Jobs and Empower Communities.