The following op-ed was published by the Boston Business Journal on April 2, 2019. You can read it online here. Also pasted in full below.
Employee ownership can save jobs, build the state's economy
I grew up like most Cape Codders, in a family inextricably tied to the tourism industry. My parents, Adrian and Annette, came to Provincetown in the 1970s, leaving behind the confines of suburban Connecticut for the free spirit of the Outer Cape. As so many do, they made a life working in restaurants.
In 1985, my parents launched their own business — the eponymous Adrian’s Restaurant — a 20-seat cafe in Truro Center that they started with $7,000 in savings and loans from friends and family. Adrian’s Restaurant was a hit, and they expanded, first to a 60-seat restaurant on Route 6A, and eventually to a 200-seat restaurant with panoramic views of Cape Cod Bay.
Adrian’s quickly became a fixture of the Outer Cape community. As an infant, I slept in a bassinet on the counter. My sister Marissa and I worked at the restaurant until young adulthood. Growing up in Adrian’s Restaurant taught me the meaning of "community." Waiting on tables for 14 seasons also proved fertile ground to learn retail politics — in 2016, I was elected to the Massachusetts Senate.
When my parents finally decided that it was time to step away from the daily grind of running a restaurant, they looked for buyers. The profit margins of a seasonal restaurant can provide a good life for a family, but they rarely provide an attractive return on investment. In recent decades, the cost to start a business on Cape Cod has skyrocketed; the region’s red-hot real estate market has made restaurants more valuable as condos and also wiped out housing for seasonal workers. Adrian and Annette explored the possibility of selling to several longtime employees, but they couldn’t figure out how to make it work. In the end, they realized their best option was to close the restaurant.
After 28 seasons, my parents sold the business in 2012 to the adjacent motel, which would go on to use the space as a function hall. It was a great run, especially in an industry where most eateries fail in the first five years. Still, I can’t help but think that if we could have found a way to continue Adrian’s, the Outer Cape community would still have one of its favorite restaurants and this cherished gathering place would be providing for another family on Cape Cod.
In an era of a widening wealth inequality, the time has come for the advancement of employee ownership models. That’s why I am thrilled that the EIO will soon be back in business. Over the last two years, thanks to the leadership and vision of Senate President Karen Spilka, who has worked on this issue for three decades, the Massachusetts Senate has appropriated funds to recapitalize the office.
The social advantages of facilitating employee ownership have been a winning, and bipartisan, issue for decades. President Ronald Reagan saw employee ownership as the next logical step in our economy — "It is a path that befits a free people,” he said — and so he partnered with House Speaker Tip O’Neill to pioneer the modern set of federal incentives around employee ownership. More recently, Vermont Sen. Bernie Sanders has pushed to create a U.S. Employee Ownership Bank to provide low-interest loans and other financial assistance for employee-owned companies.
The data bears out the benefits. According to the National Center for Employee Ownership, employee-owned companies create jobs three times faster than their traditional counterparts. The center’s research has shown that employee owners have 92 percent higher median household wealth, 33 percent higher income from wages, and 53 percent longer median job tenure compared with others, even when controlling for factors like age, race or education.
The goal of the newly re-established EIO will be to promote employee ownership and help steward companies through the employee-ownership process. Navigating this path can take time and expertise. Small- and medium-sized businesses can especially benefit from having access to an honest broker who does the type of field-building that private, for-profit advisors can't. Some states, including Vermont, Ohio, and California, have taken this approach to great success, amassing higher per capita rates of employee ownership than other states.
"It turns out that owning your workplace is as important to a good life as owning your home," says John Abrams, a Martha’s Vineyard resident who is the CEO and founder of South Mountain Co., an integrated architecture, engineering and building firm in West Tisbury. After founding the business in 1975, Abrams restructured the company to be wholly employee owned in 1987. Today, any employee who has been with the company for five years can buy in and become a full owner.
Employee ownership gives workers not just a financial benefit from the business, but a personal stake in its success. "When the people who are making the decisions bear the consequences of those decisions and share the rewards of those decisions," Abrams says, "you get better decisions." Employee ownership also changes the way employees see themselves: they're now business owners.