The golden dome of the State House. (Photo by Andy Metzger) field_54b3f951675b3

IN MASSACHUSETTS, the business landscape is in the midst of a metamorphosis. Worker-owned cooperatives, where employees share ownership, daily management roles, and strategic governance decisions, and employee stock ownership plans (ESOPs), where companies share equity with their workers, are emerging as a powerful force.

In fact, there are now about three times as many worker-owned cooperative companies in Massachusetts as there were just a decade ago. ESOPs in the Commonwealth pull in, on average, over $50 million in annual revenue.

We are thrilled to see so many of the Commonwealth’s state senators agree, as evidenced by the recent unanimous passing of an amendment to the Senate budget to add $200,000 in funding for the Massachusetts Center for Employee Ownership (MassCEO). This measure, filed by Assistant Majority Whip Julian Cyr and co-sponsored by a bipartisan group of 10 other visionary senators, supports building a more just economy by investing in forms of employee ownership supported by MassCEO, including worker-owned businesses, employee stock ownerships plans and employee ownership trusts (EOTs).

“Cooperatives are more than just businesses; they are a testament to a business model prioritizing workers’ welfare, safety, and well-being,” said Sen. Cyr in advocating successfully for this funding during the recent budget debate. “Profitable cooperatives maximize benefits by distributing that profit to their workers. Worker-owned cooperatives exemplify a commitment to sustainable and equitable economic development.” They also provide fair and dignified employment opportunities throughout the Commonwealth, fostering more democratic workplaces where workers can cooperatively manage their enterprises. 

MassCEO, formalized as a state office through a 2022 economic development bill, aims to strengthen the employee-owned business sector. When the governor’s proposed 2025 budget lacked funding for this vital office, the Coalition for Worker Ownership and Power (COWOP) and New England chapter of the ESOP Association called for investment in MassCEO to fund office operations, legal support, and grants to the worker ownership ecosystem. Additionally, the worker ownership coalition supports fully funding the Small Business Technical Assistance Grant Program, which helps cooperatives and other small businesses access vital support to get started and flourish within the state economy.

The importance of investing in worker-owned businesses cannot be overstated, especially in light of the looming wave of business owners looking to retire and sell. In Massachusetts, half of small businesses are owned by people 55 and older. This translates to 68,000 companies, with more than 775,000 employees and $162 billion in annual revenue, who are in the realm of succession planning. 

The Commonwealth’s retiring small business owners present a clear opportunity to convert traditional businesses into worker-owned enterprises, ensuring continuity and stability in our economy.

Worker-owned businesses owned by local residents contribute significantly to local economies. Their economic impact circulates three times more money in Massachusetts communities than businesses with absentee owners. Furthermore, these businesses are more likely to be owned by people of color, women, and gender non-binary residents, addressing deep inequities in our economy.

Growing the sector of worker-owned companies also benefits state finances by contributing untapped taxes to the state’s revenue base. Massachusetts cannot afford not to invest in these critical innovations, which help build the wealth of entrepreneurs excluded from traditional economic development initiatives. Funding MassCEO shores up a critical hub of resources and peer-to-peer networks, which enables existing co-ops to thrive while incubating new ones.

Significantly, legislation has been filed at the national level to establish a federal office supporting worker-owned companies, as well as a $60 million small business lending pilot program aimed at worker cooperatives. This initiative, aligned with efforts in Massachusetts and in other states, underscores the growing recognition of worker-owned business potential. According to the US Federation of Worker Cooperatives, every worker ownership bill at the federal level has bipartisan support.

It’s time for Massachusetts to take a bold step forward. By investing in worker ownership, we are investing in people, promoting economic fairness, and empowering workers. We urge Massachusetts leaders to meaningfully fund MassCEO and prioritize investments in our working families. Together, let’s build a Commonwealth where everyone has the opportunity to prosper.

Carmine Gentile is a state representative from Sudbury. Darnell Adams is principal at Firebrand Cooperative, vice chair of the Massachusetts Center for Employee Ownership, and a member of the Coalition for Worker Ownership and Power.