US lawmakers introduce bill to strengthen worker co-op sector

The bill would direct federal agencies to put support programmes in place for the sector, tackling barriers around capital, education and technical support

A bill has been introduced to US Congress with the aim of expanding the worker co-op sector with new support programmes and initiatives.

Introduced by representatives Ro Khanna (D-CA-17), Jamaal Bowman (D-NY-16), and Rashida Tlaib (D-MI-12), the National Worker Cooperative Development and Support Act (HR 7721) would endow the Small Business Administration (SBA), Internal Revenue Service (IRS), Department of the Treasury, Department of Commerce, US Department of Agriculture (USDA), and Department of Labor (DOL) with responsibilities and authorities to implement support measures for worker co-ops.

Measures include reviewing regulations to remove barriers preventing the wide-adoption of the worker co-op model by facilitating access to capital, providing education, outreach and technical assistance, and conducting research on worker co-ops.

If enacted, the bill would:

  • Direct specific federal agencies (SBA, IRS, Treasury, Commerce, USDA, DOL) to implement programs supporting worker co-ops. It would require them them to review regulations and propose revisions to remove barriers, facilitate access to capital, provide education/outreach/technical assistance, conduct research, and coordinate with the interagency council created by the bill. 
  • Direct the Small Business Administration to develop worker co-op educational materials accessible online and in multiple languages, and direct the SBA to do outreach in communities where English is not the primary language.
  • Establish an interagency US Council on Worker Cooperatives within the DOL, which is currently launching a Division of Employee Ownership, with the secretary of labour designated chair. The council would develop a federal worker co-operative strategy by identifying regulatory barriers, proposing solutions, coordinating research/data availability, coordinating educational initiatives, and reporting to Congress on progress.
  • Create a 10-year, $60m Small Business Administration lending pilot programme specifically for worker co-ops. 
  • Provide funding through the Community Development Financial Institutions Fund for education and services to establish and manage worker co-ops.
  • Define “worker-owned co-operative business” as majority owned/controlled by employees, either through organization under state co-op law or meeting IRS eligibility criteria.

Esteban Kelly, executive director of the US Federation of Worker Cooperatives (USFWC), which has been helping steward the bill for several years, said: “As a generation of owners retire in the coming years, the US is facing a small business crisis.

“The National Worker Co-op Development and Support Act is a vital solution to ensure businesses stay open, jobs are saved, and our economy is strengthened. We applaud Rep. Ro Khanna and Rep. Jamaal Bowman as they stands up for small business through the National Worker Cooperative Development and Support Act, which will build wealth for workers and give them a stronger voice in the workplace.

“This bill shines a light on the highly underserved sector of worker cooperatives, a business model that is proven to be resilient and to strengthen communities. We look forward to seeing its benefits for decades to come.”

Related: US Congress considers bill to boost rural areas through co-op investment

Rep Khanna said: “The inspiration behind this legislation comes from seeing the positive impacts that worker co-operatives are having in communities across this country. Worker-owned businesses empower employees to have a voice in their workplace and share in the company’s success. They promote more equitable distributions of wealth and anchor jobs locally. 

“As our nation confronts rising inequality and workforce displacement from automation, we need bottom-up economic models that give workers ownership stakes.

“With the coming silver tsunami retirement wave, we have a huge opportunity over the next decade to convert many existing small businesses into worker co-operatives. This bill provides coordinated federal support and resources to make that possible. I believe widespread worker ownership is not only good policy, but also fully aligned with American values of liberty, democracy, and fair opportunity. My hope is this legislation seeds an ownership economy that lives up to those ideals.”

Rep Bowman added: “The worker co-operative model has incredible potential to build wealth in local communities around the country – and to strengthen our democracy in the process. But to realize that potential, this budding sector needs the federal support and financing that this bill provides.”