Certified EO Blog

Why Aren't There More Employee-Owned Companies?

January 24, 2024

Supporters of employee ownership see it as a win-win that benefits workers and companies alike. They point to the life changing wealth built by employee-owners and the transformational impacts of ownership culture on business performance. The research done by proponents is so positive and the success stories are so prevalent that it can be startling to learn that fewer than 1 in 200 American businesses are employee-owned. If employee ownership is so great, why aren’t there more employee-owned companies?Taking a clear-eyed look at the constraints holding our community back can be challenging, but to grow it’s necessary to be honest with ourselves. In this blog post I outline four leading theories on how to grow the number of employee-owned companies, each associated with a potential blocker:Raise AwarenessImprove Financing OptionsReduce Transaction Cost and ComplexityCreate New StructuresRaise AwarenessPerhaps the most straightforward theory about what’s limiting employee ownership is that there are a large number of people who simply don’t know about the model. Awareness is certainly low among the general public. According to estimates based on data collected from our Members and the companies we’ve listed on our Directory of Employee-Owned Companies, just one percent of the labor force works at an employee-owned company. Our Members report that most new employees come in with zero familiarity. You can easily go through high school and college without hearing the words “employee ownership.” I myself never heard about the concept during three years at a major management consulting firm. To grow the number of employee-owned companies, the key audience to reach is business owners. Based on our 630+ Members, over 90% of employee-owned companies are created through conversion, and clearly business owners can’t covert to EO if they aren’t aware that it’s an option. Is awareness low among business owners? This is much more difficult to gauge. But there are a number of efforts that propose the answer is yes and are focused on raising awareness among business owners, either by reaching out to business owners directly or by targeting trusted advisors such as accountants, lawyers, and bankers. Two prominent recent awareness campaign are the EO Equals effort spearheaded by Project Equity and the Pittsburgh Citywide Taskforce on Employee Ownership led by the Pennsylvania Center for Employee Ownership.Improve Financing OptionsA second theory sees issues related to financing as the primary barrier to growing the number of employee-owned companies. As mentioned previously, the vast majority of employee-owned companies are created through a conversion where the owner(s) of the business sell it to the employees. A large portion of these transactions require the owner to provide seller financing. The details vary from deal-to-deal, but seller financing has two main challenges:The seller doesn’t get their money right away and instead is paid out over time, often over the course of 10 years. Sellers, like all people, tend to prefer money upfront.Due to #1, the seller is still linked to the company for many years. Many business owners prefer a clean break. Employee ownership is rarely the only option considered by a selling owner. Alternatives such as private equity or selling to a competitor are often able to provide most, if not all, of the purchase price upfront. It’s easy to see why a seller might take that deal, even if they prefer the legacy preservation that comes from converting to employee ownership.There are a number of creative new initiatives looking to provide improved financing options for employee ownership. Funds such as Mosaic Capital Partners and Apis & Heritage are turning the private equity model on its head and use private capital to create employee-owned companies. Venture-backed Teamshares offers small-business owners cash upfront and then sells the company back to employees over a 10 to 20-year time period. Recent policy proposals have floated the idea of government loan guarantees for employee ownership conversions, both and the national and state level. Reduce Transaction Cost and ComplexityToday, over 95% of employee-owned companies use an Employee Stock Ownership Plan (ESOP). According to Department of Labor data, roughly 250 - 300 new ESOPs are created annually and we estimate that currently around 5,700 employee-owned companies have an ESOP. While ESOPs are popular, they also have substantial transaction cost and complexity. ESOPs are great, but they can also be expensive. The cost to create an ESOP can vary widely, but a conversion generally ranges from $80,000 to over $250,000 and ongoing administration can be $50,000 to $100,000 a year. While certainly comparable, or sometimes less, than investment banking fees involved in an alternative path, the cost of ESOPs makes them out of reach for most companies under 40 employees. One major source of cost and complexity is regulatory. The ESOP structure was codified in law along with 401ks and profit sharing plans in 1974 as part of the Employee Retirement Income Security Act (ERISA). As a result ESOPs, are overseen by the Department of Labor (DoL). The DoL ensures that ESOPs are executed in a fair manner that sets employees up for success. However, for many years, the DoL has declined to provide clear and specific guidance around their expectations for important aspects of ESOP creation and oversight, opting instead to use litigation. This has created an unfortunate level of uncertainty for ESOP professionals and for owners who want to do something good by transitioning the business to their employees.In 2023 major progress was made when The ESOP Association successfully lobbied the DoL to provide clarity on the definition of adequate consideration when it comes to ESOP valuations. This is a huge step forward in reducing regulatory uncertainty that hopefully will result in the creation of more ESOPs.An ambitious idea to further reduce the cost and complexity of the ESOP is to take it out of ERISA entirely. ESOPs are not part of ERISA for any fundamental reason, but simply because Senator Russell Long was a champion for the idea and was the Chairman of the Senate Finance Committee at the time that ERISA was being created. While these favorable circumstances led to the creation of the most successful vehicle for employee-owned companies today, they have also led to much of the burdensome regulation that could be holding our community back. Removing the ESOP from ERISA and greatly streamlining the tax benefits could unleash growth analogous to the recent success of the Employee Ownership Trust in the UK. Driven by a much simpler framework, the number of employee-owned companies in the UK increased 37% in 2022. During that same time period, the number of employee-owned companies in America remained flat at around 6,400. Perhaps we can use the UK as inspiration to simplify our structure and unleash growth.There have been a number of non-regulatory proposals to streamline the cost and complexity of the ESOP. One idea is to create a “simple ESOP” with standardized plan design that receives streamlined regulatory treatment. Another is to use technology to reduce many of the ongoing administrative costs. Create New StructuresPerhaps the most creative and high-potential idea for creating new employee-owned companies is to create new structures. While the two legacy models - ESOPs and worker cooperatives - have been very successful, there might be untapped markets waiting for new approaches. This offers huge potential grow the employee ownership community, for example by increasing adoption among smaller companies, which as we pointed out in the 2022 blog post, could expnd the market for potential employee ownership conversions by hundreds of thousands of companies. Currently there are three promising new structures being explored. The first is the Employee Ownership Trust (EOT). Inspired by the success of the UK, groups such as EOT Law, Common Trust, and Purpose Owned have been setting up EOTs in the US since 2016. EOTs generally are more flexibly than legacy structures, and they’re substantially cheaper than ESOPs. The model is still in its early stages in the US and unfortunately doesn’t yet have tax incentives, but despite that headwind today there are roughly two dozen EOTs in the US. The second alternative structure is to do employee ownership through broad-based, direct ownership of company stock. This approach is being spearheaded by Teamshares (mentioned above) and the summary of the approach is that Teamshares offers a selling owner favorable terms, and then the employees buy up to 80% of the company from Teamshares over a period of 10 to 20 years. Teamshares is off to a hot start, with over 80 companies converted since their launch in 2019.The third alternative approach would be to implement broad-based employee ownership through stock options. Stock options are most well-known for their use in Silicon Valley, but they are an extremely flexible structure that can be designed in a broad-based way. Options plans are also low-cost, typically costing a few thousands dollars to implement and administer. Options are generally not a long-term solution, but could be a great fit for new companies who want to give early employees a stake in the outcome and then later convert to another employee ownership structure such as an ESOP.Which of these four theories is the correct approach? Weighing in on the likelihood is a matter of speculation. Advocates for each approach to growing employee ownership all have passionate and persuasive arguments, but ultimately nobody knows what will work until the number of employee-owned companies in the US starts to grow. At Certified EO, we’re diligently tracking the creation of new employee-owned companies as part of our larger effort to make our Directory an up-to-date list of all employee-owned companies. When we see that number start to grow, we’ll be sure to let you know.

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Become an Owner With Employee-Owned Jobs

October 19, 2023

Two months ago we launched Employee-Owned Jobs, the first and only job board for employee-owned companies. We were guided by a vision to bring together companies building broad-base prosperity and job seekers who want to become employee-owners. We expected excitement from the employee ownership community, but we’ve been blown away by the response. In roughly three months, we’ve had over 19,000 users and the positive feedback from our Members has been tremendous. This blog post shares more about our vision to connect job seekers and employee-owned companies. We’ll cover:The Advantages of Becoming An Employee-OwnerGreat Hires Amplify Ownership CultureStronger Together: Building Support For Employee Ownership‍Own Your Job: The Advantages of Becoming An Employee-OwnerThe promise of employee ownership is simple: if you work for a good company and put your time in, you will be treated well. First and foremost, there’s the opportunity to build life-changing wealth. Looking across our Members, employee-owners tend to receive an allocation of company stock between 5% - 15% of their annual salary. The benefit increases the more they make, but the average value is around $5,000 a year. Stock allocations cost employee-owners nothing and generally come on top of the usual benefits. Employee-owners also see increased job stability and career growth. Companies exist to benefit their owners, so a company that is owned by its employees is going to approach big decisions a bit differently. For example, during the COVID-19 pandemic, employee-owned firms were three times more likely to retain staff. We also see companies investing in their employee-owners with training and education. Finally, many employee-owned businesses prefer to grow leadership through internal promotion, opening career pathways for entry-level workers.Perhaps the most immediate benefit of working at an employee-owned company is being a part of an ownership culture. Broad-based ownership creates alignment up and down a company. It increases engagement, strengthens bonds, deepens relationships, and creates an elevated sense of accountability. The result is a more motivated and effective team working together towards a common goal. Best of all, it’s a benefit that a new employee experiences the first day they walk in the door.If the benefits of employee ownership sound good to you, you’re not alone. In nationally representative opinion surveys, we’ve found that 3 out of 10 job seekers would be more likely to apply to a job if they learned the company is employee-owned. But there’s an issue: how would you go about finding a job at an employee-owned company? Employee-Owned Jobs solves this issue by aggregating over 9,000 open positions, making it easy to become an employee-owner. Great Hires Supercharge Ownership CultureHiring great people can strengthen a company’s culture and create a tremendous competitive advantage. Engaged employees put in more effort, are better team members, and care more about the customer. A recent meta-analysis from Gallup found that teams scoring in the top quartile on engagement had 10% higher customer loyalty, 23% higher profitability, and 18% lower turnover. Hiring great employee-owners creates a positive feedback cycle that supercharges engagement. Motivated new hires will put more energy into getting up to speed, will be less likely to leave in the crucial ramp-up period, and will be faster to understand the benefits of employee ownership. The energy they bring will boost culture, which in turn will make it easier to attract more of the right candidates. Employee-owned jobs is the best way to tap into an applicant pool that is excited about employee ownership. Users find us through a variety of channels. Maybe they have already worked at an employee-owned company. Perhaps they know someone who has benefited from an ESOP. Or maybe the idea just strikes a cord deep inside. Whatever the case, the pull is real: in the first three months we’ve had over 19,000 users and we’re just getting started with our promotion.Stronger Together: Building Support For Employee OwnershipMaking it easy to hire great employee-owners is the next step towards our vision of building an employee-owned economy. Over the past six years we’ve grown our network to 600+ Members and a simple theme has emerged: we’re stronger together. Companies do a great job talking about employee ownership on their careers pages, in interviews, and on job offers. But what has been missing is a comprehensive effort to drive massive awareness and interest.With Employee-Owned Jobs, we’re able to mount this campaign. We’ve begun by promoting EO Jobs within the employee ownership community. In Q4, we will begin outreach to 1,462 community colleges and 7,271 trade schools across the United States. We will equip career centers with resources to share the advantages of employee ownership, we will participate in webinars, and we will drive massive interest in becoming an employee-owner.The Advantages of Becoming An Employee-Owner Great Hires Amplify Ownership Culture Stronger Together: Building Support For Employee Ownership Own Your Job: The Advantages of Becoming An Employee-Owner The promise of employee ownership is simple: if you work for a good company and put your time in, you will be treated well. First and foremost, there’s the opportunity to build life-changing wealth building. Looking across our Members, employee-owners tend to receive an allocation of company stock worth between 5% - 15% of their annual salary, an average dollar value of around $5,000/year. Stock allocations cost employee-owners nothing and generally come on top of the usual benefits. Employee-owners also see increased job stability and career growth. Companies exist to benefit their owners, so a company that is owned by its employees is going to approach big decisions a bit differently. For example, during the COVID-19 pandemic, employee-owned firms were three times more likely to retain staff. We also see companies investing in their employee-owners with training and education. Finally, many employee-owned businesses prefer to grow leadership through internal promotion, creating greater career opportunities. Perhaps the most immediate benefit of working at an employee-owned company is being a part of an ownership culture. Broad-based ownership creates alignment up and down a company. It increases engagement, strengthens bonds, deepens relationships, and creates an elevated sense of accountability. The result is a more motivated and effective team working together towards a common goal. Best of all, it’s a benefit that a new employee experiences the first day they walk in the door. If the benefits of employee ownership sound good to you, you’re not alone. In nationally representative opinion surveys, we’ve found that 3 out of 10 job seekers would be more likely to apply to a job if they learned the company is employee-owned. But there’s an issue: how would you go about finding a job at an employee-owned company? Employee-Owned Jobs solves this issue by aggregating over 8,500 open positions, making it easy to become an employee-owner. Great Hires Supercharge Ownership Culture Hiring great people can strengthen any company’s culture and create a tremendous competitive advantage. Engaged employees put in more effort, are better team members, and care more about the customer. A recent meta-analysis from Gallup found that teams scoring in the top quartile on engagement had 10% higher customer loyalty, 23% higher profitability, and 18% lower turnover. Hiring great employee-owners creates a positive feedback cycle that supercharges engagement. Motivated new hires will put more energy into getting up to speed, will be less likely to leave in the crucial ramp-up period, and will be faster to understand the benefits of employee ownership. The energy they bring will boost culture, which in turn will make it easier to attract more of the right candidates. Employee-owned jobs is the only place to find a wide variety of jobs at employee-owned companies. That means it’s also the best way to tap into an applicant pool that is excited about employee ownership. Users find us through a variety of channels. Maybe they have already worked at an employee-owned company. Perhaps they know someone who has benefited from an ESOP. Or maybe the idea just strikes a cord deep inside. Whatever the case, the pull is real: in the first three months we’ve had over 19,000 users and we’re just getting started with our promotion. Stronger Together: Building Support For Employee Ownership Making it easy to hire great employee-owners is the next step towards our vision of building an employee-owned economy. Over the past six years we’ve grown our network to 600+ Members and a simple theme has emerged: we’re stronger together. To date, a number of companies have done a great job talking about employee ownership on their careers pages, in interviews, and on job offers. But what has been missing is a comprehensive effort to drive massive awareness and interest. With Employee-Owned Jobs, we’re able to mount this campaign. We’ve begun by promoting EO Jobs within the employee ownership community. In Q4, we will begin outreach to 1,462 community colleges and 7,271 trade schools across the United States. We will equip career centers with resources to share the advantages of employee ownership, we will participate in webinars, and we will drive massive interest in becoming an employee-owner.

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Six Years, Six Hundred Members

September 13, 2023

It feels like just yesterday that Kramer and I sat down to talk about the idea that would grow into Certified Employee-Owned. As we celebrate our six-year anniversary, we're filled with gratitude and amazement at how far we've come. From humble beginnings with twenty eight Founding Members, to a thriving community of six hundred, the evolution of Certified EO has been a testament to the power of employee ownership and the unwavering commitment of our Members. Inception and Growth We launched Certified EO in 2017 with a simple vision: use certification to define, organize, and amplify employee ownership. We believed wholeheartedly in the potential of employee-owned companies to transform not just businesses, but entire economies. Inspired by the success of programs like Great Place to Work and B Corporation, we saw certification as a proven model to build support for and grow employee ownership. Fast forward to today, and the numbers astound us. From that humble group of twenty-eight, we've grown to a remarkable six hundred Members. They aren't just numbers on a page; they represent the individuals, the teams, and the families who have chosen a different path for their businesses. Our Membership is a tapestry woven with stories of dedication, hard work, and the desire to create lasting legacies. Sharing Ownership Stories Our journey over the past six years has been about more than just accumulating Members; it's been about sharing helping companies share their ownership story. Employee ownership isn't just a business model, it's a belief that when employees are empowered and have a stake in the success of their company, magic happens. We’re proud to work directly with our Members to provide them the tools and playbook they need to build a culture of ownership. The larger our network grows, the more we are able to amplify the voice of our Members. Certification makes employee ownership easy to understand, and getting certified makes it easy to join forces with 600+ companies building a brand together with our Certification Mark. As our network has grown and national brands like Litehouse and WinCo Foods have backed our brand, we have created a powerful tool that our Members can use to stand out as a great employee-owned company. There’s a similar dynamic with our Directory of Employee-Owned Companies. The Directory is the only place to find an up-to-date list of every employee-owned company in America and it has become a go-to resource for people looking to get involved in the space. We’ve heard of people using our Directory to simply explore employee ownership, to network with other other employee-owned companies, and even to explore potential suppliers. The transparency and accuracy of our Certification data that powers the Directory has led to a partnership with the Healthcare Anchor Network to help over 1,000 hospitals identify procurement opportunities with employee-owned companies! Recently we took another step to amplify the voice of our Members by launching Employee-Owned Jobs, the only job board focused on open positions at employee-owned companies. With over 8,500 active listings, we’re making it easy for our Members to hire great employee-owners. We’re currently connecting with community colleges, trade schools, and workforce development centers to educate job seekers about the benefits of becoming an employee-owner. Looking Forward: Uniting Purpose and Potential If the past six years have taught us anything, it's that the potential growth and impact of employee ownership is boundless. Going forward we're committed to deepening our impact. We will continue to provide resources, guidance, and a platform for knowledge-sharing among our Members. We will grow our reach and our ability to promote employee ownership. Our commitment to amplifying the voice of the employee ownership movement will remain unwavering. We believe in a future where employee-owned companies aren't the exception, but the norm, and we’re excited to build that future in partnership with our Members.

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The Top 25 Cities for Employee Ownership 2023

August 23, 2023

We’re excited to announce the release of The Top 25 Cities for Employee Ownership for 2023! Our second annual list showcases the cities in America that have successfully fostered a positive environment for employee ownership to thrive. Collectively, this year’s Top 25 Cities are home to 726 employee-owned companies. From small towns to large metros, these cities range in size from 23,000 people to over 2 million. They represent 17 states - 2 more than last year - with a range of cultures and political orientations. The diversity of cities in the Top 25 shows the broad appeal of employee ownership. Employee ownership changes the relationship between business and community. When employees have an ownership stake, companies become rooted in their communities. The wealth they build flows through the local economy, the jobs they create are more stable, and they become more involved in service. Employee ownership is a win for workers, businesses and communities. Our list is the result of a comprehensive effort to identify every employee-owned business in America, including Employee Stock Ownership Plans (ESOPs), Worker Cooperatives, Employee Ownership Trusts (EOTs), and broad-based equity compensation plans such as stock options. By combining our unique certification data with government fillings, news articles, website visits, and direct phone conversations we have curated the only up-to-date list of every employee-owned company in America. Our ranking of the Top 25 takes into account the number of employee-owned companies, their concentration relative to the city’s population, and the portion of companies that have recently become employee-owned. We restrict ourselves to all cities with at least five employee-owned companies. Our methodology creates a balanced list that puts every city on an even playing field. If you’re curious to see how many employee-owned companies are in your town, search your city in our Directory of Employee-Owned Companies. #1 - HARRISBURG, PENNSYLVANIA The capital of Pennsylvania, Harrisburg is the #1 city for employee ownership in 2023! Harrisburg is home to 15 employee-owned companies, including HB Global and Touch of Color Flooring. With a population of 58,320, Harrisburg has one employee-owned company for every 2,536 residents. Legislation has recently been introduced that would create resources for employee ownership. The legislation, LPRO 3835, also known as The Employee Ownership Assistance Program, would establish an office for employee ownership, as well as provide assistance to businesses converting to employee ownership. #2 - BERKELEY, CALIFORNIA Known for all things counter-culture, Berkeley is the #2 city for employee ownership. Home to 25 employee-owned companies, including Mal Warwick Donordigital, Alternative Technologies, Biofuel Oasis, Drought Smart Collective, and Heartwood Custom Woodworking. Berkeley continues to be a hub for employee ownership and worker cooperatives. In September 2022, California passed SB 1407, The Employee Ownership Act, to expand employee ownership in California. The law will establish a dedicated office for employee ownership. The law will aid existing businesses transition to employee ownership, while also expanding other employee-owned ventures, whether through new startups or aid provided to current employee-owned firms. The employee ownership office’s work encompasses ESOPs, worker cooperatives, and various other models. #3 - CINCINNATI, OHIO Sitting on the Ohio River, Cincinnati is the #3 best city for employee ownership and is home to 38 employee-owned companies, including Al. Neyer, Intrust IT, Ohio Valley Electrical Services, Parallel Technologies and The Motz Corporation. Top industries for employee ownership in Cincinnati include IT consulting, manufacturing, electrical contractors, and wholesalers. Cincinnati is also home to Co-Op Cincy, a non-profit organization that specializes in worker cooperatives. With a population of 304,548, Cincinnati has one employee-owned business for every 8,460 residents. #4 - FAIRFAX, VIRGINIA Just outside of the nation’s capital, Fairfax, Virginia is the #4 best city for employee ownership. Fairfax moved up 10 spots from 2022! Fairfax is home to 13 employee-owned companies, including Highlight Technologies, Miklos Systems, Bishop Equipment Company, and Foxhole Technology, Inc. With a population of 23,429, Fairfax has one employee-owned company for every 1,802 residents, making it the smallest city on the list. Major industries for employee ownership in Fairfax are consulting and engineering. #5 - MINNEAPOLIS, MINNESOTA Minneapolis rounds out the Top 5 as the #5 overall city for employee ownership! With 45 employee-owned companies, including Swanson & Youngdale, H2I Group, Kurt Manufacturing Company, Alliant Engineering, and Intuitive Technology Group. The city has taken an active approach to fostering employee ownership. In 2016, it expanded its Business Technical Assistance Program (B-TAP) to include services aimed at supporting the development of new Minneapolis co-operatives by offering feasibility training and technical assistance for businesses interested in converting into a cooperative. #6 – HONOLULU, HAWAII The state capital and largest city in Hawaii, Honolulu is the #6 best city for employee ownership. Honolulu is home to 37 employee-owned companies, including Generator & Power Systems LLC, Island Pacific Distributors, Roberts Hawaii, and The Solaray Corporation. Honolulu moved up 5 spots from the 2022 list! Top industries include engineering, wholesale, and HVAC services. A collaboration with Kaiser Permanente, Project Equity and Obran Cooperative, created the Business Resiliency Through Employee Ownership initiative to help improve economic health. One goal of this initiative is to provide resources for small businesses to transition to employee ownership. #7 – GRAND RAPIDS, MICHIGAN Located just east of Lake Michigan, Grand Rapids is the #7 best city for employee ownership, up from #12 on the 2022 list. Grand Rapids is home to 28 employee-owned companies, including Custom Profile, Progressive AE, Dorner Works, and Watkins Ross & Company. Employee Ownership Expansion Network (EOX) received a three year grant specifically focused on identifying businesses in the Grand Rapids and greater Kent County with owners that are near retirement to educate them on the benefits of employee ownership as an exit strategy. In turn, they hope to keep more businesses local while creating more employee-owners. #8 – HUNTSVILLE, ALABAMA Huntsville, Alabama is the #8 city for employee ownership in 2023, up 5 places from 2022. The most populous city in Alabama, Huntsville is home to 22 employee-owned companies, including Inline Electric Supply, Ignite, OASYS, Inc, Pinnacle Solutions, Radiance Technologies and Torch Technologies. Top industries for employee ownership in Huntsville are engineering, defense contracting, aerospace, and IT consulting. From introducing a state center to proposed legislation, there’s lots of interest in expanding employee ownership throughout the state. The Sand Mountain Cooperative Education Center for example, is working toward cooperative institutions to expand and strengthen worker-ownership. #9 - ST. LOUIS, MISSOURI St. Louis, Missouri is the #9 city for employee ownership in 2023. The gateway to the west, St. Louis is home to 31 employee-owned cities, including Balke Brown Transwestern, Roeslein & Associates, USA Mortgage. Top industries for employee ownership include real estate, construction, and engineering. With a population of 297,645 residents, St. Louis has one employee owned company for every 9,922 residents. #10 - WALNUT CREEK, CALIFORNIA Walnut Creek, California is the #10 best city for employee ownership for 2023, rounding out the top 10! Walnut Creek is home to 12 employee owned companies, including Brown and Caldwell, InVision Communications, and moved up 11 spots from 2022, MKA International, Inc., Davis Home Pros, and Skyline Capital Builders, LLC. Walnut Creek has a long history of employee ownership. Brown and Caldwell is one of the older ESOPs in the country as they established their program in 1962 — that’s over 60 years of being employee-owned! #11 - OAKLAND, CALIFORNIA Oakland, California is the #11 best city for employee ownership in 2023. Known as “The Town,” Oakland is home to 39 employee owned businesses, the 8th most of any city. Companies in Oakland include MN Builders, Menke & Associates, Monterey Mechanical, and Paramount Export Company. Oakland is also home to a number of non-profit organizations that promote employee ownership, including the National Center for Employee Ownership and The Democracy at Work Institute. #12 – DUBLIN, OHIO Dublin, Ohio is the #12 best city for employee ownership for 2023, their first appearance on our list and the second city in Ohio to make the list! A suburb of Columbus, Dublin is home to 10 employee owned companies which include Parallel Technologies, FST Logistics, Ulrey Foods, Ruscilli Construction, and VARGO solutions. Co-Op Columbus supports the Central Ohio community to help worker-owned and shared-equity cooperatives thrive. #13 - ATLANTA, GEORGIA Atlanta, Georgia is the #13 city for employee ownership in 2023 and the second city to be ranked from Georgia. The capital of Georgia, Atlanta is home to 38 employee-owned companies, including 1910 Legacy Enterprises, Benning Construction Company, Ogden Forklifts, and Prestwick Construction Company. Atlanta is also home to the Georgia Center for Employee Ownership which aims to create more employee owners throughout the state by providing resources about the benefits of employee ownership. #14 – DENVER, COLORADO Denver, Colorado is the #14 best city for employee ownership for 2023! The Mile High City is home to 43 employee owned companies - making it the #3 city for total number of EO businesses, which include Progressive Retail Management, Bow River Capital, Logisticsflow, and Truce Media. The state’s capital also hosts the nation’s first permanent office for employee ownership which is a division of The Office of Economic Development & International Trade (OEDIT). The Colorado Employee Ownership Office offers resources for businesses who are considering employee ownership models. One of which is a grant to help offset the costs of transitioning to employee ownership. #15 – SPRINGFIELD, ILLINOIS Springfield, Illinois is the #15 best city for employee ownership. The state’s capital has 13 employee owned companies including Andrews Engineering, Henson Robinson Company, M.J. Kellner, and Springfield Electric Supply. With a population of 113,671, Springfield has one employee owned company for every 9,473 residents. #16 – FARGO, ND Fargo, North Dakota is the #16 city for employee ownership in 2023! The state’s most populous city, Fargo is home to 33 employee-owned companies, including Dakota Supply Group, OK Tire Store, and Fargo Glass & Paint Company. With a population of roughly 125,000, Fargo has one employee-owned company for every 4,800 residents. Top industries for employee ownership in Fargo include distribution, manufacturing, and engineering. #17 – SAN FRANCISCO, CALIFORNIA San Francisco is the #17 city for employee ownership in 2023. “The City by the Bay” is home to 57 employee-owned companies, making it #2 in terms of total number. , including Recology, Inheritance Funding Company, Matarozzi Pelsinger Builders. Recology Is one of the largest employee-owned companies from the list with just under 4,000 employees. The City and County of San Francisco and the San Francisco Small Business Development Center are partnering with Project Equity to educate locally owned businesses on the advantages of converting to employee ownership. San Francisco was also part of the Democracy at Work Institute’s 2019-2020 Shared Equity in Economic Development (SEED) Fellowship, an initiative focused on creating worker cooperatives. #18 – YORK, PENNSYLVANIA York, Pennsylvania is ranked #18 for employee ownership in 2023, up from #24 in 2022. The second city to be ranked from Pennsylvania, York is home to 9 employee-owned companies, including Weldon Solutions, Flnchbaugh, and Minnich’s Pharmacy. With a population of 43,907, York is also the second-smallest city on our list. York has one employee-owned company for every 5,488 residents. Top industries for employee ownership in York are engineering, HVAC, and manufacturing. #19 – BOULDER, COLORADO Boulder, Colorado is making its first appearance on the list as the #19 best city for employee ownership. The second city ranked from Colorado, Boulder is home to 11 employee owned companies which include Civic Consulting Collaborative, Namaste Solar, and Flatirons Bank. With a population of 107,645, Boulder has one employee owned company for every 9,786 residents. #20 – PORTLAND, OREGON Portland, Oegon is the #20 best best city for employee ownership in 2023. Known as the “City of Roses,” Portland is home to 37 employee-owned companies including Cascade Energy, Breakside Brewery, DKS Associates, Durham & Bates Insurance, and Hunter-Davisson all call Portland home. Top industries for employee ownership in Portland include architecture, engineering, and construction. #21 – IRVINE, CALIFORNIA Irvine, California is the #21 best city for employee ownership in 2023 - making it the fifth (but not final!) city from California to be ranked. There are 17 companies that are headquartered in Irvine including Bivar, Inc., International Education Corporation, MAAS Companies, and Murow Development Consultants. With a population of 283,700, Irvine has an employee owned company for every 16,688 residents. #22 - LYNCHBURG, VIRGINIA Lynchburg, Virginia is ranked #22 for employee ownership in 2023. Lynchburg is the second city from Virginia ranked on this year’s list and to 14 employee-owned companies, including Electronic Design & Manufacturing, Scott Insurance, and Wiley & Wilson. Lynchburg is one of just nine cities in the Top 50 for both the total number and per capita number of employee-owned companies. Top industries for employee ownership in Lynchburg include insurance, engineering, and HVAC services. #23 – SEATTLE, WASHINGTON Seattle, Washington is the #23 best city for employee ownership in 2023, a newbie to the list. There are 32 employee owned companies headquartered in The Emerald City including Charlie’s Produce, Harris Group, and PRR. Earlier this year, Washington’s governor signed a bill that would expand employee ownership resources. This new law will establish a state employee ownership program to promote ESOPs, worker cooperatives, and Employee Ownership Trusts (EOTs). This law can also provide a revolving loan fund to directly support the costs of transitioning to an employee ownership model. #24 – SAN DIEGO, CALIFORNIA San Diego, California is the #24 best city for employee ownership and the fifth (and final) city to be ranked from California. This SoCal city is home to 45 employee owned companies, including, ATA Engineering, Carrier Johnson, Epsilon Systems Solutions, Pegasus Clean, Quartus Engineering, Torrey Pines Landscape, and Western Lighting. In 2021, The Workforce Partnership released a study that revealed employee owned businesses throughout San Diego are more resilient and profitable than private companies. #25 – HOUSTON, TEXAS Coming in at the #25 best city for employee ownership, Houston, Texas is the final city on the list. Houston is home to 62 employee owned companies including Access Sciences Corporation, Pieper-Houston Electric LP, Stress Engineering Services. Houston is #1 for the number of employee owned companies and total population. We are proud to showcase the cities in America that have done the most to foster a positive environment for employee ownership. These cities are setting the standard for how to encourage employee ownership. At Certified Employee-Owned, we will continue to update our Directory of Employee-Owned Companies and create visibility for successful approaches to building an employee-owned economy. With a population of just over 2 million, Houston has one employee owned company for every 37,357 residents. Note: All data on the number of employee-owned companies comes from the Certified Employee-Owned Directory as of 7/28/2023. All data on city populations comes from the U.S. Census Bureau for the year 2020.

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The #1 Best Practice For Building Ownership Culture

July 14, 2023

Every company wants to best engage their employees. When it comes to engagement, employee-owned companies have a secret weapon: building an ownership culture. If done correctly, an ownership culture unleashes people’s full potential by creating an environment where everyone can think and act like an owner. Companies see increased growth and profitability while employees experience a better day-to-day environment and wealth building through ownership. Our experience working with 575 employee-owned companies for over five years is that the number one best practice for building an ownership culture is cultivating a dedicated group of internal champions who are passionate about employee ownership. These champions are typically organized and empowered by the organization through the creation of an Employee Ownership Committee. This article outlines Certified EO’s perspective on creating and running a successful Employee Ownership Committee including: Getting Started With The Right People Structuring & Training Your Committee Introducing Your Committee Keeping Your Committee On Track Getting Started With The Right People What is a committee? It’s group of at least three people focused on a specific and shared goal. The key in the beginning is to start small. It’s better to have fewer people with higher average engagement. One way to find your initial members is to reach out to your workforce to let them know that you are starting an Employee Ownership Committee and provide easy ways for them to apply. It’s also fine to hand select people who you feel are passionate about employee ownership. Generally it’s nice to have your committee broadly represent the company. It’s better to have people from different levels within the company, and if your workforce is distributed across multiple locations, you might consider having a committee member from each location. But you have to start somewhere. Our recommendation is to focus on finding at least three people who truly understand employee ownership, and then build from there over time. Structuring & Training Your Committee In our experience, successful committees have leadership buy-in but are led by employee-owners. Once your committee is established, you’ll want to create a committee charter and by-laws to align on goals and expectations. Typically, this involves aligning on a mission statement, deciding on term limits, clarifying responsibilities of committee members, and defining leadership roles such as chair and vice chair. The consensus among our Members is that it’s best for the chair to come from the rank and file of the company, but it’s okay for the inaugural chair to be a member of management or leadership to ensure the committee gets off to a strong start. Your committee members should feel confident answering questions about your employee ownership. Your first few meetings as a committee might need to be spent entirely on educating the committee members, but this will be a worthwhile investment because the more knowledgeable your committee, the more successful they will be at building your ownership culture. Providing your committee with a budget will multiply their impact. Even though the committee should be run mostly by employee-owners, working with leadership will be key to ensure alignment and resource availability. Many Employee Ownership Committees have an executive sponsor who can advocate for the committee’s budget each year. Introducing Your Committee Your committee should be visible and accessible. Be sure to introduce the committee so employees know who to reach out to for questions. The committee announcement is also a good time to let your employee--owners know that they can expect more regular communication about employee-ownership. This is also a great time to remind your employees that, as owners, everyone at your company has a stake in the outcome. This way the committee announcement reinforces a key message about employee ownership. To make the committee accessible, we recommend creating a committee-specific email that employees can email with questions that anyone from the committee can answer. Many of our Members have seen great results from setting up office hours, where one or multiple committee members are available at a regular time (in-person or virtually) so that employee-owners can drop-in with questions. Even if nobody comes by, it’s nice for people to feel supported. Keeping Your Committee On Track Starting a committee is just the beginning of building a strong ownership culture. Maintaining a successful committee over time can be challenging. It’s important to keep things fresh. Rotate themes, responsibilities and committee roles so that your committee members stay interested and engaged. Consider adding new members annually, but always be sure to prioritize passion. Creating an annual communication plan is another way to keep your committee on track. Align on a theme for the year, decide on the right number of touchpoints, and identify who is responsible for each. A common pitfall is for the Employee Ownership Committee to become the party planning committee. An annual event is a great idea, but make sure your committee is focused on building your ownership culture throughout the year. The goals of your committee should change over time with your company and your employee-owners. In the beginning, your committee might be focused on building a strong foundation of EO basics. But over time the needs might evolve as understanding grows. At Certified Employee-Owned, we help guide our Members through this evolution while providing them the tools and playbook they need to share their ownership story. You can learn more about our work here.

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6,237 ESOP Companies in America: A Deep Dive on the Department of Labor (DOL) 5500s

June 12, 2023

The Department of Labor Form 5500s are the most commonly cited source of information on Employee Stock Ownership Plans. If you are part of the employee ownership community, have been to a conference, or even just read an overview of the employee ownership space, you have likely seen statistics derived from the 5500s. For example, there are around 6,237 Employee Stock Ownership Plan (ESOP) companies in the US with roughly 14 million participants. The 5500s are certainly an important source of information for the employee ownership community. But they also have a fundamental limit: not all ESOPs are employee-owned, and many employee-owned companies don’t have an ESOP. As every business person knows, if you want to grow, you have to measure what matters. Getting an accurate count of the number of employee-owned companies in America requires a simple standard that applies across all ownership structures. Our certification provides just such a standard. Despite their shortcomings, the 5500s remain a vital source of information on employee ownership. This article will give you a crash course including: What exactly are the Department of Labor (DOL) 5500s? 6,237 companies with an ESOP The 10 largest ESOPs in 2020 Certification measures what matters Appendix: how to download the ESOP dataset What Exactly Are the Department of Labor (DOL) 5500s? The Department of Labor oversees employee benefit plans created by the Employee Retirement Income Security Act of 1974 (ERISA), including Simplified Employee Pension Plans (SEPs), Profit Sharing Plans, 401(k)s, and ESOPs. Any company maintaining one or more of these plans is required to report key plan information to the DOL on an annual basis via the Form 5500. The DOL maintains a public archive of fillings going back to 1999, and anyone can access the data directly. For advocates of employee ownership, the data have a few challenges. Companies can apply for extensions and submit updated fillings, which creats duplicates. As with all self-reported information, some variables are extremely noisy. Collection takes quite a bit of time, so complete DOL fillings come out on an approximate two-year lage. Finally, companies with an ESOP are not required to report the total percent of the company owned by their employees, so there’s no way to tell how much of the company is owned by the ESOP. 6,237 Companies With an ESOP As of June 2023, the most recently available and complete DOL filling is the 2020 vintage (see Appendix for more detail). If you download the files from the DOL website, you will be struck by the size. You can open the CSV in excel but your computer might need some time to think because the file contains over 248,000 rows. Did the number of ESOPs increase dramatically? Unfortunately not. The file is much larger than the number of ESOPs because, as mentioned above, all employee benefit plans are required to submit an annual Form 5500. Selecting all fillings with an ESOP yields 6,603 rows. Added together, these fillings report 14,150,373 total participants and 10,304,341 active participants. But some companies have submitted multiple fillings. Others indicate a plan year that is well before 2020, in one case as early 2000. Ignoring these and counting only unique EINs we find 6,237 companies reporting 13,321,687 total participants and 9,755,354 active participants. The 10 Largest ESOPs in 2020 Sorting this list by number of active participants we can get a sense for the 10 largest companies with an ESOP: Company Active Participants WALMART INC. 1,689,489 THE HOME DEPOT, INC. 424,733 CVS HEALTH CORPORATION 237,061 LOWES COMPANIES, INC. 305,280 TARGET CORPORATION 356,847 WELLS FARGO & COMPANY 340,353 BANK OF AMERICA CORPORATION 283,172 COSTCO WHOLESALE CORPORATION 184,379 JPMORGAN CHASE BANK, NATIONAL ASSOCIATION 271,120 AT&T INC. 281,286 Total 4,373,720 To members of the employee ownership community, this list is probably surprising. These aren’t the companies that come to mind when we think of large, employee-owned businesses. It helps to remember that companies with a wide variety of employee benefits plans are required to file a Form 5500. These companies are likely checking the ESOP box because they have an Employee Stock Ownership Plan that owns a small portion of the company, in addition to the many other employee benefit plans they offer (Walmart, for example, indicates 8 plan types). It might even be a legacy plan that is inactive. Due to the aggregate nature of the 5500s, it’s difficult to tell. Certification Measures What Matters The data quality issues highlighted above might cause some doubts about the reliability of the DOL 5500s. But the list of the 10 largest ESOPs points to a more fundamental issue: there’s a difference between ESOP and employee-owned. While they are a useful source of information, ultimately the DOL 5500s cannot tell us the number of employee-owned companies. Accurately measuring the size of employee ownership requires a definition of “employee-owned” that can be applied to any company. Certification provides many benefits, including a consistent standard that enables an accurate count of employee-owned companies. And as every business person knows, you have to measure what matters in order to create growth. At Certified EO, we have spent the past five years creating the infrastructure required to accurately count the number of employee-owned companies in real time. We have consolidated the publicly available sources of data of employee ownership, resolved the data issues, verified key variables by hand, and supplemented the raw data with critical information like the percent of the company owned by employees. The result of thousands of hours of work is our Directory of Employee-Owned Companies. The Directory provides an up-to-date number of employee-owned companies that changes as soon as we learn new information. It also transparently lists every employee-owned company and facilitates exploration through search and filters. The good news is that there are more employee-owned companies than companies with ESOPs! As of June 9th, 2023, our Directory lists 6,390 employee-owned companies, more than the number of companies with ESOPs listed in the 2020 DOL fillings. Using data collected during our certification process we estimate that employee-owned companies employ between 2 million to 3 million Americans. These numbers represent a more accurate measure of employee-owned companies and are a starting point for growth for our community. Appendix: Step-By-Step Instructions for Downloading the ESOP Dataset Go to the Form 5500 Datasets page on the Department of Labor website. Choose which year of data to download. In my experience, data sets are completed in the Fall on a 2-year lag According to the DOL, Go to the Form 5500 Datasets page on the Department of Labor website. Choose which year of data to download. In my experience, data sets are completed in the Fall on a 2-year lag According to the DOL, companies are required to file on “the last day of the seventh month after the plan year ends (July 31 for a calendar year plan),” but it seems like it takes a while for submissions to end up in the public data. For example, on June 12th, 2023 I downloaded the 2021 fillings and found roughly 6,100 entires for ESOPs. Either the number of ESOPs dropped dramatically from 2020 to 2021 or, more likely, the dataset is still being completed. Based on past years, I would expect that to happen in October of 2023 for the 2021 fillings. Open the data and filter for ESOPs using the TYPE_PENSION_BNFT_CODE variable Values of 2O, 2P, and 2Q correspond to non-leveraged ESOP, leveraged ESOP, and S corporation ESOP, respectively. Notice that companies will often have more than one plan type, it might be helpful to create a formula that returns true if the TYPE_PENSION_BNFT_CODE variable contains one of the ESOP indicators. After filtering you should see around 6,600 rows of data for the 2020 fillings, but be mindful of duplicates and late fillings. Sort by size (TOT_PARTCP_BOY_CNT) to begin your exploration.

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Which States & Industries Are Best For Employee Ownership?

May 3, 2023

Everyone involved in employee ownership has a responsibility to strengthen our community. Advocates, service providers, trade organizations, businesses, and employee-owners all benefit when our ranks increase. But to grow successfully, we must understand where employee ownership thrives.In this article, we combine our certification data with data from the US Census Bureau to analyze where there are a surprisingly large number of employee-owned companies. Looking at company size, industry, and headquarters location, we find insights that will help our community grow:Manufacturing, Professional Services, and Construction are the top industries for EO. Combined they have almost 600,000 non-EO firms, which means focusing on these sectors seems like the biggest growth opportunity for employee ownership. 100 - 500 employees looks like a sweet spot for employee ownership. It also represents a large growth opportunity with roughly 93,000 non-EO firms and over 18 million employees.10 - 20 employees has far fewer employee-owned firms than baseline, likely due to limits of current structures. With over 640,000 non-EO firms it represents a big opportunity to grow firm numbers (less so employee numbers), but this requires new EO structures such as Direct Share Ownership.Vermont, North Dakota, Maine, Iowa, Hawaii are the top states for EO by concentration. Together these states have around 67,000 non-EO firms with more than five employees, which makes it a smaller opportunity in terms of raw numbers. But efforts in these states will benefit from dense networks of peer firms that can advocate for employee ownership.California, Pennsylvania, and Ohio are the largest states (by number of firms) with an above-baseline level of employee-owned companies. This represents an alternative geographical approach that might yield more potential conversions because combined these three states have over non-EO 480,000 businesses.Details on our methodology and additional findings are below.‍Data on Employee-Owned and US CompaniesTo understand where employee ownership thrives, we must have a detailed understanding of both the number of employee-owned companies and the number of all US businesses. Looking at only the raw number of employee-owned companies can be misleading because it ignores baseline concentration. For example, if 5% of employee-owned companies were in a particular state, we would interpret that differently if 10% or 1% of all businesses were in that state.Data on employee-owned companies comes from our Directory of Employee-Owned Companies, an up-to-date list of all businesses that meet our standards of significant, broad-based employee ownership. We pulled the numbers on March 1, 2023 and in some cases we supplemented our information with 3rd party sources. Data on all US businesses come from the Census Bureau’s Statistics of US Businesses (SUSB). At the time of our analysis the most recently available series was the 2019 data set. ‍Employee-Owned Companies By Ownership StructureThere are a number of different ways a company can be employee-owned. The following table breaks down the number of employee-owned companies by ownership structure:By far, the most common structure is the Employee Stock Ownership Plan (ESOP), accounting for roughly 90% of employee-owned companies. Worker cooperatives are the second most common structure, followed by a few emerging structures that are small but have the potential for rapid growth. Direct Share Ownership in particular is showing promise as the best structure for companies with fewer than 30 people, including newly formed businesses. Due to the emerging nature of these structures, our numbers are best thought of as lower bounds. All told there are at least 6,416 employee-owned companies in America. ‍Employee-Owned Companies By SizeUsing information collected during our certification process to project the number of employees at every employee-owned company, we can analyze the size distribution:It’s important to note that the distributions are censored to exclude firms with fewer than 10 employees. The purpose is to focus on companies that have a substantial number of non-founder employees, which is the relevant comparison group for employee ownership. The chart clearly shows that employee-owned companies skew larger than baseline. There are fewer in the 10 - 20 size bucket, with 48.9% of all firms in this range but just 12.7% of employee-owned companies. The two distributions are in the same ballpark for 20 - 100 employees. But all buckets greater than 100 employees have far more employee-owned companies than baseline. Roughly a third (32%) of employee-owned companies are in the 100 - 500 range, 4.4x the baseline of 7.2%. We see a similar trend in the 500 - 1,000, 1,000 - 2,500 and 2,500+ categories. The simplest explanation for the skewed distribution comes from the well-known fact that ESOPs generally don’t work for small companies. The cutoff varies depending on who you ask, but is broadly stated to be between 20 and 40 people. Given that 90% of employee-owned companies have an ESOP, that would explain the skew. There are two implications for growing employee ownership. First, if you’re doing ESOPs, focus on firms with at least 100 people. The large difference in concentrations leads us to think that the 100 - 500 size range in particularly good. According to the SUSB this range has 94,957 total firms with 18,612,620 employees, which makes it a sizeable growth opportunity.Second, there is probably a huge opportunity to create and promote structures that work for firms too small for an ESOP. The 10 - 20 size range has 640,827 firms in the 2019 SUSB, but we estimate just 712 employee-owned companies. In my opinion, Direct Share Ownership models using stock options are the most promising opportunity here.‍Employee-Owned Companies By Industry‍Next we can use the North American Industry Classification Systems (NAICS) to look at the distribution of employee-owned companies by industry:‍Three data notes. First, while NAICS is included in the DOL 5500 data for ESOPs, it is extremely messy. We have gone through and recategorized the industry information for all 6,300+ companies in our database. Second, we exclude the “Finance and Insurance” category for this analysis because there are a large number of community banks with a small ESOP (below our 30% threshold) that we are still cleaning. Finally, again we exclude small firms, this time those with fewer than five employees.Three sectors, Manufacturing, Professional Services, and Construction, account for nearly half of all employee-owned companies (48.7% combined). All three sectors far exceed the baseline distribution, but Manufacturing in particular stands out with 2.7x the expected concentration. These industries likely represent a substantial growth opportunity for our community. In the 2019 SUSB there are 144,201 Manufacturing firms, 213,955 Professional Service firms, and 242,885 Construction firms. Converting and additional 1% of each of these industries would roughly double the number of employee-owned companies. The importance of the baseline analysis are clear when looking at Retail Trade. On an absolute basis this is the 5th largest sector for employee-owned companies. But the concentration is 48% lower than baseline. There are three sectors that jump out as particularly challenging for employee ownership. Health Care, Accommodation & Food Services, and Other Services (details on this category can be found here). While there are employee-owned companies in each of these sectors, they all lag the baseline substantially. These industries account for 39.6% of all businesses but just 3.4% of all employee-owned companies. There are two ways to interpret this lag. There might be something about these sectors that makes it difficult to be employee-owned, or these might be industries where there are missed opportunities. A good starting point might be to connect with the employee-owned companies who do operate in this sector to get their thoughts on what is driving this trend. ‍Employee-Owned Companies By StateWe can use the headquarters location of each firm to look at concentration by State. Again we focus on firms with at least 5 employees:‍California, New York, and Texas are the top three states for total number of employee-owned companies with 13.4%, 5.5%, and 5.2% respectively. But again the baseline analysis provides a more nuanced picture. Both New York and Texas have a lower share of employee-owned companies than expected given their share of all businesses. The implication is that these states might not actually be as opportune for employee ownership as the raw numbers imply.In terms of concentration relative to baseline, the top states for employee ownership are: Vermont (3.0x baseline)North Dakota (2.5x baseline)Maine (2.3x baseline)Iowa (2.2x baseline)Hawaii (2.0x baseline)Together these states account for 6% of all employee-owned companies but just 2.7% of all companies. Together they represent 67,348 total firms with more than five employees, many of which will have peers or neighbors that are employee-owned. Another approach to geography is to look at the largest states with an above-baseline level of employee-owned companies. This would suggest California (1.1x baseline), Pennsylvania (1.1x baseline), and Ohio (1.4x baseline) are the places to focus. This approach might yield more conversions because these three states have over 480,000 businesses with at least 5 employees.The states with the lowest number of employee-owned firms relative to baseline are Delaware (18%), Rhode Island (44%), Nevada (45%), New Jersey (45%), and Florida (48%). Again the interpretation here is a complex. Perhaps there is something about these states that discourages employee ownership, or perhaps these states simply represent opportunities to bring employee ownership up to par. The only way to know for sure is by contacting some of the 267,410 businesses in these states to see how many are interested in exploring employee ownership.

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How Certification Protects and Grows Employee Ownership

March 31, 2023

Employee ownership is an exciting idea that has the potential to address some of our country’s biggest challenges. By changing the relationship between company and employee, employee ownership helps workers build wealth, creates a better day-to-day environment for employees, and makes companies more successful. But the employee ownership community also faces challenges that impeded our growth. Employee ownership can be confusing and hard for people to understand. Worse, the goodwill that we have created is threatened by pretenders because any company can call themselves employee-owned. By setting a standard that people know and trust, Certified EO plays a unique role in helping our community overcome these issues. By making employee ownership easy to understand, building trust, and protecting our goodwill, certification benefits everyone in the employee ownership (EO) community including companies, trade organizations, lobbying groups, research hubs, state centers, service providers, and most importantly employee-owners. Certification Makes Employee Ownership Easy to Understand The details of employee ownership can be confusing to insiders, let alone someone with no prior knowledge. There are many different structures - ESOPs, Worker Cooperatives, Employee Ownership Trusts, and Direct Share Ownership - each with their own nuances. For example, ESOPs have allocations, contributions, vesting, valuation, distributions, and forfeitures. From a technical point of view the details are critical, but for most people they are overwhelming. Certification makes employee ownership easy to understand. Our standard of significant, broad-based employee ownership is a yardstick that applies across all structures and boils employee ownership down to the basics: Ownership: at least 30% of the company must be owned by employees (excluding founders). Access: reasonable access to ownership must be open to every employee. Concentration: employee ownership must not be too concentrated. These simple concepts help people understand if they’re aligned with our community in terms of basic principles. It also helps companies communicate this alignment with an easy-to-recognize mark. And it resonates! Last year we ran a nationally-representative opinion poll and found that 25% of Americans would be more likely to apply to a job if the description had our certification mark. Certification Builds Trust People understand third-party certification. There are many examples of successful certifications across the United States: Great Place to Work, Made in America, USDA Organic, Fair Trade, and Veteran- and Women-Owned Businesses. Certifications are a familiar concept that help people understand whether a company’s claims are potentially misleading or indeed truthful. The independent validation of third-party certification builds confidence, especially with people who are unfamiliar with employee ownership. It can help job seekers, new hires, existing employee-owners, clients, customers, purchasing agents, and government officials trust that EO is truly as good as it sounds. For example, when a manager is explaining the wealth-building potential to a skeptical new hire, it helps to say, “you don’t have to take my word for it, we’re certified.” The rigor of our process amplifies the trust-building. Just 1 in 200 American companies qualify for Certified Employee-Owned. We have worked with academics to verify that 30% employee ownership would transform the lives of tens of millions of Americans. And we conduct a comprehensive review of every new Member. All these efforts pay off in trust and confidence. Certification Protects Our Goodwill As employee ownership becomes more well-known, our community will face a major issue: anyone can call themselves employee-owned. Maybe the CEO is the sole owner and they claim that they are also an employee, so technically their company is 100% employee-owned. Or maybe a company that has distributed 1% of shares across all employees starts talking about their employee ownership. Afterall, every employee is also an owner. You might be think these claims are absurd, but unfortunately we’ve already come across companies making such misleading statements. These examples show there is a lot of gray area around what it means to be employee-owned. This creates the possibility for the employee ownership equivalent of “greenwashing” and it will become more common as awareness of this amazing idea continues to grow. Impersonators damage the concept of employee ownership and, if left unchecked, will create negative opinions and impressions that do irreversible damage. As a community, we must defend our goodwill before it is diluted to the point of being meaningless. Aligning around a common standard with a clear and rigorous process and building a common brand will help fend off pretenders. Goodwill is an amazing asset, but it is fragile and we must protect it with certification.

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The Simple Concept That Turns Employee-Owners Into Millionaires

March 10, 2023

Last month we looked at three inspiring stories of employee-owners building life-changing wealth. We saw how regular grants of company stock at companies like WinCo Foods and Springfield Remanufacturing Company helped front-line workers build eye-opening account balances, in some cases over a million dollars. These stories are incredible, and perhaps even sound too good to be true. But what if I told you that these employee-owners were able to build such large amounts of wealth by leveraging the same force that billionaires like Warren Buffet used to build their wealth? The magic behind employee ownership is the magic behind all great fortunes: compound growth. In this post we’re going to take a peek under the hood at the surprising power of compound growth including: Warren Buffet’s Journey to Twelve Figures What Exactly is Compound Growth? Compound Growth Helps Employee-Owners Build Wealth The Key Ingredient is Time You’re Only Successful if Your Company is Successful This article has two big takeaways for employee owners. First, the most important factor in building wealth with employee ownership is giving compound growth plenty of time to work. Second, the better your company does, the faster your wealth will grow. Even small improvements in company performance add up to big changes thanks to compounding. Warren Buffet’s Journey to Twelve Figures Compound growth is simple to understand but can be difficult to appreciate. Imagine if I proposed the following deal: today you hand me a dollar, and a year from now I’ll come back and give you that dollar along with two dimes. Would you do it? If you’re like most people, that deal doesn’t sound exciting. But that deal, executed repeatedly and at scale, is how Warren Buffet became one of the richest people in the world. If you don’t know about the “Oracle of Omaha,” Warren Buffett is a legendary value investor with a net worth of roughly $108 billion. Buffett built his wealth as the majority owner of Berkshire Hathaway, a holding company that he took over in 1965. According to publicly available shareholder letters, over the next 50 years, Berkshire Hathaway’s stock grew at a compound growth rate of 21.6% a year. To put it another way, a single dollar invested alongside Buffett would have grown to $18,262 (source: Berkshire Hathaway Letters to Shareholders). That’s the power of compound growth. What Exactly is Compound Growth? In terms of investing, compound growth is when invested money earns returns on both the original amount as well any accumulated growth. Here’s a simple example. Say you invest $2,000 and earn a return of 10% per year. In the first year, you'll earn $200, bringing your total to $2,200. In the second year, you'll earn returns on the full $2,200, which comes out to $220. This includes $200 of growth from the initial $2,000 investment plus $20 from the $200 of growth from the first year. That $20, the growth made solely from prior growth, is your first bit of compounding. Compound growth means your money is growing at an accelerating rate. This effect starts small, but it becomes more and more powerful with time. Compound Growth Helps Employee-Owners Build Wealth Employee-owners tap into compound growth by owning shares of company stock. Their stock has a value determined by their company’s share price, which changes each year based on the value of the business. If the company’s share price goes up over multiple years, then the value of the stock grows with compound growth. While practices vary, most employee-owners receive an allocation of company stock each year paid for out of company profits. Annual allocations supercharge an employee-owners growth by building the account value in the early years while compound growth is still picking up steam. Building on the example above, say an employee-owner receives an allocation of $2,000 of stock at the end of each year and their company’s share price grows at 10% annually. Here’s how their account balance would grow initially: Our employee-owner sees $200 of share price growth in year 2 and their first compound growth in year 3. After 5 years of ownership, allocations add up to $10,000, over 80% of the total account value. In general allocations make up the bulk of an employee-owner’s account value early on, but that changes dramatically with time. The Key Ingredient is Time Let’s check in on that same employee-owner after compound growth has had time to work its magic. Let’s assume the allocations continue at $2,000 a year and the share price continues to grow at 10% annually: The first thing to notice is that our employee-owner’s total account value is accelerating. After 20 years they have over $110,000 in their account. After 25 years, they’re almost at $200,000. And after 30 years, they’re over $320,000! This acceleration is the tell-tale sign of compound growth. This example also shows how compound growth ends up driving most of the wealth building. Allocations continue, but they become less and less important as compound growth ramps up. By the end of their career, our employee-owner has accrued over 80% of their total account value from share price growth, exactly the reverse of what we saw after the first 5 years! You’re Only Successful if Your Company is Successful We started out talking about employee-owners becoming millionaires, but so far the highest account value we’ve shown is under $350k. This is where the share price growth rate factors in. After time as an owner, the next most important factor for employee-owners looking to build wealth is the success of their company. In general, the more successful a company is, the faster its share price will grow. To demonstrate the importance of company success, let’s look at how our employee-owner’s account value after 30 years changes with the rate of share price increase: For context, a 10% average annual share price is roughly what the public stock markets have returned over time. But it’s certainly possible for a successful private company to outperform this benchmark. Increased company success has a dramatic effect on our employee-owner’s account balance. Roughly speaking, a 1% annual increase in the company share price leads to changes in final account value of between $100,000 to $200,000. That’s huge! One very important caveat to all this is that no company’s share price is guaranteed to go up, and it’s possible that a series of events could lead to any company going bankrupt, which would make those company’s shares worth zero. For employee-owners, this risk is offset by the common practice that shares are paid for out of company profits, with the employee-owners not putting in any of their own money. And of course no financial gain comes without risk. What does it take for our employee-owner to become a millionaire? If their company is able to achieve a 20% rate of return over 30 years, they would retire with well over $2 million. Not every company will accomplish this, but it’s not without precedent. WinCo Foods managed to grow at roughly this rate from 1986 to 2014, a 28-year period. The minimum required performance for our employee-owner to see a seven-figure account balance is 16% annual share price growth over 30 years. Make no mistake, that is a solid performance that not every company can accomplish. But I personally have spoken to multiple employee-owned companies that have turned in this record, or better. Ultimately it comes down to how the company performs, which is something that every single employee-owner can impact through their ideas and their effort. Connecting the success of the company and the success of the employee through wealth building is perhaps the biggest reason we see employee ownership as a win-win for business and people. Note: The examples provided in this article are solely for illustrative purposes only and should not be relied upon in any way, nor should be construed as an appraisal, legal, financial, tax, or other professional advice. This article was originally posted on 3/10/23 and was updated on 7/11/23 to update the discussion of “compound interest” to “compound growth” which more accurately describes wealth building at stock-based employee-owned companies. What Exactly is Compound Interest? Compound Interest Helps Employee-Owners Build Wealth The Key Ingredient is Time You’re Only Successful if Your Company is Successful This article has two big takeaways for employee owners. First, the most important factor in building wealth with employee ownership is giving compound interest plenty of time to work. Second, the better your company does, the faster your wealth will grow. Even small improvements in company performance add up to big changes thanks to compounding. Warren Buffet’s Journey to Twelve Figures Compound interest is simple to understand but can be difficult to appreciate. Imagine if I proposed the following deal: today you hand me a dollar, and a year from now I’ll come back and give you that dollar along with two dimes. Would you do it? If you’re like most people, that deal doesn’t sound exciting. But that deal, executed repeatedly and at scale, is how Warren Buffet became one of the richest people in the world. If you don’t know about the “Oracle of Omaha,” Warren Buffett is a legendary value investor with a net worth of roughly $108 billion. Buffett built his wealth as the majority owner of Berkshire Hathaway, a holding company that he took over in 1965. According to publicly available shareholder letters, over the next 50 years, Berkshire Hathaway’s stock grew at a compound growth rate of 21.6% a year. To put it another way, a single dollar invested alongside Buffett would have grown to $18,262 (source: Berkshire Hathaway Letters to Shareholders). That’s the power of compound interest. What Exactly is Compound Interest? Compound interest is when invested money earns interest on both the original amount as well as the interest already earned. Here’s a simple example. Say you invest $2,000 at an interest rate of 10% per year. In the first year, you'll earn $200 in interest, bringing your total to $2,200. In the second year, you'll earn interest on the full $2,200, which comes out to $220. This includes $200 of growth from the initial $2,000 investment plus $20 from the $200 of growth from the first year. That $20, the growth made solely from prior growth, is your first bit of compound interest. Compound interest means your money is growing at an accelerating rate. This effect starts small, but it becomes more and more powerful with time. Compound Interest Helps Employee-Owners Build Wealth Employee-owners tap into compound interest by owning shares of company stock. Their stock has a value determined by their company’s share price, which changes each year based on the value of the business. If the company’s share price goes up over multiple years, then the value of the stock grows with compound interest. While practices vary, most employee-owners receive an allocation of company stock each year paid for out of company profits. Annual allocations supercharge an employee-owners growth by building the account value in the early years while compound interest is still picking up steam. Building on the example above, say an employee-owner receives an allocation of $2,000 of stock at the end of each year and their company’s share price grows at 10% annually. Here’s how their account balance would grow initially: Our employee-owner sees $200 of share price growth in year 2 and their first compound interest in year 3. After 5 years of ownership, allocations add up to $10,000, over 80% of the total account value. In general allocations make up the bulk of an employee-owner’s account value early on, but that changes dramatically with time. The Key Ingredient is Time Let’s check in on that same employee-owner after compound interest has had time to work its magic. Let’s assume the allocations continue at $2,000 a year and the share price continues to grow at 10% annually: The first thing to notice is that our employee-owner’s total account value is accelerating. After 20 years they have over $110,000 in their account. After 25 years, they’re almost at $200,000. And after 30 years, they’re over $320,000! This acceleration is the tell-tale sign of compound growth. This example also shows how compound interest ends up driving most of the wealth building. Allocations continue, but they become less and less important as compound interest ramps up. By the end of their career, our employee-owner has accrued over 80% of their total account value from share price growth, exactly the reverse of what we saw after the first 5 years! You’re Only Successful if Your Company is Successful We started out talking about employee-owners becoming millionaires, but so far the highest account value we’ve shown is under $350k. This is where the share price growth rate factors in. After time as an owner, the next most important factor for employee-owners looking to build wealth is the success of their company. In general, the more successful a company is, the faster its share price will grow. To demonstrate the importance of company success, let’s look at how our employee-owner’s account value after 30 years changes with the rate of share price increase: For context, a 10% average annual share price is roughly what the public stock markets have returned over time. But it’s certainly possible for a successful private company to outperform this benchmark. Increased company success has a dramatic effect on our employee-owner’s account balance. Roughly speaking, a 1% annual increase in the company share price leads to changes in final account value of between $100,000 to $200,000. That’s huge! One very important caveat to all this is that no company’s share price is guaranteed to go up, and it’s possible that a series of events could lead to any company going bankrupt, which would make those company’s shares worth zero. For employee-owners, this risk is offset by the common practice that shares are paid for out of company profits, with the employee-owners not putting in any of their own money. And of course no financial gain comes without risk. What does it take for our employee-owner to become a millionaire? If their company is able to achieve a 20% rate of return over 30 years, they would retire with well over $2 million. Not every company will accomplish this, but it’s not without precedent. WinCo Foods managed to grow at roughly this rate from 1986 to 2014, a 28-year period. The minimum required performance for our employee-owner to see a seven-figure account balance is 16% annual share price growth over 30 years. Make no mistake, that is a solid performance that not every company can accomplish. But I personally have spoken to multiple employee-owned companies that have turned in this record, or better. Ultimately it comes down to how the company performs, which is something that every single employee-owner can impact through their ideas and their effort. Connecting the success of the company and the success of the employee through wealth building is perhaps the biggest reason we see employee ownership as a win-win for business and people. Note: The examples provided in this article are solely for illustrative purposes only and should not be relied upon in any way, nor should be construed as an appraisal, legal, financial, tax, or other professional advice.

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Employee-Owned Spotlight: Big Sandy Superstore

March 8, 2023

Big Sandy Superstore is a furniture and appliance company that has been serving customers in Ohio, Kentucky, and West Virginia since 1953. The company has grown significantly over the years and today, operates 21 stores and employs over 550 people. This formerly family-owned business decided to sell the company to its employees, establishing their Employee Stock Ownership Plan (ESOP) in 2006. The ESOP was established by the company's founders as a way to give back to the employees who helped the company grow over the years.At first, there was skepticism about the benefits of the ESOP and employee ownership in general. Over the years, employees have seen just how impactful an ESOP can be. “Creating the ESOP was a win-win for everyone. This was a way to grow the company and take it to the next level,” CEO Trey VanHoose said. “Over the past few years, we’ve had employees surpass $500,000 in their ESOP accounts and some are on their way to $1 million. When people can see that the ESOP can be life-changing, it really puts things in perspective for them. That’s when it became real.”‍‍Commitment to Ownership Culture Employee ownership has created a culture of dedication and commitment among their employees, who take pride in their work and the company's success. Employee owners are invested in the success of the company and are motivated to provide excellent customer service. They are knowledgeable about the products and services offered by the company and work hard to ensure customer satisfaction.“Our employees proudly wear their name tags that identify them as being an owner,” Trey said. “By identifying themselves as an owner, customers understand that they have skin in the game. They can expect a higher level of customer service. ”Establishing a strong ownership culture can take time and repetition. From day one, employees are engaged in education about the ESOP and employee ownership. During their three-day new hire orientation, new employees can expect to learn about how the ESOP functions and the benefits of working for an employee-owned company. By partnering with us at Certified EO, Big Sandy Superstore has been able to take advantage of our extensive educational library to complement their own educational materials.“We try to tie everything we do back to employee ownership and how things will benefit the ESOP, which in turn benefits our employee owners,” said David Smith, Director of Sales and Operations. Regularly engaging with employee owners throughout the year keeps employee ownership top of mind. “There are lots of times throughout the year we engage with our employee-owners. From our annual ESOP meeting, to EO Month celebrations, from new hire orientation, we do our best to share knowledge throughout the year. ”Dedicating time and resources to educating the company’s employee-owners can have a real impact on how they work. Trey expended on this idea, “Having buy-in from the employee-owners helps everyone to be unified behind a common goal. Employees have a better understanding of how their actions can affect the bottom line, so they are able to identify things like cost savings opportunities. ”Big Sandy Superstore is a unique employee-owned business in that they have more direct interaction with the public than most employee-owned companies (a majority of employee-owned companies operate business-to-business with clients and customers). Big Sandy Superstore has done a great job at marketing themselves as an employee-owned company not only with their employee name tags, but also things like store signage and social media. To learn more about Big Sandy Superstore, visit their website.

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Employee-Owned Spotlight: Acadian Companies

February 13, 2023

Certified EO is excited to spotlight Acadian Companies, a majority employee-owned company with several healthcare divisions, including medical transportation, healthcare, residential and commercial security equipment and monitoring, emergency medicine education, and aircraft charter services. Headquartered in Lafayette, Louisiana, Acadian Companies operates across 130 locations with over 5,200 employees. Acadian’s ambulance services, its first line of business when it opened in 1971, provides medical care to more than 21 million residents across 63,000 square miles in Louisiana, Mississippi, Tennessee and Texas. Covering a vast rural population, Acadian launched an air ambulance division in the 1980s to respond more quickly to emergency situations offshore and in swamps, bayous, and marsh lands. In 2005, Acadian played a crucial role in the disaster response to Hurricanes Katrina and Rita in Louisiana. Acadian Companies created its Employee Stock Ownership Plan (ESOP) in 1993, and today its employee-owners hold 80% ownership in the company. Throughout the years, Acadian has become a premier medical services company with a national footprint, reflected in the company's share price growth from less than a dollar to nearly fifty dollars today. Building a Life-Changing Nest Egg Since the inception of Acadian’s ESOP, a number of employee-owners have had the opportunity to retire comfortably, in large part due to the growth of their ESOP accounts over their career. While receiving an allocation of company shares each year can accumulate into tens of thousands of dollars, consistent annual growth in a company’s share price is what can push an ESOP account into the hundreds of thousands of dollars or even over $1 million in value. Acadian has recorded only one year in which the share price declined. Over the past decade, employee-owners have benefitted from the compound annual growth in the share price hovering around 15%. Cody White, a paramedic field supervisor and member of Acadian’s ESOP Committee, spoke to the shift in mindset he experienced himself, and sees in others, when he started to grasp how an ESOP account can grow over the decades. “If I’m here 25 or 30 years, I’m going to have a big return. ESOP is a fantastic way to plan for your future,” Cody said. He recalled meeting with a financial advisor who told him he could retire as a millionaire, which really got his attention. Once an employee-owner connects the dots between the company’s profitability and the year-to-year growth of their account balance, they begin to understand how their work can contribute both positively and negatively to the company's success. “If somebody breaks a stretcher, it could cost $20,000. We have to take care of our stuff,” Cody said. “When we all do our part, we can benefit down the road.” Building this understanding among younger generations of employees can be a significant challenge. After joining the company at 18 years old, it wasn’t until a supervisor spelled out the numbers to Cody that he really started to see the potential. Companies providing EMS services often also struggle with hiring and retention. Many EMS staff approach the role as a stepping stone and will move on to a degree program or another role within healthcare. Caitlin Russo, Acadian’s PR and marketing manager, spoke to the company’s efforts to invest in its employee-owners in a line of work often experiencing costly turnover. “Being employee-owned shows people this can be a long-term career. There’s a lot of opportunity for growth and promotion within the company,” she said. As employee-owners gain experience, they often progress into management or grow into roles in support departments that lengthen their tenure at Acadian. Celebrating the ESOP Acadian’s ESOP Committee shares information company-wide about how their ESOP functions, what employee-owners should understand about it, and how it can benefit them. Beyond educating employee-owners, the committee also organizes an annual ESOP Week, often in the spring or during Employee Ownership Month in October. Part of ESOP Week is the company’s annual cook-off competition, with prizes given out and committee members presiding as judges. ESOP Week is also an important time to continue the committee’s education efforts. Keeping the ESOP top of mind for employee-owners prevents it from slipping into a once-a-year discussion when employees receive their annual statements. Investing in a culture of ownership, including creative programming with activities and prizes, can provide an informal opportunity to drive the message home. In 2021, Acadian celebrated its 50th anniversary, and the company is also approaching the 30th anniversary of its ESOP. To learn more about the company’s employee ownership program, visit Acadian’s website.

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Three Inspiring Examples of Employee-Owners Building Life-Changing Wealth

January 20, 2023

There’s a lot to like about employee ownership. By changing the relationship between the company and employee, broad-based ownership creates alignment up and down a business. Engagement is stronger, people are more motivated, relationships are more durable, and companies are more successful. But of all the positive aspects of employee ownership, the most inspiring is how it can build life-changing wealth for employee-owners. Wealth building for working people ties the employee ownership community together. Every employee ownership structure, including Employee Stock Ownership Plans (ESOPs), Worker Cooperatives, Employee Ownership Trusts (EOTs), and Direct Share Ownership, builds broad-based wealth through some combination of capital accounts and profit sharing. It was the common thread in over 250 conversations about the meaning of employee ownership we had when we set our certification standards. And while there are decades of research in support of this model, it’s the individual stories of wealth-building that inspire people to join the employee ownership movement. In this article we will touch on three inspiring examples of employee-owners building life-changing wealth. We also consider the question of scale: are these examples cherries we have picked or would a wide-spread transition to employee ownership change millions of lives? WinCo Foods WinCo Foods was founded in 1967 by Ralph Ward and Bud Williams. The no-frills, warehouse-style grocery store focused on low prices soon grew from the original location into a small chain in the Pacific Northwest. In 1985, after the passing of Mr. Ward, the company transitioned to employee ownership. Several decades of success later, the company now has over 20,000 employee-owners across 135 stores in 10 states. Broad-based ownership translated WinCo’s growth into impressive wealth-building for employee-owners. In 2014, the 130 workers at a single store in Corvallis, Oregon had a combined $100 million in ownership wealth and across the company over 400 front-line employees were “millionaire grocery clerks”. According to the most recent Department of Labor 5500s, in 2020 WinCo’s employee-owners had a combined $3.6 billion in company stock. Cathy Burch’s story illustrates the impact of WinCo’s employee ownership. Cathy joined WinCo in 1991 and worked a number of front-line jobs such as stocking shelves, doing checkout, and ordering inventory. Over the years she received small allocations of company stock and benefited from compound interest as WinCo’s share price grew at roughly 20% a year. Ownership helped Cathy build a level of wealth and security that is unimaginable for most in her position. “I have almost $1 million in stock”, she said when interviewed for Forbes in 2014, “If I wanted to, I could retire right now.” Springfield Remanufacturing Company Springfield Remanufacturing Company (SRC) is another iconic example of employee ownership building broad-based wealth. Founded in 1983 as a distressed spin-out from International Harvester, SRC’s unique approach to open-book management was born of necessity. With an 89:1 debt to equity ratio and an interest rate of 18%, the new company had to find a way to get every single employee thinking about how to save every possible dollar. The laser focus created by approaching business as a team sport not only helped SRC pay off it’s initial loan and led to a leading opening-book management system known as The Great Game of Business, but it created a lasting culture that has continued to drive SRC’s growth. Today the company has 10 divisions with over 2,000 employee-owners. SRC’s approach to employee ownership rests on thinking like an owner but also benefiting like one. The company has been 100% employee-owned from the very beginning, allowing employees like Rick Hedden to own a piece of the action. The shares Rick earned over 36 years as an employee-owner allowed him to retire early at 59 to focus on his hobbies and his family. “I wanted to be able to retire while I was healthy and I could afford it,” Rick said when interviewed for an article on the Great Game of Business Blog, “my wife and I are also enjoying having more time with each other without any pressure or timelines.” Rick is not alone. Employee ownership has helped transform SRC from a struggling spinout with a share price of 10 cents into a thriving conglomerate with a share price of over 420 dollars. Along the way, SRC has paid out over $100 million to retiring employee-owners and created 30 millionaires. New Belgium Brewing New Belgium Brewing offers a different perspective on how employee ownership can help build life-changing wealth. Founded in 1991, the Colorado-based brewer helped popularize craft beer with it’s flagship Fat Tire Ale. New Belgium transitioned part of the business to employee ownership in 2000 and then went to 100% in 2013. Unlike WinCo and SRC, New Belgium is no longer employee-owned. The company was sold to Little Lion World Beverages in 2019. How can a company that’s no longer employee-owned be an inspiring story? In an interview with Forbes, Katie Wallace, the Director of Social and Environmental Impact, shared, “ultimately, the sale was a great success story for employee ownership in that more than 300 New Belgium coworkers will receive more than $100,000 in retirement money, with some coworkers receiving quite a bit more. Over $190 million will have been paid out to hundreds of families by the time the deal closes. This is money that founders of a more traditional business could have easily pocketed themselves, so it’s an excellent win for wealth equality.” New Belgium shows that employee ownership not only creates tremendous upside, but it also creates downside protection in the case of a sale. While it’s bittersweet to see a company transition out of employee ownership, sales are a fact of business ownership and there will always be times where the best outcome for the owners is to sell. In the case of New Belgium, the sale was put in front of the employee-owners and a majority voted in favor of the deal. Does Employee Ownership Scale? WinCo, SRC, and New Belgium show how employee ownership helps workers share in the value they create and access that value in the case of a sale. But perhaps these three exceptional companies are not representative of the broader employee ownership experience. To understand the economy-wide impact of a transition to employee ownership, Certified EO teamed up with Professor Ethan Rouen at Harvard Business School to answer a simple question: what would happen if every company in America employee-owned? Analyzing data from the Federal Reserve, we demonstrated that an employee-owned economy would be an absolute game-changer. Median household wealth would rise from $121,760 to $230,076 and wealth inequality would drop to historic lows. Our analysis shows that the inspiring stories we highlighted are certainly great outcomes, but if every company in America were employee-owned, they would be common. Today these stories are a light that can guide us as we seek to change more lives through employee ownership.

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We Must Build an Employee-Owned Economy

December 6, 2022

When it comes to work, America is at a crossroads. Good jobs are getting harder to find as roles are increasingly contracted, gigged, and automated. Companies are being gobbled up through consolidation or closing down as the baby boom generation retires. On their own these trends have made work more precarious for millions. Together they are undermining the foundational premise of America as a land of opportunity. While momentum leads to a future of work that is ever more precarious, it is not too late to change course. We can create shared prosperity by building an employee-owned economy. Today’s challenges are decades in the making. The period just after World War 2 marks a high-point for job security. Large firms like General Motors and IBM sought dedicated employees and offered them stable careers. When companies did well, people did well. But globalization, offshoring, and technological change have broken that connection. Productivity and wage growth moved in lockstep from 1948 to 1978, but since then they have decoupled with productivity growing four times faster than average compensation. Companies are getting more valuable, but fewer of those gains are being passed on to workers. The rise of the gig economy on the heels of the financial crisis has accelerated this trend. If you work for Uber you might be a programmer with generous compensation that includes stock options, but more likely you are a driver, ping-ponging around town for the lowest price the algorithm thinks you’ll take while covering expenses out of your own pocket. The gig economy has exploded since 2009 with 23M Amricans (9% of adults) working a gig job in 2021. As more jobs are demoted to gigs, millions of Americans will find the skills they have spent years honing are no longer enough to make ends meet. What will these people fall back on? For many there is no safety net at all. According to the Federal Reserve’s Survey of Consumer Finances, in 2019 13 million households had negative net worth. And for others, a small net might be there but they can’t afford the fall. Just 4 in 10 Americans have sufficient savings to cover an unforeseen expense of $1,000. Looking at fifty years of increasingly precarious work combined with a snapshot of Americans’ finances, one thing is clear: millions could soon find themselves with no financial or human capital. This is a major concern for every single American. Since our country’s founding, leading thinkers have recognized that a healthy republic is rooted in the broad-based ownership of property. Founding Fathers such as Thomas Jefferson saw the small landowner as the bedrock of our democracy because owning land made them independent and active citizens. This was also the guiding principle behind the Homestead Act of 1862, which created 4 million family farms. These ideas and policies focused on land because in the agricultural economy of the 1700s and 1800s, farmland was the most important asset. Today, the most important asset is business ownership. Owning a business is how great fortunes are built, just look at Elon Musk or Bill Gates. According to the 2019 Survey of Consumer Finances, business ownership is the largest asset class, with public and private companies accounting for over $32T of wealth, much more than home equity ($19T). And it’s not just the household names who own stock. Among the Top 1%, the largest asset is ownership of private businesses, accounting for 38% of their portfolio with average value of $10.8 million, and the second largest asset is public company stock, accounting for 18% of their portfolio with average value of $5.1 million. Yet, the bottom 50% of households by wealth hold a combined 0.25% of all business ownership, just $1,347 per household. Securing the future of our democracy means expanding the opportunity of business ownership. Thankfully we have a solution that has been tested and proven for 50 years: broad-based employee ownership. The idea that employees should hold some stock in their employer has a long history, but it got meaningful traction with the creation of the Employee Stock Ownership Plan (ESOP) in 1974. Today, there are over 5,600 employee-owned companies operating in every industry and state. They range in size from 5 people to over 220,000 and employ over 2.5 million people. Employee-owned companies like Publix Supermarkets, Wawa, and Bob’s Red Mill represent the blueprint for modernizing the American dream. Employee ownership changes the relationship between the company and employee by ensuring that everyone who works at a company has reasonable access to the benefits of ownership. Making employees into employee-owners helps them build wealth. A 2021 study by the National Center for Employee Ownership found the average employee-owner had roughly $67,000 more in retirement wealth, compared to workers at non-employee-owned firms. And this can scale. Our research calculates that if every American company became employee-owned the net worth of the bottom 50% by roughly $81,000 on average. Employee ownership also benefits workers the first day they walk in the door by creating a better working environment. Broad-based ownership aligns everyone around a unified goal and creates a shared purpose. Alignment increases commitment, trust, and accountability. This leads to stronger relationships, closer connections with coworkers, and increased job stability. Finally, employee ownership makes companies stronger. Decades of research show that broad-based ownership combined with high-involvement management systems increases key performance indicators like productivity, revenue growth, and employee engagement. Even large private equity firms are beginning to see employee ownership as a way to supercharge engagement and increase business performance. Taken together, the evidence on wealth building, culture, and company performance show employee ownership is a win-win-win: it’s good for workers, good for business and good for our country. Transitioning to an employee-owned economy would create shared prosperity that benefits all Americans, but we must act now. A start would be converting a portion of the 2.3 million companies owned by Baby Boomers, the youngest of whom will hit 65 in 2029. But we must think bigger than just business conversion. An employee-owned economy represents an entirely new way to view work and a new relationship between the company and employee. We must make it easy for people who understand this difference to find employee-owned companies. We must coordinate and amplify the voice of our movement to share the advantages of employee ownership far and wide. And we must set a standard that people know and trust to defend against the inevitable pretenders. The need for broad-based business ownership has never been greater. The time has come to build an employee-owned economy.

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Employee-Owned Spotlight: JASPER

November 8, 2022

Certified EO is excited to spotlight JasperHoldings, Inc., a 100% “associate-owned” company that remanufactures engines, transmissions, differentials, and more. JASPER operates seven divisions, including Jasper Engines & Transmissions, which in total employ over 4,000associate-owners across 105 locations and 35 states. JASPER established its Employee StockOwnership Plan (ESOP) in 2009 with the aim to continue to grow organically and leverage its associate ownership structure to make strategic acquisitions. At the time of the ESOP transition, the company—then just Jasper Engines &Transmissions and headquartered in Jasper, Indiana—was generating about $275million in revenue each year for its “reman” services. Now after several acquisitions and national expansion, JASPER is one of the country’s largest remanufacturing companies and is approaching $1 billion in annual revenue. Expanding Employee Ownership through an ESOP Holding CompanyA big part of JASPER’s success since becoming associate-owned has been establishing a holding company to facilitate acquisitions. For legacy businesses interested in an ESOP transaction, JASPER’s model means they don’t have to go it alone. The company’s ownership model helps the team find like-minded founders and second-generation business owners. “Some of them have thought about doing their own ESOP but didn’t want to be a standalone. Now they’re part of a bigger ESOP company,” said Zach Bawel, JASPER’s President.This helps selling owners reap “the best of both” by taking care of their employees and partnering with a competitive buyer. Once JASPER acquires a new company, it takes a hands-off approach to allow them to continue to be successful. “Operationally, we don’t want to be in the weeds of running the business—we want to provide capital and share best practices with safety, HR, banking, and accounting,” said Bawel. JASPER’s scale can help its divisions reduce expenses on line items like sourcing and insurance rates, cost savings that ultimately benefit its associates. Leveraging Certified EO’s Wealth CalculatorA key part of JASPER’s approach to communicating the benefits of the company’s ESOP to its associate-owners is getting as many people as possible to view and interact with its WealthCalculator tool. Managers and supervisors walk through the WealthCalculator one-on-one with associates, explaining the current value of theirESOP accounts, how it has grown in the past year, and how it could grow in the next 10 years as the company continues to be successful. “The Wealth Calculator is highly configurable for us and allows us to have our own brand on it,” said Jason Nord, JASPER’sVice President of People Services. The tool is critical for the company to drive home the potential for associates to build long-term wealth. Since establishing the ESOP, the company has allocated $367 million worth of company shares to its associates, 37% of whom have account balances of more than $100,000. For associates at every division of JASPER, this nest egg can be life changing. And since it also maintained its 401(k) match following the transition to a 100%ESOP, the company’s two wealth building opportunities set it apart in the job market. Making Recruitment a Team EffortLike many companies with an employee ownership program, JASPER has faced challenges in recruitment and the retention of new hires. A new hire entering a company with an ESOP may hear about the wealth building benefits and effects on company culture that come with being employee-owned, but it can be difficult to drive this point home with individuals who haven’t entered the ESOP or received an account statement yet. JASPER has tackled its hiring challenge in part through a referral program in which associates are encouraged to connect the company with potential hires. Since there is high turnover for those with less than two years of experience at JASPER, it’s important to drive home the immediate benefits of being part of an associate-owned company, including the aligned incentives of broad-based ownership and the company’s performance. “The ESOP has given associates the vested interest to act like an owner,” said Nord, including in driving cost savings and participating in programs like the one for referrals. About a third of all new hires are referrals, and those who do come in as referrals have a stronger likelihood of a longer tenure with JASPER. Health and WealthJASPER staffs the “Health and Wealth”committee with internal champions for the company’s wellness initiatives, including communicating the benefits of the ESOP company-wide. During EmployeeOwnership Month this October, the committee put on a “Know Your Share Price”contest in which associates picked at random are given a cash prize for knowing their ESOP account balance within a $250 error margin. Communications and wellness committees likeJASPER’s help employee-owned companies deepen their culture of ownership. With“We Own It” banners hanging at each of the company’s locations, associate-owners have daily reminders that when the company does well, so do they. And with the team of associates growing with each new acquisition, JASPER continues to play an outsized role in growing the employee ownership movement. JASPER became a Member of Certified EO in 2017. If you are a CertifiedEO Member and would like to see your company’s story featured in a future spotlight article, please contact membership@certifiedeo.com.

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The Top 25 Cities for Employee Ownership 2022

October 5, 2022

Employee ownership changes the relationship between business and community. When every employee has an ownership stake, companies become rooted in place. The wealth they build flows through the local economy, the jobs they create are more stable, and they become more involved in service. Employee ownership is a win for workers, businesses and communities. That’s why we are proud to announce a new list highlighting the Top 25 Cities for Employee Ownership. The Top 25 Cities for Employee Ownership showcases the cities in America that have done the most to foster a positive environment for employee ownership. Collectively they are home to 569 employee-owned companies. From small towns to large metros, these cities range in size from 17,000 people to over 850,000. From the coasts to the heartland, they represent 15 states with a range of cultures and political orientations. The diversity of cities in the Top 25 highlights the broad appeal of employee ownership. Our list is the result of a comprehensive effort to identify every employee-owned business in America, including Employee Stock Ownership Plans (ESOPs), Worker Cooperatives, Employee Ownership Trusts (EOTs), and broad-based equity compensation plans such as stock options. By combining our unique certification data with government fillings, news articles, website visits, and direct phone conversations we have curated the only up-to-date list of every employee-owned company in America. Our ranking of the Top 25 takes into account both the number and the concentration of employee-owned companies in each city. We restrict ourselves to all cities with at least five employee-owned companies and look at the total number and the per capita density. Our methodology creates a balanced list that puts every city on an even playing field. If you’re curious to see how many employee-owned companies are in your town, search your city name in our Directory of Employee-Owned Companies. #1 - FARGO, NORTH DAKOTA Fargo, North Dakota is the #1 city for employee ownership in 2022! The state’s most populous city, Fargo is home to 26 employee-owned companies, including Dakota Supply Group, Border States Electric Supply, Fargo Glass & Paint Company, and Scheels. Fargo is the only city in America in the top 25 for both the total number and per capita density of employee-owned companies. With a population of roughly 125,000, Fargo has one employee-owned company for every 4,800 residents. Top industries for employee ownership in Fargo include distribution, manufacturing, and engineering. #2 - BERKELEY, CALIFORNIA Berkeley, California is ranked #2 for employee ownership in 2022! Known for all things counter-culture, Berkeley is home to 22 employee-owned companies, including Mal Warwick Donordigital, Arizmendi Bakery, Sun Light & Power, and Alchemy Collective Cafe. Berkeley is the only city other than Fargo to be in the top 30 for both the total and per capita density of employee-owned companies. Berkeley also stands out as the #3 city for Worker Cooperatives with 18. Berkeley is partnering with Project Equity and the Sustainable Economies Law Center to help local businesses stay locally-owned and preserve their legacy by becoming employee-owned. #3 HARRISBURG, PENNSYLVANIA Harrisburg, Pennsylvania is the 3rd best city for employee ownership in 2022! The capital of Pennsylvania, Harrisburg is home to 17 employee-owned companies, including HB Global, D&H Distributing, and Schaedler Yesco Distribution. With a population of 58,000, Harrisburg has one employee-owned company for every 3,400 residents, making it the #9 city for per capita employee ownership. #4 - CINCINNATI, OHIO Cincinnati, Ohio is the #4 city for employee ownership in 2022! Sitting on the Ohio River, Cincinnati is home to 32 employee-owned companies, including Al. Neyer, Intrust IT, Ohio Valley Electrical Services, Parallel Technologies and The Motz Corporation. Top industries for employee ownership in Cincinnati include IT consulting, manufacturing, electrical contractors, and wholesalers. #5 - MINNEAPOLIS, MINNESOTA Minneapolis rounds out the Top 5 as the #5 overall city for employee ownership! With 40 employee-owned companies, Minneapolis is also the #5 city in terms of total number of EO businesses. H2I Group, Kurt Manufacturing Company, Brin Glass Company and RSP Architects all call Minneapolis home. The city has taken an active approach to fostering employee ownership. In 2016, it expanded its Business Technical Assistance Program (B-TAP) to include services aimed at supporting the development of new Minneapolis co-operatives by offering feasibility training and technical assistance for businesses interested in converting into a cooperative. #6 - MADISON, WISCONSIN Madison, Wisconsin is the #6 city for employee ownership. The state capital of Wisconsin, Madison is home to 27 employee-owned companies, including Vita Plus, Bock Water Heaters and Just Coffee Cooperative. This midwestern university town stands out because of the Madison Cooperative Development Coalition (MCDC), a City of Madison-funded initiative to form worker cooperatives through co-op education, technical assistance, outreach to potential or existing business owners, and $10,000 seed grants to cooperative startups. #7 - LYNCHBURG, VIRGINIA Lynchburg, Virginia is ranked #7 for employee ownership in 2022. Lynchburg is home to 15 employee-owned companies, including Electronic Design & Manufacturing, Scott Insurance, and Wiley & Wilson. Lynchburg is one of just nine cities in the Top 50 for both the total number and per capita number of employee-owned companies. Top industries for employee ownership in Lynchburg include insurance, engineering, and HVAC services. #8 - SPRINGFIELD, MISSOURI Springfield, Missouri is the 8th best city for employee ownership in 2022. One of just three cities in the top 40 for both total and per capita employee-owned companies, Springfield is home to 21, including SRC Holdings, Ollis/Akers/Arney, Penmac Staffing, Global Recovery Group, NewStream Enterprises, DeWitt & Associates, and South Barnes Development Company. SRC is one of the most well-known employee-owned companies in America because its unique approach to open book management led to the creation of The Great Game of Business, which thousands of companies now use to increase engagement and business performance. A number of Springfield companies are also behind the recently launched Missouri Center for Employee Ownership. #9 - ST. LOUIS, MISSOURI St. Louis, Missouri is the #9 city for employee ownership in 2022. The gateway to the west, St. Louis is home to 28 employee-owned cities, including Balke Brown Transwestern, Roeslein & Associates, USA Mortgage, and Graybar Electric. Top industries for employee ownership include real estate, construction, and engineering. #10 - OAKLAND, CALIFORNIA Oakland, California rounds out the top ten as the #10 ranked city for employee ownership. Known as “The Town,” Oakland is home to 35 employee owned businesses, the 8th most of any city. Companies in Oakland include MN Builders, Menke & Associates, Paramount Export Company, Berrett-Koehler Publishers, Coracao Chocolate, and New Harbinger. Oakland is also home to a number of non-profit organizations that promote employee ownership, including the National Center for Employee Ownership and The Democracy at Work Institute. #11 - HONOLULU, HAWAII Honolulu, Hawaii is the #11 city for employee ownership in 2022. The state capital and largest city in Hawaii, Honolulu is home to 30 employee-owned companies, including Generator & Power Systems LLC, Island Pacific Distributors, Roberts Hawaii, and The Solaray Corporation. Top industries include engineering, wholesale, and HVAC services. #12 - GRAND RAPIDS, MICHIGAN Grand Rapids, Michigan is ranked #12 for employee ownership in 2022. Located just east of Lake Michigan, Grand Rapids is home to 21 employee-owned companies, including Custom Profile, Progressive AE, Axios, and Lumbermen’s. Grand Rapids is one of just nine cities in the Top 50 for both total number and per capita number of employee-owned companies. Top industries for employee ownership in Grand Rapids are engineering, construction materials, and manufacturing. #13 - HUNTSVILLE, ALABAMA Huntsville, Alabama is the #13 city for employee ownership in 2022. The most populous city in Alabama, Huntsville is home to 20 employee-owned companies, including Ignite, OASYS, Inc, Pinnacle Solutions, Radiance Technologies, and Torch Technologies. Top industries for employee ownership in Huntsville are engineering, defense contracting, aerospace, and IT consulting. #14 - FAIRFAX, VIRGINIA Fairfax, Virginia is the 14th best city for employee ownership in 2022. Just outside of the nation’s capital, Fairfax is home to 10 employee-owned companies, including Miklos Systems, Fairfax Lumber & Hardware, and Zimmerman Associates. With a population of 23,429, Fairfax has one employee-owned company for every 2,343 residents, making it the #5 city for per capita employee ownership. Fairfax is also the 2nd smallest city on the Top 25. Major industries for employee ownership in Fairfax are consulting and engineering. #15 - SAN FRANCISCO, CALIFORNIA San Francisco, California is the #15 city for employee ownership in 2022. “The City by the Bay” is home to 50 employee-owned companies, making it #3 in terms of total number. Inheritance Funding Company, Matarozzi Pelsinger Builders, Gensler, Rainbow Grocery Cooperative, Recology, and Swinerton all call San Francisco home. With a population of 866,606, San Francisco is the largest city on the Top 25. The City and County of San Francisco and the San Francisco Small Business Development Center are partnering with Project Equity to educate locally owned businesses on the advantages of converting to employee ownership. San Francisco was also part of the Democracy at Work Institute’s 2019-2020 Shared Equity in Economic Development (SEED) Fellowship, an initiative focused on creating worker cooperatives. #16 - PORTLAND, MAINE Portland, Maine is ranked #16 for employee ownership in 2022. Known for lighthouses and seafood, Portland is home to 11 employee-owned companies, including Systems Engineering, Artist & Craftsman Supply, Stroudwater Associates, and Wright-Ryan Construction. With a population of 66,803, Portland has one employee-owned company for every 6,073 residents, making it the #21 city for employee ownership per capita. Top industries for employee ownership in Portland are professional services and construction. #17 - ATLANTA, GEORGIA Atlanta, Georgia is the #17 city for employee ownership in 2022. The capital of Georgia, Atlanta is home to 30 employee-owned companies, including Benning Construction Company, Ogden Forklifts, Choate, EPI Breads, and Techwood Consulting. Atlanta is the #30 city for the total number of employee-owned companies, and several initiatives are underway to spread the model in Atlanta. The Atlanta Wealth Building Initiative (AWBI) and Project Equity have partnered to create a business retention strategy focused on employee ownership. Atlanta was also part of the Democracy at Work Institute’s 2018-2019 Shared Equity in Economic Development (SEED) Fellowship, an initiative focused on creating worker cooperatives. 3rd largest city #18 - ROANOKE, VIRGINIA Roanoke, Virginia is the 18th best city for employee ownership in 2022. Nestled in the Blue Ridge Mountains, Roanoke is home to 12 employee-owned companies, including R&K Solutions, Lanford Brothers Company and The Branch Group. Top industries for employee ownership in Roanoke include professional services, engineering, and construction. #19 - LOUISVILLE, KENTUCKY Louisville, Kentucky is the #19 city for employee ownership in 2022. Kentcuky’s largest city and the host of one of the most famous horse races in the world, Louisville is home to 34 employee-owned companies, including Advanced Lifeline Services, Hall Contracting of Kentucky, Master’s Supply and S&D Group. With a population of 615,924, Louisville is the second-largest city among the Top 25. Louisville was also part of the Democracy at Work Institute’s 2019-2020 Shared Equity in Economic Development (SEED) Fellowship alongside San Francisco and Atlanta. #20 - SANTA FE SPRINGS, CALIFORNIA Santa Fe Springs, California rounds out the Top 20 as the #20 city for employee ownership in 2022. Located in Los Angeles County, Santa Fe Springs is home to eight employee-owned companies, including Great Western Sales, LeFiell Manufacturing Company, and MATT Construction. With a population of 17,349, Santa Fe Springs is the smallest city in the Top 25. Santa Fe Springs has one employee-owned company for every 2,169 residents, making it the #4 city for employee ownership per capita. #21 - WALNUT CREEK, CALIFORNIA Walnut Creek, California is ranked #21 for employee ownership in 2022. The fifth city from California to make the list, Walnut Creek is home to 10 employee owned companies, including Brown and Caldwell, AEI Consultants, Diablo Magazine, HPGI Holdings, and Heffernan Insurance Brokers. Walnut Creek has a long history of employee ownership. Brown and Caldwell is one of the older ESOPs in the country as they established their program in 1962 — that’s 60 years of being employee-owned! #22 - PITTSBURGH, PENNSYLVANIA Pittsburgh, Pennsylvania is the #22 city for employee ownership in 2022. Known as the “Steel City,” Pittsburgh is home to 20 employee-owned companies, including Standard Air & Lite Corporation, Aerotech, Garrison Hughes, and Ryan Construction. In 2019, The Pittsburgh City Council voiced strong support for employee ownership. This was followed by the creation of a Citywide Task Force taking a comprehensive approach to contacting business owners about converting to employee ownership. The Task Force represents a broad group that includes the Office of Mayor William Peduto, the Office of the Lt. Governor, the PA State House, the Pittsburgh City Council, the Pennsylvania Center for Employee Ownership, the Democracy at Work Institute, Chatham University, and many Pittsburgh-based businesses. #23 - PORTLAND, OREGON Portland, OR is the 23rd best city for employee ownership in 2022. Known as the “City of Roses,” Portland is home to 32 employee-owned companies, good enough for #13 in terms of total number of EO businesses. Breakside Brewery, DKS Associates, Durham & Bates Insurance, and Hunter-Davisson all call Portland home. Top industries for employee ownership in Portland include architecture, engineering, and construction. #24 - YORK, PENNSYLVANIA York, Pennsylvania is ranked #24 for employee ownership in 2022. York is home to eight employee-owned companies. With a population of 43,907, York is the third-smallest city on our list. York has one employee-owned company for every 5,488 residents, making it the #18 city for employee ownership per capita. Top industries for employee ownership in York are engineering, HVAC, and manufacturing. #25 - ASHEVILLE, NORTH CAROLINA Asheville, North Carolina rounds out the list as the 25th best city for employee ownership in 2022. Asheville is home to 10 employee-owned companies, including John W. Abbott Construction, MB Haynes, and Moog Music. Top industries for employee ownership in Asheville include manufacturing, construction, and printing. OTHER NOTABLE CITIES Two cities outside of the Top 25 are worth mentioning. The city with the most employee-owned companies is none other than New York. However, as the most populous city in the country with 8,804,190 inhabitants, New York has just one employee-owned company for every 82,282 inhabitants, making it the #181 city per capita (fourth from the bottom of the list). The city with the highest density of employee-owned companies is Zeeland, Michigan. Zeeland has six employee-owned companies and 5,522 residents, giving it one business for every 920 people. But it is just #150 in terms of total businesses. While both are remarkable, New York and Zeeland showcase why we chose an approach that considers both absolute and per capita number of employee-owned companies. We are proud to showcase the cities in America that have done the most to foster a positive environment for employee ownership. These cities are setting the standard for how to encourage employee ownership. At Certified Employee-Owned, we will continue to update our Directory of Employee-Owned Companies and create visibility for successful approaches to building an employee-owned economy. Note: All data on number of employee-owned companies comes from the Certified Employee-Owned Directory as of 6/16/2022. All data on city populations comes from the U.S. Census Bureau for the year 2020.

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