Statements on Introduced Bills and Joint Resolutions

Floor Speech

STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS -- (Senate - August 02, 2007)

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BY Mr. SANDERS (for himself and Mr. LEAHY):

S. 1982. A bill to provide for the establishment of the United States Employee Ownership Bank, and for other purposes; to the Committee on Banking, Housing, and Urban Affairs.

Mr. SANDERS. Mr. President, I am introducing today with Senator LEAHY the U.S. Employee Ownership Bank Act.

At a time when the U.S. has lost over 3 million manufacturing jobs; at a time when we are on the cusp of losing millions of high-paying information technology jobs, this legislation would begin to reverse that trend by providing employees with the resources they need to purchase their own businesses through Employee Stock Ownership Plans and Eligible Worker Owned Cooperatives.

Specifically, this legislation would authorize $100 million to create a U.S. Employee Ownership Bank within the Department of Treasury to provide loans, loan guarantees, technical assistance, and grants to expand employee ownership throughout the country.

Why is it so important for the Senate to provide incentives to expand employee ownership in this country? The answer is simple: employee ownership is one of the keys to creating a sustainable economy with jobs that pay a living wage.

This legislation has the strong support of the ESOP Association, a nonprofit organization representing approximately 2,500 Employee Stock Ownership Plans throughout the country. Let me quote from a letter they recently sent to my office:

Your legislation is a modest first step in awakening our Government to the fact that in the 21st Century the inclusion of employees as owners of the companies where they work in a meaningful manner should be a key component of any national competitiveness program. If the Senate adopts your legislation, and it eventually becomes law, we assure you that the ESOP community will work constructively to ensure that the loan and grant program you propose works effectively to benefit the employee owners, the employee owned companies, and our American economy.

Every day we read in the papers about plants that are being moved to China, Mexico, and a number of other low wage countries. Since a number of these factories were making profits, shutting them down was unnecessary and could have been avoided by selling these factories to their employees through ESOPs or worker-owned cooperatives.

Since 2000, the U.S. manufacturing sector has lost 3.2 million decent-paying jobs. Put another way, since George W. Bush has been elected President, this country has seen one out of every six factory jobs disappear.

In addition, the Associated Press recently reported about a study by Moody's which found that ``16 percent of the nation's 379 metropolitan areas are in recession, reflecting primarily the troubles in manufacturing.''

In other words, about 16 percent of the biggest cities in this country are experiencing a recession, largely due to the loss of decent-paying manufacturing jobs. I suspect that this problem is even worse in rural areas. In my small State of Vermont, we have lost about 20 percent of our manufacturing jobs over the past 6 years representing over 10,000 jobs.

Let me just give you an example of some of the jobs that have been lost. From 2001-2006 the United States of America experienced the loss of 42 percent of our communication equipment jobs; 37 percent of our semiconductor and electronic component manufacturing jobs; 43 percent of our textile jobs; and about half of our apparel jobs.

Not only are we losing decent-paying manufacturing jobs, we are also losing high-paying information technology jobs as well.

While the loss of manufacturing jobs has been well-documented, it may come as a surprise to some that from January of 2001 to January of 2006, the information sector of the U.S. economy lost over 640,000 jobs or more than 17 percent of its workforce.

Unfortunately, the worst may be yet to come. Alan Blinder, an economist at Princeton and the former Vice Chairman of the Federal Reserve has recently concluded that between 30 and 40 million jobs in the United States are vulnerable to overseas outsourcing over the next 10 to 20 years.

Would expanding employee ownership be a cure-all for what ails the manufacturing and information technology sectors? Of course it wouldn't. But I strongly believe that employee ownership can and should be one of the central strategies in combating the outsourcing of American jobs. Simply put, workers who are also owners will not move their own jobs to China.

Today, there are some 11,000 Employee Stock Ownership Plans, hundreds of worker owned cooperatives, and thousands of other companies with some form of employee ownership, and most of them are thriving.

In fact, employee ownership has been proven to increase employment, increase productivity, increase sales, and increase wages in the United States. According to a Rutgers University study, broad based employee ownership boosts company productivity by 4 percent shareholder return by 2 percent and profits by 14 percent. Similar studies have shown that ESOP companies paid their hourly workers between 5 to 12 percent better than non-ESOP companies.

Yet, despite the important role that worker ownership can play in revitalizing our economy, the Federal Government has failed to commit the resources needed to allow employee ownership to realize its true potential, and that is why this legislation is so important.

When I was the Ranking Member of the Financial Institutions and Consumer Credit Subcommittee in the House of Representatives, I was able to hold a hearing on this issue nearly 4 years ago.

During the hearing, a number of witnesses told the Subcommittee that if Federal loans, loan guarantees, technical assistance and grants were made available for the expansion of employee ownership, factories that are now closed and abandoned would be open for business today.

For example, the Subcommittee heard from Larry Owenby who worked at the RFS Ecusta mill in North Carolina for 30 years until one day, the company decided to shut down.

Other witnesses talked about factories that were closed in Mississippi, Alabama and Ohio. All of the witnesses testified in support of Federal loans, loan guarantees and technical assistance for the expansion of employee ownership. In fact, if this assistance had been around before the plants had closed, many of them would still be employed today as employee owners.

The final point that I want to make is that the Federal Government, through the U.S. Export-Import Bank, is already providing billions of dollars in loans, loan guarantees and other assistance to large, multi-national companies, such as Boeing, General Electric, and Halliburton. Many of these companies happen to be some of the largest job cutters in America, as they have moved hundreds of thousands of jobs to China, India, and Mexico.

In my opinion, instead of providing corporate welfare to large corporations that are throwing American workers out on the street as they move overseas, we should be providing employees with the tools they need to create and retain jobs right here in the United States through the expansion of employee ownership.

I urge my colleagues to support this important piece of legislation.

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