Building Worker Wealth Through Employee Ownership

Income Inequality

County of Los Angeles

Expand existing project, program, or initiative

Low-to-moderate income (LMI) workers in Los Angeles, who are disproportionately Black and Latino, are trapped in a cycle of working poverty. The combination of low and stagnant wages, limited opportunities for advancement, and a rapidly rising cost of living have made it nearly impossible for these workers to participate fully in the LA economy, stay in their homes, and build generational wealth. At the same time, nearly half of the job-creating businesses in LA County have owners nearing retirement age, and the majority of those owners do not have succession plans. Many owners assume they will find a buyer, but only 20% of businesses listed actually sell. In LA County, these businesses employ 1 in 5 private sector workers and account for $237 billion in revenue. Without urgent intervention, this wave of retirements, known as the Silver Tsunami, will lead to widespread small business closures, resulting in massive job losses and upending the local economy.

Employee ownership (EO) is a unique, 'shovel-ready' solution that turns the small business closure crisis into an opportunity to build wealth and equity for LMI workers in LA County. EO preserves business owners' legacies, gives workers a meaningful financial stake in the success their labor creates, and strengthens communities. Studies have repeatedly shown that EO is a powerful income and wealth building opportunity, and that these benefits can be life-changing, particularly for LMI workers and workers of color. Project Equity recently launched a multi-year partnership with the LA County Department of Economic Opportunity to build community wealth and retain local businesses through EO. LA2050 can help to strengthen and catalyze this work by enabling us to conduct ground-level market research into the needs of LA's legacy businesses. With LA2050's support, we will: 1. Craft and conduct a survey of LA County business owners age 55+ who have been in business for 10+ years and have 10+ employees in order to analyze the current state of the market for EO. This survey will assess owners' readiness to sell, their level of succession planning, and their familiarity with EO as a succession option. 2. Raise awareness of EO via regional marketing and sharing stories of LA businesses that have converted to EO. 3. Host educational webinars and events. 4. Hold an Employee Ownership Equity Summit for stakeholders in LA County in early 2024 that spotlights local employee-owned businesses.

Making just one change-who gets to benefit from owning a business-can transform lives. E.g., since Proof Bakery became a cooperative in 2021, the owner received a fair price for her business, the 25 employee-owners have received over $400,000 in profit sharing, and Atwater Village retained a beloved institution. Christian, a baker at Proof, credited his increased earnings with enabling him to afford housing, saying, "It's the difference between maybe one day I can own a home and, now I definitely will be able to own a home, even on a single income." In the short term, we will increase awareness of EO as a viable small business succession strategy among LA County business owners and accelerate our ability to impact local workers by building demand and capacity for EO transitions. In the long term, we envision that EO will increase wealth building opportunities for thousands of LMI workers, which will translate into greater housing stability and economic participation.

Project Equity is a data-driven organization. We will track our progress in this project using the following metrics: - Survey recipients reached - Survey responses received - Stories and videos published and number of views - Ad campaigns placed and number of engagements - Total media impressions - Educational events/webinars held and individual stakeholders reached - Consultations arising from educational events/webinars - Attendees at the Employee Ownership Equity Summit We will actively monitor the open and completion rates for the survey and adjust our follow-up messaging as needed to increase engagement. Additionally, we will collate the quantitative and qualitative learnings from the survey into a report that we can use to inform our ongoing strategy for advancing EO in LA County and to help other organizations in the field to do the same.