Adds employee-owned enterprises to the list of preferred contractors for public contracts in the state

◆ The sponsor's argument

Why April Baskin says this is needed

New York State law defines an employee-owned enterprise, or more specif- ically a worker cooperative, as a business that is democratically controlled and owned by its employees. Employees not only own the busi- ness but also allocate decision making power on the basis of "one member, one vote," in contrast with the shareholder model of corporate governance. The vast majority of worker cooperatives are small businesses with under 25 employees, according to the most recent report by the Democracy at Work Institute (DAWI) and the U.S. Federation of Worker Cooperatives (USWFC). A wealth of studies have illustrated that worker cooperatives are more resilient to economic shocks, experience lower turnover, and have higher productivity levels than conventional U.S. firms. Unlike conventional firms, where CEOs earn on average 350 times more than the typical worker, the pay ratio at a worker cooperative is typically no more than 2:1 from the highest to lowest earner. During the COVID-19 pandemic, 80 percent of worker cooperatives remained open, and just one in five worker cooperatives lost more than 50 percent of their revenue compared to nearly one in three traditional U.S. firms. New York State is home to more than 110 worker cooperatives which is the highest total in the country, according to the joint DAWI/USFWC report. But 91 of these businesses are located in New York City, which saw a dramatic rise in worker co-ops after establishing the $1.2 million Work- er Cooperative Business Development Initiative in 2014. The remaining employee-owned businesses are scattered across Upstate New York, lacking both a consistent funding mechanism and an organized trade association such as the New York City Network of Worker Cooperatives. This legislation seeks to amend the state finance law by adding employee owned enterprises to the list of preferred sources for State contracts. This list is currently composed of commodities produced by correctional industries programs, as well as commodities and services produced by nonprofit agencies or employment programs for blind persons, persons with mental or physical disabilities, or veterans. Designating employ- ee-owned businesses as preferred public contractors would provide a critical new revenue stream for these entities across the State, partic- ularly those outside of New York City.

This is the sponsor's own case for the bill, quoted from their memorandum. It is not Agora's description of what the bill does.