As baby boomers age, the nearly 25 million jobs they have created nationwide are at risk. In Santa Clara County alone, roughly 15,000 boomer-owned businesses account for nearly 50% of private businesses that have employees, according to research by Project Equity. Only 15% will successfully pass to the second generation, and there will not be enough qualified individuals to buy and run the remaining 85%. The result will be a “silver tsunami” of retiring boomers that could spell disaster — or opportunity — for our communities.
One possibility is that corporations and private equity firms will buy and consolidate some of the larger boomer-owned firms while many treasured local businesses will be left to close. In this scenario, the tsunami will accelerate the longstanding trend of wealth concentration that is ripping the country apart, and many jobs will be lost.
But there is another path: Employees can buy these companies, through Employee Stock Ownership Plans (ESOPs) or worker-owned cooperatives. These strategies can reinvigorate the American dream with a new chapter of expanding ownership. The authors have lived this story and are proud of the outcomes. David Smathers Moore is founder of Sunnyvale-based TeamWorks Cleaning which, since 2006, has operated as a cooperative, owned and managed by its 19 house cleaners and office staff. Kirk Vartan and Marguerite Lee founded A Slice of New York pizzerias in Santa Clara and Sunnyvale, and sold them in 2017 to their longtime workers with technical assistance from Project Equity, a nonprofit that Hilary Abell co-founded.
The transition to employee ownership requires guidance to help retiring owners structure a well-managed exit, and technical assistance and training to prepare employees for new responsibilities. But it is proven: Thousands of employee-owned companies are stable sources of employment and wealth creation in the United States.