Reporting on a new study from the Joint Center for Housing Studies of Harvard University last week, VTDigger reminded us yet again of what we hear week after week: demand for housing in Vermont continues to rise much faster than available supply, contributing to soaring housing costs. More specifically, the report found that median sale prices for homes in northwest Vermont rose 18.3% from March 2021 to March 2022, bringing the annual income needed to afford a median-priced home in the region up to $116K.
At the same time, Vermont Business Magazine recently reported that Vermont is now only behind Missouri in the amount of difficulty finding workers to staff local small businesses. Lower wages combined with a severe lack of affordable housing supply have exacerbated this ongoing workforce shortage, and surveys show that residents continue flocking to other states with higher pay and more housing options.
“We have a lot more jobs than we have housing,” noted Gordon Black, Assessor and Economic Development Coordinator for the Town of Manchester, during a conversation earlier this year on Vermont’s housing and workforce crises. “Quite frankly, the teachers who teach here, the policemen who work here, none of those people can afford to live in the town that they work for, or work with.”
For younger Vermonters ages 25-34, the dream of having a stake in their communities through homeownership has receded further into the horizon; among those able to stay in Vermont, only 41% owned a home in 2017, down from 49% for the same age group in 2007.
Owning your job
We aren’t experts on housing, but we do know the importance of ownership here at VEOC. Ownership, whether of a home or a business, is a powerful vehicle for growing household wealth, for establishing stability within a community, and for having a say over the decisions that impact individuals, their families, and their neighborhoods.
Historically, owning a home has been the primary avenue for Americans to have a stake within their local communities, while owning a business has been another powerful means of local ownership for a much smaller subset of the population. Today, however, we’re at an historic moment where broad-based employee ownership is gaining momentum across the nation, and more people are beginning to recognize the value of owning their work in addition to where they live. Or, for many young workers in rent-burdened places like Vermont, owning their job presents itself as an opportunity to have a stake in their communities even if homeownership is not currently an option.
“What we’re doing here is we’re turning the notion of ownership, of homeownership, into what you do in your day job, too, that you ought to have a longstanding stake in the place where you work,” said Alex Moss, president of Praxis Consulting Group, during his keynote address at our 20th Annual Vermont Employee Ownership Conference.
To be an employee owner is to have a stake in the company where you work as well as in the community where it has established roots. As an employee owner, hard work and innovation that increases the value of your company simultaneously increases your household wealth and supports your local economy. While many employees are accustomed to receiving bonuses if company performance is strong in a given year, broad-based employee ownership is the most comprehensive, direct way to give workers control over their futures and a stake in their local economies.
Employee ownership on the rise
In an Employee Stock Ownership Plan (ESOP), a trust owns company shares on behalf of the employee owners. Upon retirement, the company repurchases those shares at their current value and begins paying out the cash to the departing employee owner. In a worker-owned cooperative, profits are usually distributed based on hours worked after all expenses have been paid at the end of the year, at a rate set by the board of directors. In an Employee Owned Trust, profits are shared with employees on a regular basis. Better company performance means more money for employees.
There is a nationwide rise in worker-owned cooperatives, and Vermont is currently leading the nation in the number of worker co-ops per capita. In 2021 we saw Kalchē Wine Co and Flat Iron Cooperative establish themselves, and this year we’ve had the conversion of a village store in Marshfield into a worker co-op.
Vermont also has a strong presence of successful ESOP companies like Gardener’s Supply Company and King Arthur Baking Company. According to the most recent data from the National Center for Employee Ownership (NCEO), Vermont is second in the nation in ESOP companies per capita, though we’re 14th in per-capita participants.
Benefits of owning your job
Employee owners experience a variety of direct and indirect benefits compared to their traditionally employed peers. The specific advantages somewhat depend on the exact employee ownership structure, but usually include having more of a say in the workplace, better benefits like vacation time and insurance coverage, and greater financial security.
On average, ESOP employee owners ages 28-34 have 33% higher median income, 92% higher household wealth, and an additional $67,000 in retirement savings compared with their peers at non-employee owned companies. Combining the direct and indirect financial benefits of employee ownership, a recent study calculated the annual advantage at just under $26,000.
Cultivating a spirit of ownership
An apt quote from Mark Twain: “Almost any man worthy of his salt would fight to defend his home, but no one ever heard of a man going to war for his boarding house.” Many business owners seek to create an ownership mindset among their employees without giving them an ownership stake. Unsurprisingly, they often don’t see the results they’re after. It’s not easy to motivate employees with a sense of ownership, just like it’s not easy to get satisfaction from a sense of lunch.
Having a stake in the community means caring more about the outcome. When workers own their companies, their mindset shifts from punching the clock for a paycheck to thinking long term about where the company is heading and how to take care of it so that its value to the community continues to increase into the future.
While homeownership is in decline in Vermont, we’re glad to be seeing signs that employee ownership is on the rise. More employee owners means more people with an investment in their local economies, and it means more families able to navigate challenges like the ongoing housing shortage. Employee ownership offers an alternative or supplemental opportunity for working families to build a long-term stake here in Vermont, and it can help strengthen our communities across the state while doing so.
