By Mauri Ingram
Whatcom Community Foundation, President, and CEO
I read an interesting report recently which highlighted the official United States unemployment rate dropped to 3.7 percent, representing a 49-year low. A recent Harris Poll had cited 80 percent of American workers report living paycheckto-paycheck. And, in Washington state, the data from the U.S. Census Bureau was just as troubling, indicating 25.9 percent of families who work have low wage jobs, and are among the working poor. When more closely examining these dissonant statistics, you find that our “full employment” economy is not a sign of prosperity, but rather, it is an economy trending towards creating low-paying, temporary jobs with no benefits or job security. However, Whatcom County, starting here in Bellingham, is addressing this trend by building quality jobs from our most essential resources: existing small businesses that transition into employee-owned enterprises.
There are 1,100 small businesses in Bellingham in operation for more than 20 years, which employ an estimated 2 in 5 Bellingham employees. But the owners of these small businesses are aging and most will retire over the next 15 years. You can imagine the hardships caused if these jobs disappear. These business owners need a succession plan that fits their goals, and employee ownership could provide it. As a longterm solution, transitioning to employee ownership through an Employee Stock Ownership Plan (ESOP) or a worker cooperative offers retiring entrepreneurs a safe and profitable way out of their dilemma. A leading business broker finds that only 20 percent of businesses listed for sale ever sell, and only 15 percent of companies will be passed on to a second generation. But, when business owners turn to employee ownership as a way to sell their company, they find they can be in the driver’s seat of the timing, sell at market rate and, in essence, find a buyer right under their nose.
Small business owners, more often than not, do not pass along their businesses to family members who would be able to sustain their business and the legacy it created, leaving them to close their businesses altogether or to sell to out-of-area buyers. However, in Bellingham and Whatcom County, we can blaze a different path. Given the commitment of the Whatcom Community Foundation, the WWU Small Business Development Center and Bellingham city officials in collaboration with the nonprofit Project Equity, we are already on board with options that empower small business owners with business succession planning.
The situation is urgent. The city of Bellingham has an estimated population of 88,500 and is the county seat of Whatcom County. The median income of Bellingham’s residents is just under $50,000 and currently, over twenty percent of the city’s population lives in poverty. And, the community cost of poverty is high for current and future generations.
In Bellingham, as well as throughout Washington State, small businesses employ hundreds of thousands of residents and they circulate about three times as much money in local communities as firms owned by chains or out-oftown interests. Closing small businesses serves the interests of no one, and non-local or corporate ownership means reduced benefits for communities and likely a reduction in local jobs. Employee ownership provides the power to deliver quality jobs with living wages to a broad range of workers, whose spending habits and entrepreneurial activities can help boost the entire economy, in Bellingham and across the county.
For Bellingham business owners nearing retirement, this is the perfect time to consider converting to employee ownership. It could mean a more prosperous future for Bellingham, and contribute to a more resilient Whatcom County economy, at a time when quality jobs are needed more than ever.