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Description
From the hearing of Council's Committee on Commerce & Economic Development held Monday, April 2, 2018:
Kevin McPhillips, Executive Director of the Pennsylvania Center for Employee Ownership testifies before Council regarding initiatives to support employee ownership.
A
C
Good
afternoon,
and
thank
you
for
having
me
my
name-
is
Kevin
McPhillips
and
I'm.
The
executive
director
and
CEO
of
a
relatively
new
nonprofit
organization
called
the
Pennsylvania
Center
for
employee
ownership.
We
exist
for
one
purpose:
to
raise
awareness
about
a
remarkable
program
that
dramatically
improves
the
lives
of
citizens
in
Philadelphia
throughout
the
Commonwealth
and
the
nation
as
a
whole.
C
It's
called
employee
ownership
and
in
specific,
the
employee
stock
ownership
plan
or
Eastside
we're
here
today,
because
we
want
to
ask
you
to
allow
us
to
help
you
and
the
city
of
Philadelphia
I'd
like
to
begin
by
thanking
the
distinguished
members
of
council
for
the
opportunity
to
share
a
few
thoughts
and
I'd
like
to
especially
commend
councilman
at-large,
Derek
Greene
and
his
staff
for
taking
the
critically
important
step
that
you've
done
today
to
improve
lives
and
decrease
the
wealth
gap
that
is
strangling
so
many
of
our
citizens.
Today,
employee
ownership
can
help
to
do
that.
C
I'd
like
to
take
just
a
moment
for
a
personal
note.
I
grew
up
in
Northeast,
Philadelphia
and
I'm,
proud
to
say
that
my
father
was
a
dedicated
member
and
leader
in
city
government,
for
over
25
years,
the
city
and
its
many
extraordinary
offerings
were
centrally
important
to
my
family
and
to
myself
and
that's
why
we're
here
today?
It's
within
that
context
that
I'd
like
to
share
a
couple
stories
in
2002,
a
man
with
a
successful
distribution
company
in
the
small
town
of
Selinsgrove
Pennsylvania,
turned
75.
C
It
was
time
to
sell
his
business
and
spend
more
time
with
his
wife
and
his
family.
He
had
40
employees
and
he
considered
them
family
as
well.
Unfortunately,
as
they
were
in
a
remote
location,
all
offers
to
purchase
the
business
included,
moving
it
away
and
laying
off
40
people.
He
couldn't
do
that
these
were
his
neighbors.
Instead,
he
learned
about
a
plan
that
would
work.
He
sold
the
business
for
the
same
amount
of
money
offered
to
his
employees.
His
employees
paid
nothing
fast
forward.
C
15
years
to
today,
the
business
has
over
200
employees
and
all
40
of
the
original
ploys
have
more
than
enough
funds
to
retire
today.
Some
with
seven
figures
that
to
warehouse
workers,
truck
drivers,
laborers
office
assistants,
as
well
as
management
in
a
Forbes
magazine
story
last
year,
it
was
related
that
two
twin
sisters
graduated
school
in
Oregon,
and
went
to
work
at
a
fast-food
establishment.
After
one
year
they
received
a
five
cent
raise.
C
C
She
had
just
over
1
million
dollars
in
her
account
and
had
contributed
none
of
her
own
money.
So
what
is
this
program?
Well
in
1974
Congress
passed
a
law
that
is
part
of
ERISA,
the
Employee
Retirement
Income
Security
Act.
The
law
says
that
an
owner
can
sell
some
or
all
of
their
business,
10%
20%
for
9%
or
even
a
hundred
percent
to
their
employees.
The
employees
pay
nothing.
Rather,
the
business
takes
on
a
note,
a
mortgage.
C
If
you
will
to
pay
off
the
owner
overtime,
the
federal
government
and
the
state
of
Pennsylvania
turned
around
and
say:
look
if
you
do
this
and
you
meet
certain
business
requirements,
you
never
have
to
pay
taxes
again
on
your
profits,
for
whatever
portion
is
owned
by
the
employees,
the
tax
savings
served
to
pay
off
the
mortgage
once
paid.
Those
funds
can
be
used
for
any
number
of
things,
most
particularly
growth.
C
Some
of
the
successful
companies
right
here
in
Philadelphia
that
are
employee,
owned,
include
Pannonia
associates,
many
of
whom
are
here
today.
The
Gramm
company
also
here
today,
mccain
defense
down
at
the
Navy
Yard
urban
engineers,
Cardone
TransAmerican
office,
furniture,
Elmo,
Corp
and
Crown
Court
concealed.
Yet
in
all
of
Philadelphia,
there
are
less
than
two
dozen.
C
In
total
other
recognizable
employee
owned
companies
include
Wawa
sheets,
which
is
the
sort
of
the
Wawa
that
Western
PA
the
dance
Koshu
company
in
West,
Chester
or
Chester
County
Bradford
white
water
heaters
right
in
Montgomery,
County,
New,
Belgium,
beer,
King,
Arthur,
Flour
and
Publix,
the
largest
grocery
store
chain
in
the
nation,
and
yet
very
few
people
know
about
Aesop's
and
even
fewer
who
understand
in
private
industry.
The
days
of
real
pensions
are
largely
over
as
the
baby
boomers
age
we're
on
the
cusp
of
a
silver
tsunami.
C
It's
estimated
that
four
point:
five
million
companies
will
transact
over
the
next
ten
years.
Four
point:
five
million,
and
yet
thirty
percent
of
business
owners
over
the
age
of
55
have
no
succession
plan.
None
worse.
Yet,
30%
of
employees
over
the
age
of
55
have
zero
retirement
savings.
Nine
and
fully
60%
of
American
workers
over
55
have
less
than
$50,000.
C
So
what's
going
to
become
of
our
citizens?
What's
the
future
of
Social
Security?
How
will
they
keep
be
cared
for
and
who's
going
to
pay
for
it?
Employee
ownership
offers
a
stark
contrast,
based
on
a
recent
report
from
the
economic,
the
report
of
economic
well-being
by
the
nonprofit
national
center
for
employee
ownership
out
of
Oakland.
Employee
owners
have
30%
higher
wages,
30%
higher
wages
than
non
employee
owners
on
average
two
and
a
half
times
higher
retirement
five
times
longer
job
tenure
and
are
92%
less
likely
to
be
laid
off.
C
Today,
you're
going
to
hear
from
a
recognized
national
legal
expert,
my
colleague
James
steiker
on
the
community
value
of
employee
ownership,
we're
going
to
hear
from
a
fourth-generation
Philadelphia
company
CEO
mr.
William
Stockwell,
who
chose
to
keep
his
company
here
in
Philadelphia
and,
most
importantly,
you're,
going
to
hear
from
the
company
employees
whose
lives
have
been
changed
forever.
C
Members
of
council
here's
what
employee
ownership
can
do
for
the
city
of
Philadelphia.
It
will
keep
jobs
and
companies
here.
Esop
companies
are
on
average
much
more
productive.
Surprise,
surprise.
That
means
job
growth.
Job
growth
means
an
increase
in
the
tax
base,
employee
ownership
will
contribute
to
retirement
and
correcting
wealth
disparity,
and
it
will
not
cost.