Exclusive: Murphy budget allocates money for employee ownership efforts (updated)

Ahead of Gov. Phil Murphy’s Fiscal Year 2024 Budget Address, NJBIZ exclusively learned that Murphy will call for funding toward employee ownership and supply chain diversity efforts in the Feb. 28 speech.

Sources in the Murphy administration tell NJBIZ the governor wants to appropriate $6 million annually in grants to broaden employee ownership here in the Garden State. The grants would fund a firm’s cost of conversion into any of the three employee ownership vehicles:

• an Employee Stock Ownership Program (ESOP)
• a worker-owned cooperative
• an employee ownership trust

Eligible expenses for the grants would include accounting services, legal services, succession planning advisory and technical assistance.

The proposal was recommended by Murphy’s Wealth Disparity Task Force, which he formed in September 2021 via Executive Order No. 262. The governor said that the task force would advise his administration on strategies aimed at addressing the various causes and effects of wealth disparity in New Jersey.

“Income inequality is one of the preeminent and far-reaching issues in today’s society,” said Murphy when he signed that order. “We cannot have a stronger and fairer New Jersey without examining the causes of our wealth gaps and without establishing strategies to combat this long-standing problem. I look forward to working with the Wealth Disparity Task Force and continuing our administration’s efforts to create an economy that works for every New Jerseyan.”

As for the thinking behind this funding and new initiative, the sources point to studies showing that employee ownership dramatically increases the wealth of workers of color, who face a severe median wealth gap from their white counterparts.

Furthermore, the administration sources say that employee-owned firms often experience higher innovative output and R&D intensity. And they believe that broadening employee ownership of firms that build critical technologies, products and services here in the Garden State will ensure that the gains of new energy sources and other innovations are shared by workers of these firms.

The administration believes that will especially come into play as the state’s green and innovation economies continue to grow and evolve—and that incentivizing employee ownership conversions could also help equitably build and strengthen New Jersey’s middle class, particularly for people of color.

The governor is set to deliver his annual Budget Address Tuesday at 2 p.m. from the State House in Trenton. NJBIZ will have continued coverage from the event, along with analysis and reaction.

Editor’s note: This story was updated at 2:05 p.m. ET Feb. 28, 2023, to update the annual grant total to $6 million.