Using Worker Buyouts To Counteract Retaliatory Closings


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There has been much understandable outrage at the closure of Gothamist and DNAinfo, a mere week after the publications voted to unionize. The closure of these publications was a move that will cause huge hardship to the journalists and staff at those publications, and should never have happened.

It is also probably legal. United States labor law is exceptionally favorable to employers who would prefer to shut down their business rather than recognise a union. This precedent isn’t about to change because of a persuasive legal argument under the current Supreme Court and NLRB – but there are policy options which would significantly reduce the incentives for owners to close businesses in response to unionization, and protect workers where such actions are attempted.

The first part of such a platform would be a version of the Italian “Marcora Law”, introduced in 1985. The law established a state investment fund for “phoenix cooperatives” in businesses or workplaces that were shutting down. Workers were given the right to collectively use up to three years of future unemployment benefits to instead buy the shares in their former workplace. These funds would then be matched three times over by the state investment fund, creating a sizeable sum of capital which could be used to revitalise the company.

Only 10% of the cooperatives created under the Marcora Law failed, and these accounted for only 5% of the jobs. 95% of those employed at firms turned into “phoenix cooperatives” were successful in keeping their jobs. It is worth recalling here that 100% of these jobs would have been lost otherwise. Such a scheme clearly represents a viable model for saving many businesses which are shut down by owners – but it would not solve the question of businesses which are closed down solely to punish employees for unionization by itself.

What should be added to a “phoenix cooperative” law is a “right to own” policy, as proposed by the British Labour Party in their recent manifesto. What this effectively means is that if a company is being dissolved, sold, or floated on the stock exchange, a waiting period would be introduced. During that time, workers in the company would have a legal right to buy the company out, turning it into a cooperative (and if the company is being shut down, this can be done using the “phoenix cooperative” method of combining unemployment assistance and state investment).

United States labor law continues to remain sorely lacking in protection for union employees. Clearly, it would be desirable to introduce measures prohibiting employers from shutting down businesses as a form of retaliation against labor unions entirely. However, it may often be possible to create a pretext that will stand up in court regardless of the employer’s true intent. These measures would help to fill the gap whether or not such a law is introduced.

A government policy which encourages organized labor to take over viable businesses which are shut down by employers would help people around the country – not just in media organizations, but in all walks of life. It will also remove the political incentive to retaliate against union workers by shutting down healthy businesses, because those workers may often become richer as a result.

If we’re going to learn lessons from the Gothamist and DNAinfo closure, it should be that billionaire owners and their workers don’t have common interests. Government should take the workers’ side.