Earlier this month, Univision announced it was selling Gizmodo Media Group (a digital media company comprising former Gawker sites such as Gizmodo, Kotaku, Splinter, Jezebel, and The Root) as well as the Onion (including its eponymous site, The A.V. Club, Clickhole, and The Takeout) to a private equity firm, Great Hill Partners.
No further layoffs have been announced for the 233 unionized employees at the two properties. But workers and contributors are probably right to worry that some or all of the sites will see mass layoffs or closure as Green Hill seeks to strip the companies for their most profitable parts while burning the rest. This is the private equity business model, after all, and it would be naive to expect anything else.
But what if there was an alternative? Wouldn’t it be better if the workers at the Gizmodo Media Group and the Onion had the right to block the Great Hill sale and buy the company themselves, turning it into a worker-owned business, with financial and technical assistance from the government?
According to a new poll from YouGov Blue commissioned by the Democracy Collaborative, a pro-democracy research group, 69 percent of Americans say yes: workers should have the right to purchase their workplaces before any other buyers when they are up for sale or slated to close. This includes absolute majorities of Democrats, Independents, and even Republicans. It also receives absolute majorities among all generations and racial groups. Even more astonishingly, only 10 percent of Americans say they oppose giving workers the right of first refusal to buy out their business.
Yesterday, the Democracy Collaborative released a report that could help make this right a reality. Precedents already exist in several places. If you are a tenant in an apartment building in the District of Columbia and your landlord wants to sell the building, you have a legal right to join with other tenants and buy out your homes under the city’s Tenant Opportunity to Purchase Act. Similarly, if you are a worker in Italy and your workplace is being closed, you have a legal right to get together with your coworkers and purchase it under the country’s “Marcora” legislation.
Both jurisdictions provide financial and technical assistance for such buyouts, and in both places the policies have been in force for decades, giving tens of thousands of people opportunities to own their homes or workplaces.
In a time when millions of baby boomers who own small and medium-sized businesses are retiring, potentially sparking massive layoffs as the firms close or are bought up by private equity companies, isn’t it a no-brainer to give workers the right to intervene themselves — to say, “We are going to buy the business, take it into our own hands, and run it ourselves”?
The concept of a right of first refusal would be a modest but important challenge to the absolute authority of owners to do whatever they please. It would maintain their right to choose when to leave the business, and to set a price at which they were willing to sell, but would take away their absolute right to shutter a viable company or sell it to an asset-stripping private equity firm. Owners who are closing or selling a business are moving on to something else. But their workers are left behind, and should therefore have priority in controlling the future of the business.
The Democracy Collaborative report proposes that companies being sold or closed would be held in escrow for a period of time. Workers would be given the right to choose a trustee, or have one appointed on their behalf, and would be made aware of how much they needed to pay to exercise the right of first refusal. They would then be given access to a range of new dedicated sources of capital for worker ownership transitions, including ones that would mandate repayment not in the form of money but instead by addressing social needs through production, changing company practices to be more environmentally sustainable, and/or rectifying legacies of discrimination or inequality in the workplace.
The workers’ trustee would prepare a proposal to purchase the company, and workers would vote by card check on whether to go forward with it. Depending on the firm, this might involve a contribution from the workers, but they would also be able to access a public sector loan with repayments based on income (so low-income workers would not have to pay until they were in a better financial position). This would be a change from the Marcora model in Italy, where workers have to pay for buyouts upfront using their accrued unemployment benefits — potentially causing extreme poverty in situations where the bought-out company fails and workers are left both unemployed and without a safety net.
Not that every company being sold or closed would be bought by workers. In some cases, workers might green light the new proposed ownership. In other cases, a closure might happen for entirely understandable reasons, and workers would decide that buying it out would be a waste of time and effort. But few in the US today would agree that every company stripped and shut down by vulture capitalists was doomed to that fate. Many profitable, viable, important companies have been destroyed that could have been saved, and many workers who may have wanted to save them were never given the chance.
Some might argue for preserving the status quo. But they are a small minority, and the burden is on them to explain why they don’t trust workers to own good, socially responsible, democratic businesses. There are thousands of workers across America who already own their companies as cooperatives. This policy would give millions more a right to join their ranks — whether to save their company, or because they think they could do a better job running it than a third-party buyer who might not have their best interests at heart.
“Right of first refusal” enjoys immense popular support, and politicians who endorse it could find a groundswell of approval from unlikely places — uniting workers of all races, genders, and parties behind a new economic right that gives them greater control over their futures. We call that freedom.