Employee Ownership Could Prevent a Baby-Boomer Business Closure Wave

At the 2026 Employee Ownership Ideas Forum, convened by the Aspen Institute Economic Opportunities Program and Rutgers’ Institute for the Study of Employee Ownership and Profit Sharing, Bharat Ramamurti drew on his experience as former deputy director of the National Economic Council and as a longtime economic policy adviser to argue that employee ownership belongs to a small category of policies that do not fit the usual Washington pattern of visible tradeoffs, winners, and losers. Most policy choices, he said, require deciding how to weigh those tradeoffs. Facilitating employee ownership, in his view, is different.

The benefits he named are not confined to workers. Employees gain a chance not only to preserve jobs but to build wealth. Business owners gain more exit options and a way to see the company they built continue. Consumers keep more choices in their communities when local firms are preserved rather than shut down. The broader economy benefits because, as Ramamurti put it, these small businesses form part of the foundation of U.S. manufacturing, health care, and industrial policy.

He extended the argument beyond local economics. A large deterioration in these businesses, he said, would harm U.S. economic competitiveness and “frankly even national security,” given their role in sectors such as manufacturing, construction, home health care, and health care services.

Ramamurti’s central warning is that the United States is approaching a business-succession wave. He said 3 million businesses are owned by baby boomers, and that the vast majority of baby boomers report wanting to dispose of their businesses — effectively to retire — within the next 10 years. Collectively, those firms employ about 32 million Americans.

The question, in his account, is not whether those owners will eventually exit. It is what happens to the firms when they do. Ramamurti cited a 2022 McKinsey study finding that, among businesses in this category that transferred ownership or were otherwise disposed of, only 5% were sold: 3% to new owners and 2% to employees. The remaining 95%, he said, shut down in some fashion.

That figure drives the urgency of his remarks. If the pattern continues, employee ownership is not merely one desirable ownership model among others. It becomes a policy tool for preventing closures at scale.

Ramamurti emphasized that the risk is unevenly distributed. These businesses, he said, are overrepresented in rural communities and concentrated in industries including construction, manufacturing, home health care, and health care more generally. That makes the succession wave a possible regional service problem, not just a balance-sheet event for retiring owners.

He described the downstream questions plainly: what happens to the housing market in a smaller community if a main construction firm shuts down? What happens to the quality of health care if the company providing home health services closes? What happens to hospitals if a nurse-staffing provider disappears?

For Ramamurti, this is part of the concentration debate, but not only in the familiar sense of the largest companies getting larger. He described another form of concentration: the shrinking availability of basic services for people who do not live in one of the country’s 10 largest metropolitan areas.

Ramamurti did not present employee ownership solely as a defensive measure against closure. He argued that employee-owned businesses tend to outperform non-employee-owned businesses.

The example he gave came from government contracting. The government, he said, tracks contract performance carefully, and employee-owned government contractors receive much higher quality ratings than non-employee-owned firms. He characterized that as a “quality difference,” not only a governance preference.

He also tied employee ownership to a gap in wealth formation. Ramamurti said 50% of U.S. households do not own any stocks, despite public fixation on the stock market, and about 60% of households are homeowners. He used those figures to argue that many households lack access to the conventional channels of wealth building that dominate economic discussion. For workers with few paths to asset ownership, he said, employee ownership can provide another way to build wealth and pass something on to their children.

In Ramamurti’s telling, employee ownership creates a wealth-building channel for workers who otherwise have limited options, especially in firms that might otherwise disappear during an ownership transition.

Ramamurti proposed three federal policy directions.

First, he pointed to a financing gap. Even when employees want to buy a company, they may struggle to compete with offers from a private equity firm or another buyer with deeper pockets. Ramamurti said bipartisan proposals already exist in Congress to create federal financial support. One model he described is a revolving loan fund: the government provides low-cost loans to help employees complete transactions, the newly employee-owned companies repay the loans, and the money then supports the next set of potential owners.

Second, he argued that financing is not enough because employee-ownership transactions are complicated. Workers may want to buy the firm but lack the knowledge, paperwork capacity, lawyers, and accountants available to better-funded bidders. Government could respond with technical assistance, and possibly by simplifying the regulatory environment so that employee ownership faces fewer hurdles.

Third, Ramamurti called for more favorable tax treatment for owners who sell to employees. If an owner has multiple sale options with different tax consequences, he asked why the employee sale should not be more tax advantaged than a sale to someone else. Changing tax treatment is, in his words, something the federal government can do “relatively easily.” A federal thumb on the scale for tax-advantaged sales to employee owners, he argued, could change outcomes.

Ramamurti closed on a guardedly optimistic note. He said few issues in Washington currently command bipartisan support, but employee ownership is one of them. The ideas he had outlined, he said, already have bipartisan proposals at the federal level, and there is progress at the state level across party lines.

The optimism is conditional. Ramamurti described the moment as a crossroads: without action in the next few years, the country could miss a “massive opportunity” as millions of owners retire and firms are sold, closed, or transferred under existing incentives. His hope is that forums and professional networks can turn the existing bipartisan interest into concrete reforms.