Policymakers should rethink who benefits from public investment

Capitol Weekly welcomes Opinions on California public policy or politics. Please read our guidelines for opinion pieces before submitting an Op-Ed. Submissions that do not adhere to our guidelines will not be considered for publication. 

OPINION – Each year, California invests at least $5 billion in transportation construction through SB 1, and over the next five years the state will receive approximately $41.9 billion in additional federal infrastructure funding. These are huge investment numbers, and it comes at the same time that certain federal contracting rules are shifting. That combination creates a rare opportunity for policymakers to rethink who benefits from public investment.

These dollars support road and bridge projects across the state and sustain hundreds of thousands of construction jobs. The question for policymakers is not whether this investment is necessary. They are. It is whether the benefits of that spending are reaching the people who do the work.

From my perspective as the former CEO and current chairman of Pavement Recycling Systems, where I spent 35 years in the construction industry, the answer is clear. We should prioritize employee ownership to offer California a better path forward.

At PRS, employees earn ownership through an Employee Stock Ownership Plan (ESOP). They own stock in the very company the work for. They do not buy the stock. They do not put their own money on the line. They are given shares of the company and , over time, as the company succeeds, they build an ownership stake that becomes real retirement security. Their day-to-day jobs stay the same, but their future changes. They are no longer just working for a company. They are building something they own.

This model is not theoretical. Employee ownership is already working across California. Companies with ESOPs consistently show stronger outcomes for workers, including 33% higher wages, 53% longer job tenures, and 92% higher median household wealth than employees of non-ESOP companies. During the COVID-19 pandemic, ESOPs were far more likely to keep people employed and avoid cutting pay or benefits. When workers have a stake in the business, companies are better positioned to navigate uncertainty.

These benefits matter even more in construction.

The construction industry creates great jobs across California for a diverse workforce. But too often, the long-term wealth created by public works projects accrues to a narrow group at the top. ESOP construction companies change that dynamic by sharing ownership across the workforce, allowing the working people building California’s infrastructure to share in the economic upside of that work.

For years, California has relied on programs like the Disadvantaged Business Enterprise (DBE) to expand opportunity in public contracting. But the DBE program is structured around who owns a company, not the workforce doing the work. With DBE changes being mandate by the federal government and infrastructure spending continuing to scale, California lawmakers should seize this moment to do something more durable and more far-reaching: prioritize ESOPs through a bid preference so public investment builds wealth for the workforce–not just senior executives.

An ESOP bid preference would be straightforward and practical. Instead of focusing on the background of a single owner, it would reward companies that share ownership with their employees. In California, where a large share of construction workers are people of color, an ESOP bid preference would mean the benefits of public investment go directly to the communities the DBE program was originally designed to benefit. It would not rely on legally complicated classifications or federal programs that are currently unsettled.

Just as important, employee ownership does not shift risk onto workers. Construction is a demanding industry, and financial and legal risk remains with the company, not individual employees. Workers gain the upside of ownership without being asked to take on burdens and liabilities they cannot afford.

Recognizing this opportunity, we have launched the California Employee Ownership Coalition to bring ESOPs across industries together and engage with policymakers in Sacramento. Our goal is not to replace every existing program, but to modernize how California approaches opportunity in public investment.

With billions of dollars continuing to flow into infrastructure, California leaders have a chance to make a practical and meaningful choice. We can continue to concentrate the benefits of public spending at the top, or we can ensure the people doing the work share in the success.

The workers rebuilding California deserve more than a paycheck. They deserve a stake in what they are building.

Steve Concannon is Chairman of Pavement Recycling Systems and President of the California Employee Owned Coalition.