Build roads and wealth with Employee Stock Ownership Plans

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OPINION – Every year, billions of public dollars flow through California’s state budget into infrastructure projects across our state. This year alone, California is investing roughly $5 billion in state transportation construction funding, alongside $41.9 billion in federal infrastructure funding.

Those taxpayer dollars fund the roads we drive on, the bridges we rely on, and the public works projects that keep California connected and competitive. They represent hard-earned money from families and small businesses across the state. When that level of public investment is made, lawmakers in Sacramento have a responsibility to ensure it delivers the strongest possible return, not only in completed projects, but in long-term economic opportunity.

Too often, the long-term financial upside of public infrastructure spending is concentrated in the hands of a single owner or a small group at the top. The workers who pour the concrete, operate heavy equipment, and manage job sites receive wages for their work but do not share meaningfully in the wealth their labor helps create. That’s ineffective public policy that misses the chance to expand economic opportunity across our state.

The question for policymakers is: how can we structure public policy so that infrastructure spending strengthens businesses, expands opportunity, and builds wealth in our communities?

One answer is to support ownership models that reward performance, retain talent and incentivizes employees the job site to the boardroom. SB 1174 does just that – not as a mandate, but as a smart, strategic incentive that aligns public dollars with broad-based opportunity.

The bill establishes a bid preference for Employee Stock Ownership Plans, or ESOPs, in state transportation contracting. ESOPs are companies where employees earn shares in the business over time through a federally regulated trust. Workers do not buy in and do not put their personal savings at risk. Ownership is earned through years of service, and as the company grows and succeeds, employees build long-term financial security.

This model has produced measurable results. National research shows employee-owners have 92% higher median household wealth than comparable workers at non-ESOP companies. They also earn 33% higher median wages and experience 52% longer job tenure. During the COVID-19 pandemic, ESOPs retained jobs at significantly higher rates and were far less likely to cut pay or benefits.

In Sacramento, creating policy that encourages economic opportunity remains one of my top priorities. When billions of dollars in state and federal infrastructure are spent, the outcomes and opportunities created matter.

Construction remains one of the most important pathways to economic mobility in California. It provides stable, skilled jobs that allow workers to support their families. Yet under traditional ownership models, the wealth generated by public works projects often flows upward rather than outward.

ESOPs change that dynamic by distributing ownership across the workforce. Instead of concentrating profits with a single owner, they allow the people doing the work to share in the success of the company over time. That shared ownership can translate into meaningful retirement assets and greater financial stability.

Encouraging this model is also about responsible stewardship of taxpayer dollars. With billions of dollars spent annually on state transportation construction and federal infrastructure projects, we members of the Legislature must prioritize spending that strengthens communities statewide. Providing a bid preference for ESOPs ensures that public spending supports companies that share success broadly with their employees. It aligns state investment with the goal of expanding opportunity and strengthening the middle class.

California is already home to hundreds of ESOPs across many industries. These companies have demonstrated that broad-based ownership strengthens businesses, improves retention, and builds more resilient workforces. SB 1174 builds on that foundation by recognizing and rewarding companies that choose to structure themselves around shared ownership.

As infrastructure investment continues across California, policymakers have an opportunity to think differently about how public policy shapes economic outcomes. We can allow the financial rewards of public works to remain concentrated at the top, or we can encourage a model that helps working Californians build lasting financial security.

SB 1174 ensures that when we build California’s infrastructure, we are also building economic opportunity for the people who make it possible.

Sen. Suzette Martinez Valladares represents California’s 23rd Senate District.