Even in today’s strong and growing economy, lawmakers, job creators and workers must come together to generate career opportunities with strong benefits that help Americans prepare for a secure retirement.
There is no better example of this than the thousands of employee-owned businesses throughout our nation that create jobs, generate economic activity and promote retirement savings for hundreds of thousands of workers. Known as “S ESOPs,” these nearly 3,000 employee-owned S corporations account for $92 billion in direct output to America’s economy and provide nearly half a million Americans across all 50 states with a secure income, benefits and retirement.
Since Congress passed bipartisan S ESOP legislation more than 20 years ago, employee-owned businesses have shown remarkable strength and stability, even in tough economic times. That translates to happier, more confident employees. In fact, employee-owners are more than twice as likely to report that their personal financial outlook has improved over the past 12 months compared to their peers, and worry less about losing their jobs. Employee-owners also feel better prepared to handle major financial obligations, such as car payments, mortgages, college costs for their children and retirement savings.
When I began working at Messer Construction Co., it was a medium-sized, family-owned construction company with a long history and a good reputation. But like most construction companies, it provided little in the way of employee benefits.
When the last child of the company’s founder passed away, we found ourselves with an uncertain future. The founder’s grandchildren, who had no connection with the employees, wanted access to their wealth and were not committed to maintaining employment at the company. The win-win solution was an employee stock ownership program (ESOP).
As I told the House Committee on Small Business during a recent hearing, our country’s investment in ESOPs empowered 99 Messer employees to purchase their future. And that opportunity has resulted in real growth — for individual employees and their families, for our employee-owned company and for the local economies where we do business.
When Messer’s ESOP was created, company-funded retirement benefits totaled just $1.5 million on behalf of about 99 participants. Today, operating from 10 regional offices, Messer performs more than a billion dollars in construction annually. And, here is the measure of the change that our ESOP brought to our retirement savings: Messer now provides quality jobs and predictable retirement for more than 1,200 participants and has company-funded retirement assets for those employees totaling more than $400 million.
Not only that, through these company-funded retirement assets, as well as the other strong benefits ESOPs offer, we have been successful in attracting and retaining high-skilled millennial talent. It’s no coincidence that a survey taken last year found 56 percent of millennial workers at ESOP companies said they had at least six months’ salary saved for retirement, while 66 percent of their non-ESOP counterparts said they had no savings at all. These younger workers share our vision and embrace the challenges and opportunities of working as employee-owners.
Through our engagement with the Employee-Owned S Corporations of America (ESCA), we have come to know of hundreds of companies with success stories similar to ours; and the data from ESCA’s quality research shows that ESOP companies are more robust, more sustainable and provide higher levels of diversified retirement benefits than non-ESOP companies.
While an ESOP is in place and working well for us, Messer manages a vendor supply chain of small local subcontractors who are increasingly at risk from forces both external and internal. That is why we strongly encourage Congress to come together and pass the Promotion and Expansion of Private Employee Ownership Act (H.R. 2258). This bipartisan legislation will encourage even more employee ownership by providing incentives to S Corporation business owners to sell to their employees through an ESOP when they are ready to transition out of the business. This will allow even more Americans to build the kind of meaningful retirement savings that those of us have realized through employee ownership, and will ensure that all the benefits of employee-ownership continue flowing to American workers and growing our economy for years to come.
Mark Gillming is senior vice president of Messer Construction Co., an employee-owned commercial construction company based in Cincinnati.
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