It’s Little Wonder ESOP Employees Worry Less

Despite a growing economy, millions of American continue to experience ongoing anxiety about their current and future economic well-being. Yet a new study indicates there is one group of workers who are feeling more financially secure and optimistic about their future than average workers: employees who work in private, employee-owned businesses.

In a new poll from John Zogby Strategies, employee-owners across the country were more financially secure and less anxious than the overall workforce, feeling better equipped to deal with upcoming and unexpected expenses.

Of course, these findings are no surprise to those of us who work at employee-owned companies; we recognize the great benefits of the employee ownership model, which boosts workers’ share of capital through specialized retirement accounts. Under an employee stock ownership plan (ESOP), more than 13.5 million Americans share in that type of productive, collaborative work culture, while enjoying better job and retirement security. At Entertainment Partners, we have been 100 percent employee-owned since 2004. Since that time, our core competency of offering backend services in the entertainment industry has grown across the country, benefitting both our overall business and employees. More broadly, expanding this unique work structure would ensure more opportunity and stability for employees like ours across the country.

With ESOPs, what’s good for business is equally great for employee-owners. According to the Zogby survey, commissioned by the Employee-Owned S Corporations of America, employee-owners more often feel they have opportunities for financial advancement, and that comports with their own reality and that of their companies. A study of company performance over the past decade found that among Subchapter S ESOPs, jobs grew an impressive 39 percent. This growth has meant stable careers and earnings for S ESOP employees. In addition to higher productivity, employee-owners are able to boost their wealth as their companies grow, giving them financial peace of mind.

When it comes to planning for a successful career, employee ownership acts as an extra buffer against the ups and downs of an ever-changing market landscape, ensuring better job protection and a more stable career pathway. A Georgetown University/McDonough School of Business study found that S ESOPs are resilient during downturns and actually added jobs, increased wages, and boosted retirement benefits for employees during the 2008 recession. This kind of success, against all economic headwinds, gives employee-owners extra confidence in their positions: The Zogby survey finds employee-owners – by a 16-point margin over all U.S. workers – are less likely to say they have “a lot” or “a little” of fear about losing their jobs in the next 12 months.

A more stable career also leads to a more stable retirement, as workers at ESOP companies are 30 percent less likely to claim they worry “a lot” about their retirement prospects than the broader workforce. While almost half of all U.S. workers have no access to any form of employer-sponsored retirement savings plans, all employee-owners have access to at least one plan. Across all industries, the average S ESOP employee nearing retirement will have accumulated savings that are on average five to seven times those of a typical 401(k).

While the benefits of ESOPs are becoming better known, we still have a long way to go to ensure more Americans can have the chance to become employee-owners. Fortunately, policymakers increasingly recognize employee ownership as a viable way to address ongoing economic worries.

Reps. Dave Reichert (R-Wash.) and Ron Kind (D-Wis.) recently re-introduced the Promotion and Expansion of Private Employee Ownership Act (H.R. 2092), a bill that would provide the same tax incentives available to C corporations for S corporation owners looking to transition their companies to an ESOP. Additionally, this proposal calls for a federal office to provide technical support and help educate business owners about ESOPs.

This bill and similar state-level legislation have historically enjoyed broad bipartisan support. With congressional leaders hoping to restore U.S. workers’ faith in their own prospects, now is the time to expand the rewards of ownership to more employees while protecting our nation’s jobs, retirement, and overall financial success. As the new John Zogby Strategies survey and other reports show, employee ownership can play a prominent role in forging a more promising American future. While economic pressures may not go away on their own, employee ownership is one way to restore Americans’ confidence in an economy that works for them.


Michael Wofford is executive vice president at Entertainment Partners and the policy chair at the Employee-owned S Corporations of America.

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