New Study Shows Dramatic Impact of Employee Ownership on Economic Well-Being

Oakland, California, Oct. 18, 2017 --

Ayanna Banks works for the waste management company Recology, and she has an answer to what makes a good job: “Recology is a 100% employee-owned company. That means a lot, because we can look forward to a great retirement, and they have outstanding benefits for employee-owners and their families.” Ayanna’s story is part of a striking pattern highlighted in a new research report: employee-owners are more likely than other workers to rise toward the middle class.

The research, conducted by Nancy Wiefek, Ph.D., of the nonprofit National Center for Employee Ownership, uses data on workers ages 28 to 34 from the US Bureau of Labor Statistics. It found that employee-owners had 92% greater median household net worth than non-employee-owners. They also had 33% higher income from wages, more job security (53% longer tenure at their current jobs), and strikingly better employee benefits.

The pattern of greater economic well-being among employee-owners extends across demographic groups: parents of young children, workers of color, various education levels, and more. Lower income employees have 17% higher net worth and 22% higher wages; workers of color 79% higher net worth and 31% higher wages. The full report is at www.ownershipeconomy.org.

If you have not heard much about employee ownership, you’re not alone. It’s a large part of the U.S. economy: more than 14 million workers at over 6,700 American companies own part or all of their employers through an employee stock ownership plan, or ESOP. But it rarely shows up in the business section of the newspaper or in public policy discussions about how to address economic opportunity.

Although millions of employees have an equity stake in their company through stock options, restricted stock and similar awards, ESOPs are the primary form of employee ownership in the United States. Congress designed ESOPs in the 1970s to encourage owners of private companies to transfer ownership to employees without requiring employees to come up with the money. Instead, the shares are bought by the ESOP itself, which borrows the money if necessary and repays the loan from company earnings.

ESOP companies are a cross-section of the U.S. economy. They are in manufacturing, professional services, construction, retail, and wholesale. They are in every state in the country, and they employ anywhere from a few dozen people to more than 100,000. Past research has shown that employee-owned companies grow about 2.5% per year faster than similar conventionally owned businesses, are more productive, and have one-third to one-fifth as many layoffs. ESOPs also provide employees with about 2.2 times the retirement assets of employees not in ESOPs.

The new data paint a compelling picture about the quality of life of for the employees who own these companies. For example, stable jobs and family-friendly benefits can make a big difference to families with young children. The NCEO’s study found that employee-owners with a child age 8 or younger are better off than non-employee-owners in the study on a number of measures: the employee-owners have $10,000 more in median income from wages, almost a year of increased job stability, and were almost four times as likely to have childcare benefits from their employers.

If you are interested in learning more about this research in particular or employee ownership in general, you can contact the staff at the NCEO.

Attachments:

A photo accompanying this announcement is available at http://www.globenewswire.com/NewsRoom/AttachmentNg/8a0fab60-4b3d-450c-bc0e-965eddc51ce1

Timothy Garbinsky
National Center for Employee Ownership
510-208-1300
[email protected]

Loren Rodgers
National Center for Employee Ownership
510-208-1300
[email protected]