More than 14 million workers at over 6,700 American companies own part or all of their employers through an employee stock ownership plan (ESOP) but there’s not much discussion about it “in the business section of the newspaper or in public policy discussions about how to address economic opportunity” according to Business Insider.
For those interested, a new research report from the nonprofit National Center for Employee Ownership offers some useful insights into how employees are affected by being employee-owners instead of just workers. Namely, employee-owners are more likely than other workers to rise toward the middle class.
The study, which reviewed data on workers aged 28–34 from the U.S. Bureau of Labor Statistics, indicates that employee-owners had 92 percent greater median household net worth than nonemployee-owners; 33 percent higher income from wages; more job security (53 percent longer tenure at their current jobs); and strikingly better employee benefits.
Yet the opportunities presented by employee ownership seem to yield clear benefits across a broad spectrum of workers. The pattern of greater economic well-being among employee-owners isn’t restricted to a single group of workers, but extends across demographic groups: parents of young children, workers of color, various education levels, and more, the report says.
Over-time analysis indicate that the two groups — employee-owners and nonemployee-owners — start out at the same modest level of wealth. “Multivariate regression analysis,” says the study, “shows that employee ownership is significantly related to higher wages after controlling for other strong predictors, including education, race, gender, and marital status. Employee ownership is strongly predictive of longer job tenure controlling for these factors and wages. Longer job tenure is in turn strongly predictive of household wealth.”
Lower-income employees have 17 percent higher net worth and 22 percent higher wages, and workers of color have 79 percent higher net worth and 31 percent higher wages. And as far as benefits go, “Employee-owners are much more likely to have access to an array of benefits at work, including flexible work schedules, retirement plans, parental leave, and tuition reimbursement. For example, 23 percent of employee-owners have access to child care benefits, compared to 5 percent of nonemployee-owners.”
But it’s not just about child care. Where 34 percent of nonemployee-owners have a flexible work schedule, 52 percent of employee-owners do; 67 percent of nonemployee owners have medical, surgical or hospitalization insurance that covers injuries or major illnesses off the job, but 97 percent of employee-owners do.
The list goes on, including life insurance that covers death not related to the job (86 percent of employee-owners, 50 percent of nonemployee-owners); dental benefits (94 percent, 60 percent); paid maternity or paternity leave (65 percent, 31 percent); unpaid maternity/paternity leave that allows a return to the same or a similar job (56 percent, 30 percent); a retirement plan other than Social Security (89 percent, 53 percent). Other benefits with similar proportions include tuition reimbursement, and company-provided or –subsidized child care.
ESOPs are apparently good for businesses, too, according to the report, which points out that “[p]ast research has shown that employee-owned companies grow about 2.5percent 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.”