ESOPs Boost Household Wealth

Workers between the ages of 18 and 34 who are employee-owners have 92% higher median household wealth relative to workers who are not employee-owners.

The National Center for Employee Ownership issued a report, “Employee Ownership & Economic Well-Being” that looked at survey data of workers between the ages of 28 to 34 from the Bureau of Labor Statistics. The center says its analysis is one of the first in-depth analysis of the relationship between employee ownership and workers’ economic well-being.

The center found that employee-owners have 92% higher median household wealth relative to workers who are not employee-owners. Their wages are 33% higher and they have a 53% longer median job tenure.

The center says that one policy solution to the growing wealth inequality in the United States is employee ownership. “Though often overlooked, employee ownership is a highly scalable tool that has immense untapped potential,” the center says.

Employee ownership is typically arranged through an employee stock ownership plan (ESOP). The center says that there are 6,500 companies in America that offer ESOPs to 10.5 million workers. “Qualitative and qualitative research at the company level has shown that ESOP companies tend to grow faster and provide greater job stability than non-ESOP companies, making ESOPs an effective tool to create and save jobs in vulnerable communities,” the center says. “Because workers at ESOP companies share in the success of their companies, ESOPs should directly address the crises of mobility, wealth inequality and stagnating wags.”

The center notes that the top 10% of families in the nation hold 76% of the total wealth.

The study also found that employee-owners are much more likely to have access to an array of benefits, including flexible work schedules, retirement plans, parental leave and tuition reimbursement. For example, 23% of employee-owners have access to childcare benefits, compared to 5% of non-employee-owners.

Their wages are $3,160 higher a year for the lowest-paid employee-owners to $5,000 higher for the highest-paid. In 2013, the median employee-owner had household income equal to 378% of the poverty line, compared to 293% of the poverty line for non-employee owners.

For families with children up to age eight, employee-owners have a median household net worth nearly twice of the non-employee-owners. They have nearly one full year of increased job stability and $10,000 more in annual wages.

Employee-owners of color have 30% higher income from wages, 79% greater net household wealth and a median tenure in their current job that is 36% longer than non-employee-owners of color.