New Report Shows Governors How To Access More ESOP-Driven Economic Benefits In Their State
WASHINGTON, D.C. – State officials who have seen the substantial benefits of employee ownership in their local economies – including strong job growth, unparalleled retirement savings opportunities for workers, and more jobs and businesses staying local– can use a variety of tools to expand these benefits, finds a new report.
The study, released by the National Center for Employee Ownership (NCEO) and Employee-Owned S Corporations of America (ESCA), reviews the evidence that private employee-owned (so-called “ESOP”) companies provide unique advantages for state economies and offers state leaders a guide for encouraging more companies to become ESOPs so they can reap additional benefits of this structure.
“Employee ownership works, and it provides tremendous benefits to businesses and workers. Nearly 7,000 ESOPs across the United States support roughly 13.5 million employee owners. The biggest challenge we face in expanding the model is building the knowledge base,” said Stephanie Silverman, ESCA President and Executive Director. “States should adopt proactive policies to educate business owners and incentivize employee ownership, such as the ownership centers that exist in Ohio, Colorado, Vermont, Pennsylvania, and California. We hope Governors and their state economic teams will look to the ESOP model to grow and keep jobs in their states.”
The study highlighted a number of approaches to increase the number of states’ ESOP companies, including creating a state office of employee ownership, establishing tax incentives to encourage owners to sell their business to an ESOP, and providing loan funds, loan guarantees and incentives for ESOP lenders.
Already, several governors have launched efforts to promote and expand employee ownership in their states after seeing the unique benefits ESOPs offer. In Iowa, Governor Terry Branstad advanced a measure in 2012 that provides tax incentives to owners of private companies who convert their companies to ESOPs. In Ohio, early state support for employee ownership led to the creation of the Ohio Employee Ownership Center, which provides outreach, information, and technical assistance to those interested in employee ownership. And in Vermont, federal and state-level support allowed the state to develop an ownership center to provide information and resources to interested stakeholders.
For more information on ESOPs, click here.