ICYMI: How Congress Can ‘Save The Savings Of American Workers’

Home ICYMI: How Congress Can ‘Save The Savings Of American Workers’

WASHINGTON – As elected leaders look for ways to help struggling Americans and get our economy back on track, a new Morning Consult op-ed by ESCA president and CEO Stephanie Silverman urges Congress to focus on encouraging “more stable jobs that are likely to build workers’ economic security,” and reminds us that a “steady stream of research shows those are the kinds of jobs held by employees who share in the ownership of their companies” through employee stock ownership plans, or “ESOPs.”

Silverman continues:

When an ESOP company’s value goes up, the value of its workers’ shares does too. The National Center for Employee Ownership reports that ESOP participants – including those paid the lowest wages – have twice the retirement savings of average Americans. That type of job-based financial security is just what the doctor ordered, especially now when the country is ailing so badly.

new paper by Jared Bernstein, a member of President Joe Biden’s Council of Economic Advisers, queries why more ESOPs do not exist, given their job and wealth-accumulation benefits. Among the answers, Bernstein finds, is that many business owners thinking about retiring or selling find the cost and work of creating an ESOP – hiring lawyers and finance experts, and often loaning much of the sale price to the company to buy itself – not worth it.

Today, two decades since laws permitting ESOPs to own private S corporations were enacted, there are only 3,000 ESOP-owned private companies in America. There could be so many more. Given that these ESOPs generate about $14 billion each year in savings their employees would not otherwise have, according to a University of Pennsylvania study, Congress should waste no time in looking for ways to create more of them, just as Bernstein suggests.

Last Congress, bipartisan legislation was introduced in the House and Senate to eliminate hurdles company owners face to creating ESOPs. Advancing that measure – which was ultimately cosponsored by 92 members of Congress, including nearly half of the House and Senate tax-writing committees – is a significant step to creating the stable, economically secure jobs our employees need in times like these.

The bottom line: “Workers at ESOP-owned companies perform better, and so do their companies, helping to grow the company’s value … Congress should waste no time in looking for ways to create more of them.”

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