ICYMI: Top Biden Economist ‘Urging Americans To Set Up More Employee Stock Ownership Plans’

Home ICYMI: Top Biden Economist ‘Urging Americans To Set Up More Employee Stock Ownership Plans’

WASHINGTON – In case you missed it, a new study by economist Jared Bernstein – who recently joined President Joe Biden’s White House Council of Economic Advisors – examines the benefits of employee stock ownership plans (ESOPs) and, given that there are still relatively few U.S. ESOPs, proposes ways to encourage the formation of more employee-owned businesses.

The Philadelphia Inquirer reports that, as part of his study, Bernstein interviewed several entrepreneurs about why they decided to start ESOPs, “citing the example of New Age Industries’ 135-worker Bucks County plant in urging Americans to set up more” ESOPs. The Inquirer notes that the company “is now 100% employee-owned” and that “the internal value of New Age’s ESOP shares is up tenfold since the ESOP started in 2006, more than triple the rise in the S&P 500.”

Bernstein’s study, conducted with support from the Employee-Owned S Corporations of America (ESCA), sheds light on common obstacles to the creation of ESOPs and urges policy and private sector leaders to take steps and find new approaches to remove these barriers. Those steps include private and governmental approaches to “help more retiring business owners access the resources and information they need to fully consider an ESOP for their company,” especially as those owners are considering retiring.

Additional research reveals that job growth among employee-owned S corporations (S ESOPs) has historically outpaced that of the private sector as a whole, and that employee-owners are more confident about their jobs and less anxious about their financial futures. In fact, employees at S ESOP companies have more than twice the average total retirement savings of Americans who work at non-ESOP companies.

An earlier study by Bernstein also found that by increasing capital ownership, employee stock ownership plans reduce wealth inequality, and, if plans were to proliferate, more workers across the country would benefit from the equalizing effects of ESOPs.

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