New Legislation Introduced to Promote and Expand Private Employee Ownership

For Immediate Release:

July 27, 2023

Home News New Legislation Introduced to Promote and Expand Private Employee Ownership

 WASHINGTON – New bipartisan legislation introduced by U.S. Senators Ben Cardin (D-MD) and Steve Daines (R-MT) and U.S. Representatives Mike Kelly (R-PA) and Earl Blumenauer (D-OR) – the Promotion and Expansion of Private Employee Ownership Act of 2023 – would provide better incentives for employee ownership, as well as much-needed technical assistance for those companies that are interested in forming an ESOP. Senators Cardin and Daines were joined by 20 original cosponsors of the bill in the Senate, and Representatives Kelly and Blumenauer were joined by six original cosponsors on the House Ways & Means Committee. Specifically, the bill would:

  • Incentivize owners of S corporations to sell their stock to an ESOP;
  • Provide needed technical assistance for companies that may be interested in forming an S ESOP;
  • Ensure small businesses that become ESOPs retain their SBA certification; and
  • Create an Advocate for Employee Ownership at the U.S. Department of Labor.

“Employee ownership is good for businesses and good for workers. With the personal saving rate in the U.S. barely over five percent there is more that we can do, and expanding employee ownership opportunities is one way that Congress can help more Americans save for retirement and better prepare for a potential economic downturn,” said Stephanie Silverman, president and CEO of the Employee-Owned S Corporations of America (ESCA).

Since Congress enacted the S corporation ESOP structure 25 years ago, employee-owned businesses have flourished, providing retirement savings to hundreds of thousands of American workers in all 50 states. Today, S ESOPs are doing exactly what Congress intended them to: creating jobs, generating economic activity and promoting retirement savings.

A new survey by the National Center for Employee Ownership (NCEO) found that workers who own their companies through ESOPS have significantly greater retirement security than most American workers. Key findings of the survey include:

  • S ESOP leaders report voluntary quit rates of their employees at roughly one-third of the national average.
  • Nearly 80 percent of S ESOP leaders feel they are able to do better than their non-ESOP competitors when it comes to retaining and recruiting employees.
  • Employee-owners are experiencing layoffs at nearly one-fourth of the national average.
  • Nearly 80 percent of S ESOP leaders believe employee-ownership helps them manage economic disruptions.
  • Employee-owners are staying put because of the benefits. ESOP respondents estimate that the median ESOP account balance across their participants is $80,500, not accounting for other retirement savings vehicles they provide like a 401(k).

“Our businesses are engines for economic growth and creating long-term retirement security for millions of American workers,” added Silverman. “We commend Senators Cardin and Daines and Representatives Kelly and Blumenauer for their bipartisan leadership and look forward to continuing to work to expand this important tool for retirement savings to more Americans.”

A 2022 study by Ernst & Young examined trends in S ESOP retirement plans from 2002 through and found that S ESOP assets and participants grew significantly since 2002, and assets grew faster than participants, leading to higher assets per participant. S ESOP participants also increased by nearly four times, from 244,000 to 941,000, and S ESOP net assets increased by nearly eight times, from $12 billion to $94 billion.

Latest News