BY JEFF MILLHOLLIN
While recent jobs reports demonstrate that our economy continues to show modest signs of rebounding, both our state and national unemployment rates remain well above historical averages. Fifteen years before the recession, unemployment rates stood at approximately half what they are today.
How do we turn things around? Surely there is no single cure-all. However, when it comes to creating jobs and high performing businesses, one model is proving most effective.
Consider one study from Georgetown University, which found that so-called S corporation Employee Stock Ownership Plans (S ESOPs) have demonstrated a striking resilience — growing and hiring new workers during the recession, though their counterparts had been shrinking. While overall U.S. private employment in 2008 fell by 2.8 percent, employment in S ESOP companies rose by nearly 2 percent.
During my 13 years at Pacific Steel and Recycling, even when times have been tough, I have been privileged to be part of a very different reality than the average business has — one that I feel is a model for businesses and policymakers seeking to support job growth and economic development.
Billings operation
Private, employee-owned companies like ours are unique in that the earnings of the company directly benefit the retirement accounts of the workers. The result is a culture of ownership in which our more than 40 workers here in Billings, and nearly 200 more across the state, feel responsible and accountable for every challenge and every achievement. We take each project personally, and the company’s successes are quite literally our own successes.
This kind of motivation and work ethic translates to a stronger bottom line. In fact, a study from the University of Pennsylvania found that S ESOP companies demonstrate higher productivity, profitability, job growth and job stability, generating a collective $19 billion in economic value that otherwise would not exist.
Additionally, private employee-ownership creates retirement security. While nearly 60 percent of working Americans do not have any assets in a work-related retirement plan — and half do not even have access to such a plan, according to the Georgetown study — all employee-owners at S corporation ESOPs do have a plan that is wholly funded by their companies.
Congress should act
At a time when our state and our nation needs to see strong, continued economic growth and security, we should preserve and expand this structure. Recognizing that employee ownership is proving successful in Montana and across the country, a bill has been introduced in the U.S. House and Senate to help eliminate barriers that exist for companies that want to become employee-owned. The Promotion and Expansion of Private Employee Ownership Act represents meaningful action to help American businesses thrive and their workers to retire with dignity.
Montanans should applaud this measure and its supporters, and consider whether this structure could benefit their business as well. By preserving and expanding the S corporation ESOP structure, we can help more businesses to grow and create jobs that enable hardworking Americans to save for the future.