ESCA Applauds House Introduction of ‘Promotion & Expansion of Private Employee Ownership Act’

June 24, 2021

Home News ESCA Applauds House Introduction of ‘Promotion & Expansion of Private Employee Ownership Act’

WASHINGTON – The Employee-Owned S Corporations of America (ESCA) issued the following statement regarding the introduction of the Promotion & Expansion of Private Employee Ownership Act in the U.S. House of Representatives today by Rep. Ron Kind (D-Wis.) and Rep. Jason Smith (R-Mo.).

“Employee ownership of private companies has a proven track record of helping American workers build exceptional financial security and strong retirement savings, as well as creating good-paying jobs that weather economic uncertainty,” said Stephanie Silverman, President and CEO of ESCA. “The ESOP community is thankful to Congressman Kind and Congressman Smith for introducing bipartisan legislation that not only recognizes the substantial benefits of employee ownership for workers and the economy, but goes further, making these valuable benefits available to many more Americans. We encourage lawmakers to move this legislation toward passage so that it can be signed into law by President Biden.”

The bipartisan bill – which Kind and Smith introduced with cosponsorship by Ways and Means Committee members Rep. Earl Blumenauer (D-Ore.), Rep. Tom Reed (R-N.Y.), Rep. Bill Pascrell (D-N.J.) and Rep. Mike Kelly (R-Penn.) – will promote employee ownership of private businesses by:

  • Incentivizing owners of S corporations to sell their stock to an employee stock ownership plan (ESOP);
  • Encouraging the flow of bank capital to ESOP-owned S corporations;
  • Providing needed technical assistance for companies that may be interested in forming an employee-owned S corporation (S ESOP);
  • Ensuring small businesses that become ESOP companies retain their Small Business Administration (SBA) certification; and
  • Affirming the importance of preserving the S ESOP structure in the Internal Revenue (IRS) Code.

Senator Ben Cardin (D-Md.) and Senator Rob Portman (R-Ohio), along with 25 original Senate co-sponsors, recently introduced companion legislation in the U.S. Senate.

new survey by John Zogby Strategies finds that workers at employee-owned S corporations (S ESOPs) report being on significantly more stable financial ground than other U.S. workers during the COVID-19 pandemic, building on previous research showing that employee-owners are more confident about their job security, less anxious about their financial futures, and hold more than twice the average total retirement savings of Americans who work at non-ESOP companies.

In a study released earlier this year, economist Jared Bernstein, who is now a member of the White House Council of Economic Advisers, affirms the benefits of ESOPs and urges lawmakers to explore ways to encourage the formation of more employee-owned private businesses. An earlier study by Dr. Bernstein demonstrated that employee ownership helps to close the wage and wealth gap between managers and workers in ESOP-owned companies.

To learn more about the Employee-Owned S Corporations of America (ESCA), CLICK HERE.

ESCA, Employee-Owned S Corporations of America, is the voice in Washington, DC that speaks exclusively for employee-owned S corporations (“S ESOPs”). Since 1998, ESCA’s membership has grown to represent more than 215,000 employee-owners in virtually every state in the nation. ESCA company members engage in a broad spectrum of business activities and are a variety of sizes – from 25-person businesses to companies with 18,000+ employee-owners – but all have one thing in common: a commitment to protecting the S corporation ESOP structure and promoting it so that more working Americans can become employee-owners.

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