WASHINGTON – The Employee-Owned S Corporations of America (ESCA) issued the following statement today upon the bipartisan introduction of the Promotion and Expansion of Private Employee Ownership Act of 2021 by U.S. Senator Ben Cardin (D-Md.) and U.S. Senator Rob Portman (R-Ohio).
“At a time when job creation and economic growth are top priorities for Americans, employee ownership has a decades-long track record of driving the creation of stable jobs that empower Americans to build exceptional economic security and retirement savings, while also helping companies grow and thrive,” said Stephanie Silverman, president and CEO of ESCA. “We are grateful to Senators Cardin and Portman for introducing this bipartisan legislation to help extend the substantial benefits of employee ownership to more Americans, and we encourage members of Congress to pass this bill so it can be signed by President Biden.”
The bipartisan legislation, which was introduced today by lead sponsors Senator Ben Cardin and Senator Rob Portman, along with 25 original Senate co-sponsors, will:
- Incentivize owners of S corporations to sell their stock to an employee stock ownership plan (ESOP);
- Provide needed technical assistance for companies that may be interested in forming an employee-owned S corporation (S ESOP);
- Ensure small businesses that become ESOPs retain their SBA certification; and
- Affirm the importance of preserving the S ESOP structure in the Internal Revenue Code.
At a time when many Americans are struggling with job losses, research reveals that job growth among employee-owned S corporations has historically outpaced that of the private sector as a whole, and 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.
A recently released study by economist Jared Bernstein, who is now a member of the White House Council of Economic Advisers, affirms the benefits of ESOPs and, given that there are still relatively few U.S. ESOPs, urges lawmakers to explore ways to encourage the formation of more employee-owned businesses.
In a previous study, Bernstein demonstrated that employee ownership helps to close the wage and wealth gap between managers and workers in ESOP-owned companies. “Employee ownership — and ESOPs in particular — should be part of our national discussion on ways to reduce inequality,” Bernstein said in releasing the 2016 analysis.
Since Congress created the S corporation ESOP structure through bipartisan legislation over 20 years ago, more than 3,000 private U.S. companies have become S corporation ESOPs, enabling one million workers to have an ownership stake in the businesses where they work.
To learn more about the Employee-Owned S Corporations of America (ESCA), CLICK HERE.