ESCA Primer

September 22, 2015

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Today, the Employee-Owned S Corporations of America (ESCA) released a primer on S Corporation employee stock ownership plans, or S ESOPs, which provide workers retirement savings through investments in their employer’s stock, at no cost these workers. Given national discussions on income inequality, retirement security, and economic growth, policies that support the growth of S ESOPs will address the everyday financial concerns of middle class Americans.

“The data shows American workers face stagnant wages, a retirement gap, and a lack of confidence in future economic growth,” said ESCA Executive Director Stephanie Silverman. “Rarely does a business model address all three of these concerns, but S ESOPs do.”

The primer finds:

  • Turning workers into owners through S ESOPs has the potential to alleviate these issues. S ESOPs are qualified retirement plans that give employees ownership stakes in their companies.
  • As a retirement plan, S ESOPs outperform the S&P 500 and distribute more annually than 401(k)s on average. S ESOPs go a long way in providing retirement security to employees.
  • S ESOPs also pay better wages on average. The added retirement savings do not come at the expense of wages. S ESOPs pay approximately 22-percent more than other comparable companies.
  • S ESOPs are more productive and stable because they align the long-term goals of management and labor. This stability enables S ESOPs to provide higher wages.
  • S ESOPs have strong bipartisan support in Congress. A bill to promote the S ESOP model has 61 (total of House and Senate) co-sponsors from both sides of the aisle.

“As Members of Congress continue to examine policies to help grow the U.S. economy, while ensuring Americans are prepared for retirement, we hope they will continue to find ways to support the growth of S ESOPs,” added Silverman. “In particular, passing The Promotion and Expansion of Private Employee Ownership Act (S. 1212/H.R. 2096) introduced in the Senate by Senators Pat Roberts (R-KS) and Ben Cardin (D-MD) and in the House by Representatives by Dave Reichert (R-WA) and Ron Kind (D-WI) would provide a real boost to S ESOP formation.”

Click HERE to view the full primer and HERE to visit the ESCA website to learn more.

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