WASHINGTON – With bipartisan bills on the table in the U.S. House and U.S. Senate to promote employee ownership of private businesses through employee stock ownership plans (ESOPs), ESCA President and CEO Stephanie Silverman spoke with John Manganaro of PLANSPONSOR about the legislation and “new research showing the way broad employee ownership of private companies benefits individuals and communities.”
Highlights from the interview include:
On the Benefits of Employee Ownership for American Workers and Communities:
- SILVERMAN: “I can point to a new survey published by John Zogby Strategies, which tells a tale of two economies during the pandemic. Simply put, 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 emergency, ESOP employees have experienced dramatically less financial adversity. They have had more stable jobs and better housing security and retirement savings than their non-ESOP counterparts … Non-ESOP employees reported experiencing job losses or downsizing at six times the rate of their peers at employee-owned companies. At the same time, non-ESOP workers have been adversely affected by the pandemic economy at more than three times the rate of employees at ESOP companies. Other stats show twice as many non-ESOP respondents as ESOP respondents are concerned about their ability to pay down debt, while three times as many ESOP employees say they are able to cover an emergency $500 expense, as compared with their non-ESOP counterparts. Twice as many ESOP workers expect to retire by the age of 60 compared with workers at non-ESOP companies. Finally, and perhaps most remarkably, not a single ESOP respondent in the survey of more than 200 people from across the U.S. reported being behind on their rent or mortgage, compared with more than a quarter of their non-ESOP peers.”
On Congress’s Role in Promoting Employee Ownership of Private Businesses:
- SILVERMAN: “In terms of potential progress, there is currently legislation on the table in Congress that could make some positive change. The House’s bipartisan bill will promote employee ownership of private businesses by incentivizing owners of S corporations to sell their stock to an employee stock ownership plan. It also encourages the flow of banking capital to ESOP-owned S corporations as a means to ease the liquidity burden of an ownership transition event. Other provisions provide needed technical assistance for companies that may be interested in forming an S-ESOP, while ensuring small businesses that become ESOP companies retain their Small Business Administration (SBA) certification. A companion bill with 25 original co-sponsors was recently introduced in the U.S. Senate. These bills include some real steps that we think would make company leaders more likely to transition their businesses to an ESOP.”
To read the full interview at PLANSPONSOR, CLICK HERE.
To read the full survey findings by John Zogby Strategies, CLICK HERE.