The recent uptick in our economy has yet to remedy Americans’ very reasonable concerns about retirement security — or lack thereof. In fact, anticipating continued cuts to their retirement benefits, more than half now say they would readily trade some of their pay, if they could, for more guaranteed income in retirement, according to a survey by HR consulting firm Towers Watson.
I find this figure troubling, especially for older workers who may have less time to recover from economic setbacks — and particularly as, each day, more and more baby boomers turn 65.
However, truth be told, we don’t need studies to tell us that too many hardworking Americans who have spent their lives in pursuit of retirement security are now finding it more elusive than ever.
As a nation, we can do better. During my 27 years at Woodfold Inc, I have been privileged to be part of a very different reality — one that I feel is a model for businesses and policymakers seeking to support more successful, reliable savings initiatives.
In fact, well upwards of 3,000 workers in our state — at companies that range from grocers to engineering firms to our operation, a leading manufacturer of custom wood accordion folding doors and shutters — are working towards more certain and secure retirements. This is because we work for a private, employee-owned company, or “S corporation employee stock ownership plan” — known as an S ESOP.
Private, employee-owned companies 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 62 workers- feel responsible and accountable for every challenge and every achievement. That is, our people take each project personally, and the company’s success is quite literally their success.
Their motivation translates to meaningful retirement security. In fact, S corporation ESOPs create retirement account balances that are three to five times higher than the average 401(k) or other defined contribution plans, according to the National Center for Employee Ownership.
And nationally, a study by the University of Pennsylvania shows that they generate $14 billion in new savings each year for their workers — beyond what they otherwise would have earned.
At a time when retirement insecurity is on the rise, S ESOPs really do stand apart. 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 scholars from Georgetown University.
However, employee-owners at S corporation ESOPs do have a plan. Further, that plan is funded by their companies.
Now is exactly the time to preserve and expand such a structure. Recognizing that employee ownership is proving successful in Oregon and across the country, Congressman Earl Blumenauer, D-Ore., has helped spearhead legislation to eliminate barriers that currently exist for companies that want to become employee-owned.
This measure, the Promotion and Expansion of Private Employee Ownership Act, represents meaningful action to help correct our current trajectory and allow those who wish to retire to do so with dignity.
Oregonians should applaud Rep. Blumenauer for his leadership. Further, we should encourage his colleagues in the House and Senate to follow suit and cosponsor the measure. By preserving and expanding the S corporation ESOP structure, we can help change the course for countless more Americans who may also benefit from employee ownership.
Mark Lewis is a resident of Portland and president of Woodfold Mfg. Inc., a 100 percent employee-owned company in Forest Grove.