Helping Low-Income Employees at Employee Ownership Companies

Employee-owned Cooperative Home Care Associates (CHCA), a national model for home health care in the Bronx, New York, and an NCEO 2009 Innovations Awards winner, has generously volunteered to share its model for helping low-income employees achieve greater financial stability. Like many lower-income workers, CHCA employees often lacked bank accounts, causing them to rely on expensive alternatives like check cashing services. They often had: a) little experience with financial planning, b) often failed to receive claim the earned income tax credits for which they qualified for, and c) trouble paying unexpected expenses were ill-prepared to deal even with what other people might consider very minor financial bumps. CHCA has worked to change this, in the process making it easier for people to stay with CHCA and provide the kind of continuity of care to clients so critical to their well being.

Aside from a strong benefits package, CHCA helps make sure low-income employees can claim their Earned Income Tax Credits by offering free income-tax preparation services. The credits average $3,100 per employee and yet are often not claimed if employees do their own taxes. CHCA has negotiated with local banks to offer banking services at lower costs and direct deposit of paychecks, saving many employees from expensive check cashing services. It also provides small no-interest loans, and access to free legal advice through a local legal clinic.

For additional information about CHCA's model experiences in integrating shared ownership and individual wealth-building strategies—which help hundreds of low-income New York City residents achieve economic security each year—please contact Stu Schneider by calling (718) 402-7112, or emailing [email protected].

Another employee ownership company with such a program is Staples, which piloted a program offering free tax preparation for up to the first 500 low-income employees who participated and $30 for those coming after that. The average participants got an additional $522 in tax credits. At the same time they were getting help with their taxes, the providers offered help in explaining other benefit programs they could sign up for, including the 401(k) plan and the employee stock purchase plan, which offered a 15% discount. Staples' employee ownership program is an employee stock purchase plan (ESPP); participation in the Staples ESPP increased 15% as a result of the assistance to low-income employees. Turnover among those who participated dropped 32% compared to those who did not.

For details on programs like the one at Staples, contact John Hoffmire at the Center on Business and Poverty and the University of Wisconsin-Madison School of Business ([email protected]).