New NCEO Study Finds Increased Retirement Security for Employee-Owners

A new NCEO study commissioned by the Employee-Owned S Corporations of America (ESCA) found that workers who own their companies via an ESOP have far greater retirement security than the majority of the American workforce. The recent survey also shows that, even at a time of great upheaval and uncertainty in the labor market, when many companies are contracting and struggling to find and retain workers, employee-owned S corporations also report better employee retention through a corporate culture that fosters worker satisfaction.

“The evidence continues to show that employee-owned businesses and their employees are faring better than most, positioning them to better withstand the challenges of a volatile economy,” said Stephanie Silverman, president and CEO of the ESCA. “As business leaders prepare for possible economic uncertainty ahead, ESOP-owned private firms offer a compelling model for positioning workers and companies alike.”

Some key findings include:

• ESOP leaders report voluntary quit rates of their employees at roughly one-third of the national average.
• Nearly 80% of ESOP-owned S corporation leaders feel they can do better than their non-ESOP competitors in retaining and recruiting employees.
• Employee-owners are experiencing layoffs at nearly one-fourth of the national average.
• Nearly 80% of ESOP-owned S corporation leaders believe employee ownership helps them manage economic disruptions.
• Employee-owners are staying put because of the benefits. ESOP company respondents estimate that the median ESOP account balance across their participants is $80,500, not accounting for other retirement savings vehicles they provide, such as a 401(k).

The study’s release follows the introduction of new bipartisan legislation by U.S. Senators Ben Cardin (D-MD) and Steve Daines (R-MT) and U.S. Representatives Mike Kelly (R-PA) and Earl Blumenauer (D-OR)—the Promotion and Expansion of Private Employee Ownership Act of 2023. This bill would provide better incentives for employee ownership, as well as technical assistance for those companies that are interested in forming an ESOP.

Based on the responses of more than 100 executives at ESOP-owned companies, the NCEO survey is  consistent with decades of past research that demonstrates the economic power of employee ownership, including a 2022 NCEO study finding that employee ownership provided exceptional resiliency and financial security in the face of pandemic-driven economic challenges.

A 2021 survey of workers at ESOP companies by John Zogby Strategies found that those workers reported being far better off financially than other U.S. workers, many of whom were hit hard economically by the COVID-19 crisis.

For more information about the power and resilience of employee ownership, see these infographics, and check out our research and data page.

To see more NCEO resources on recruitment and retention for employee-owned companies, see our updated Recruitment and Retention Toolkit.