More companies should consider employee ownership
At a time when pandemic-driven job losses are being felt by so many in our community, leaders in business and government should work together to help empower our region’s hardworking people with the economic opportunity and security of employee ownership.
The evidence – including a growing body of research and the experiences of employee-owned companies such as ours – strongly suggests that encouraging greater employee ownership of private businesses should play a role in both our short-term recovery and our long-term economic strategy.
Through employee stock ownership plans (ESOPs), businesses allow workers to save for retirement through ownership shares in the company, which are given as a benefit of their employment. Employee ownership can spur job creation, improve wages and productivity and strengthen retirement savings.
As the pandemic took hold last year, unemployment rates soared in Cincinnati and across Ohio, and they remain elevated today. Against this backdrop, it is noteworthy that employee-owned S corporations (S ESOPs) have a decades-long record of outpacing the private sector as a whole when it comes to job creation.
Research shows that employee-owners are not only more confident about their jobs, they are also less anxious about their financial futures. In fact, employees at S ESOP companies have more than twice the average total retirement savings of Americans who work at non-ESOP companies. This is especially important now, with the economic aftershocks of the pandemic expected to continue for years to come.
At Messer, based here in Cincinnati, our experience with employee ownership has certainly been positive. As my colleague Mark Gillming explained in his testimony to the U.S. House of Representatives last year, transitioning from a medium-sized, family-owned business to an employee-owned model has allowed our company to grow and thrive.
When Messer first adopted an ESOP model, our company-funded retirement benefits totaled just $1.5 million on behalf of about 99 participants. Today, we perform more than $1 billion in construction annually, provide quality jobs and predictable retirement for more than 800 ESOP participants, and have company-funded retirement assets for those employee-owners totaling more than $375 million.
As employee-owners, my colleagues have a real stake in our company’s success. They are personally invested when they come to work each day and when they volunteer in the community – leading our company to play a substantial role in the Greater Cincinnati economy. That’s the power of an ESOP.
Since Congress created the S corporation ESOP structure more than 20 years ago, more than 3,000 private U.S. companies have adopted this model, enabling one million workers to have an ownership stake in the businesses where they work.
If you’re hearing about ESOPs for the first time, you’re not alone, and you may be wondering why there aren’t more of them. This is the topic of a new study by Jared Bernstein, a member of the White House Council of Economic Advisors.
Bernstein’s study, conducted with support from the Employee-Owned S Corporations of America, found that a simple lack of awareness often keeps small and mid-size privately held companies from considering employee ownership. Fortunately, straightforward solutions, such as providing resources and information to retiring business owners, can help facilitate the creation of more ESOPs.
Messer encourages other companies in our region to consider employee ownership, and we are grateful for the strong bipartisan support for the S ESOP model among Ohio’s congressional delegation, led by Senators Sherrod Brown and Rob Portman.
As hardworking families throughout our region grapple with economic uncertainty, policymakers should strongly consider supporting efforts to allow more Americans to build meaningful retirement savings and reap the benefits of employee ownership through ESOPs.
Tim Steigerwald is president, CEO and chairman of the board of Messer Construction Co., an employee-owned commercial construction company headquartered in Cincinnati.
As seen in the Op Ed section of Cincinnati.com, The Enquirer.