Shared Capital, Secure Retirement Help Address Growing Inequalities for Workers

PR Newswire

WASHINGTON, June 12, 2014 — House Ways and Means Committee members Dave Reichert (R-WA), Ron Kind (D-WI), Erik Paulsen (R-MN), Earl Blumenauer (D-OR), Pat Tiberi (R-OH), Richard Neal (D-MA), Charles Boustany (R-LA) and Bill Pascrell (D-NJ), introduced legislation yesterday designed to spur more employee-ownership in private industry.

“At a time when almost half of American workers lack retirement accounts, the S ESOP structure lets employees share in the capital as owners of their companies and provides workers meaningful retirement accounts.” said Rep. Reichert.

“This bill empowers companies to become employee-owned, create new employee-owners, and provides retirement security to more American workers,” said Rep. Kind. “Growing our economy and adding jobs is a priority and employee-ownership is a proven model to do just that.”

“Making it easier to turn employees into owners benefits the US economy, improves productivity, and increases wages and retirement security,” said Rep. Blumenauer. “I look forward to working with my colleagues to strengthen opportunities for employee-ownership.”

“There has been a lot of discussion of late to the effect that owners of capital may be benefitting at the expense of workers,” said Steve Smith, Chair of ESCA. “We applaud this bipartisan effort to promote a structure that allows hard working Americans to also own their companies’ capital, giving them rewarding jobs where they have “skin-in-the-game” and investing in their future by building meaningful retirement savings.”

Studies have shown that S ESOP employees have retirement account balances three to five times higher than the average 401 (k) or other defined contribution plans and they are economic drivers. In a recent report, economist Alex Brill said, “Beyond the immediate benefit they provide to employees and customers, S ESOPs’ positive outcomes yield benefits to the U.S. economy broadly.” The 2013 study, Macroeconomic Impact of S ESOPs on the U.S. Economy, also found total direct and indirect output from these companies is nearly 2 percent of gross domestic product.

The Promotion and Expansion of Private Employee Ownership Act of 2014 (H.R. 4837) eliminates barriers that a business and its owners currently face in establishing a new S corporation ESOP or expanding the employee-ownership stake in an S corporation. Congress created the S corporation ESOP structure to encourage and expand retirement savings, giving more workers in private companies the chance to own their companies through an ESOP qualified retirement savings program.

Among the provisions in the bill are measures that will:

  • Enable owners of S corporations to sell their stock to an ESOP;
  • Encourage the flow of bank capital to ESOP-owned S corporations;
    Provide needed technical assistance for companies that may be interested in forming an S ESOP;
  • Ensure small businesses that become ESOPs retain their SBA certification; and
  • Affirm the importance of preserving the S ESOP structure in the Internal Revenue Code.

The Employee-Owned S Corporations of America (“ESCA”) is the Washington, DC voice for employee-owned S corporations. ESCA’s exclusive mission is to preserve and protect S corporation ESOPs and the benefits they provide to the employees who own them. These companies have an important story to tell policymakers about the tremendous success of the S ESOP structure in generating long-term retirement savings for working Americans and their families. ESCA provides the vehicle and the voice for these efforts. ESCA represents employee-owners in every state in the nation. More at

SOURCE Employee-Owned S Corporations of America