A new study from Rutgers University’s Institute for the Study of Employee Ownership and Profit Sharing, funded by the WK Kellogg Foundation, titled Building the Assets of Low and Moderate Income Workers and their Families: The Role of Employee Ownership, was released last month. Authored by Janet Boguslaw of the Institute on Assets and Social Policy at Brandeis and Lisa Schur at Rutgers, the study finds that being an employee-owner in an employee stock ownership plan (ESOP)-owned company can have life-changing effects.
As NPQ has noted, as of 2015, 6,669 companies are owned in whole or part by ESOPs. All told, 10.8 million Americans work at companies with ESOPs, and another 3.6 million Americans still have holdover ESOP accounts as recent former employees. Total asset holdings in these 14.4 million accounts exceed $1.3 trillion, which works out to over $90,000 per person. And the average account value for veteran employees is considerably more than that—Boguslaw and Schur found the average for the people their team interviewed exceeded $200,000.
Among worker co-ops, participation in communities of color is highly visible. Last year, US Federation of Worker Cooperatives executive director Esteban Kelly noted that about 60 percent of the federation’s members were people of color. But membership in worker co-ops remains small. A 2017 report from the Democracy at Work Institute found 6,734 worker-owners nationwide at roughly 450 co-ops nationwide.
Companies with ESOPs employ 1,000 times as many people as worker co-ops. Data on racial equity in the sector is sparse, however. The Boguslaw and Schur study works to close that gap by examining “the asset building impacts of employee ownership for low- and moderate-income employees and their families.” The authors claim that their study is the “largest qualitative, individual interview-based study of this employee population ever conducted in the United States.”
To build on their qualitative data, in their report Boguslaw and Schur draw on the General Social Survey (GSS) national quantitative survey, which does not measure ESOPs per se, but does measure employee stock ownership more broadly. According to GSS data, as one might expect, employee stock ownership is more common among whites than people of color. Specifically, 20.1 percent of whites in the workforce own stock or have an ESOP share in the company where they work, compared to 17.1 percent of blacks and 10.6 percent of Latinx workers.
As for the qualitative data, Boguslaw and Schur explain that the research team they led “completed interviews at 21 companies across the United States that offer ESOPs, representing 16 states and eight discrete sectors, ranging in size from 75 to 18,000 employees.” The authors note that their sample was purposefully not representative. As Boguslaw and Schur explain:
We sought to find companies across a range of industry types and geographies enabling us to compare the experiences and asset wealth building trajectories of low- and moderate-income workers with at least 15 years’ longevity of employment with the firm. Additionally, within this group, we sought out firms that had representation of women and people of color who were the primary but not the exclusive focus of the interviews. In some cases, we found that we had to reduce the number of years of employment to eight or more years in order to fulfill this last criterion, an issue that will be discussed further in the findings.
The need to select in this manner speaks to the lower prevalence of people of color in ESOPs. But the fact that it was easier to find people of color at firms in recent years suggests that ESOP hiring of people of color may have increased. Interviews were conducted from June 2015 through August 2018, with the goal of reaching at least 10 people at each firm. Interviews were conducted in confidence on company time; respondents wer