As the presidential primary contest begins to wind down, candidates from both parties continue to battle for delegates by appealing to one of voters' chief concerns: the economy. And rightfully so, especially when wages have remained stagnant for most workers since the Great Recession, and nearly 60 percent of Americans do not have adequate retirement savings. As candidates continue the race for the White House, they would do well to explore the benefits of employee stock ownership plans (ESOPs), a business model with a proven track record of improving income and retirement outcomes for many Americans.
I had the privilege recently of testifying at a hearing before the House Small Business Committee on the benefits of S ESOPs broadly and H.R. 2096, the Promotion and Expansion of Private Employee Ownership Act of 2015. Joined by Stephanie Silverman, President and Executive Director of the Employee-owned S Corporations of America, I stressed how employee ownership changed the financial outcome for the employees of Messer.
In 1990, the ESOP model allowed ninety-nine Messer employees to buy the company from our founder's surviving grandchildren, who no longer had an interest in running the company. Today, Messer is a 100 percent employee-owned S corporation (S ESOP) that provides quality jobs and predictable retirement for over 1,000 individuals in nine regional offices, and has company-funded retirement assets for those employees totaling over $220,000,000. We would not have been able to do this without the ESOP structure.
This story isn't unique to Messer Construction; nearly 500,000 Americans work at nearly 3,000 S ESOP companies across the country. In fact, research from the American Enterprise Institute's Alex Brill found S ESOPs outperformed private firms, and continued to proliferate, during the pre-recession and post-recession periods, increasing employment over 60 percent from 2001-2011, compared to roughly no change in private firm employment. In addition, Vice President Joe Biden
Joe BidenViolence erupts between counter-protestors, Trump supporters following DC rally Biden considering King for director of national intelligence: report Here are the 17 GOP women newly elected to the House this year MORE's former chief economist Jared Bernstein published research earlier this year finding ESOPs had an equalizing impact on wealth and wage inequality.
H.R. 2096, introduced by Rep. Reichert (R-WA-08) and Rep. Kind (D-WI-03), would help expand ESOPs by providing additional incentives to S corporation business owners to sell to an ESOP. It would also establish a government technical assistance office for companies seeking to make the transition to an ESOP. There is a similar bill in the Senate, S. 1212. Together, the bills have nearly 100 cosponsors almost evenly split between both parties.
The next ten years will produce the largest wave of retiring business owners in America, and it's time to get smart about ways to secure the businesses they own and the people they employ. If we're serious about the future, we need to act now to incentivize employee ownership.
I applaud Chairman Steve Chabot's efforts in support of employee ownership and his decision to become a sponsor of H.R. 2096. I ask that members of Congress support H.R. 2096 in the House of Representatives, and the complimentary bipartisan bill in the Senate, S. 1212.
Peter S. Strange is the Chairman Emeritus of Messer Inc.
