Americans worried about retirement should look to employee ownership

Americans worried about retirement should look to employee ownership
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The tax reform debate has dominated Washington’s attention recently, but policymakers must not overlook commonsense opportunities to achieve the economic growth everyday Americans need. Outside the Beltway and across the country, families are sitting around the kitchen table with their financial stresses in tow, from how to afford next year’s college tuition payment to whether they have enough cash to weather an emergency, and increasingly, whether they can afford to retire.

It should come as no surprise then that a recent survey shows that 79 percent of Americans fear they won’t have enough saved for retirement. But while all eyes remain on tax reform, a little-known solution already exists to help alleviate much of this anxiety: employee stock ownership plans. These are companies of all sizes that allow employees to own stock in the organizations they work for, giving them stake in the company at no cost. Over 13.5 million Americans nationwide participate in employee stock ownership plans as employee owners, sharing the fruits of their labor and gaining a secure, high performing source of retirement income.

I first learned of the value of employee stock ownership plans while representing Louisiana’s 3rd congressional district, home of employee-owned Acadian Ambulance. The company was founded in 1971 with two ambulances and eight medics, and has since grown to over 4,000 employees, becoming the largest privately-held medical transportation company in America. In 1993, Acadian Ambulance set up an employee stock ownership program to give the employees an ownership stake in a company that was rapidly growing. A fund was set up for qualifying employees from which the company contributed new shares or cash to buy existing shares. While this business model generated pride of ownership and contributed to the continued growth of the company, most importantly, it proved to be a stable vehicle for retirement security.

Having witnessed the success of Acadian Ambulance firsthand over the years, I became a champion for the employee stock ownership plan business model. This was easy to do based on the evidence that employee stock ownership plans are reliable, high-performing sources of retirement security. Employee stock ownership plan participants have account balances that are three to five times larger than those of participants of comparable 401(k) plans. Additionally, employee stock ownership plan accounts outperformed the S&P 500 Total Return Index on a per participant basis by 62 percent from 2002 to 2012. The robust benefits of employee stock ownership plans are hard to beat.

Given the commonsense benefits of employee ownership, I was proud to have been part of the original bipartisan effort to promote greater retirement security and support stable, well-paying jobs. Several terms later, both political parties still agree on how to achieve these goals. Most recently, the Senate and the House of the 115th Congress reintroduced the Promotion and Expansion of Private Employee Ownership Act. The Senate bill, co-sponsored by Sens. Pat RobertsCharles (Pat) Patrick RobertsSenate GOP's campaign arm releases first ad targeting Bollier in Kansas The Hill's Campaign Report: Trump, Biden hit campaign trail in Florida National Republicans will spend to defend Kansas Senate seat MORE (R-Kan.) and Ben CardinBenjamin (Ben) Louis CardinBipartisan group of senators call on Trump to sanction Russia over Navalny poisoning Pelosi hopeful COVID-19 relief talks resume 'soon' Congress must finish work on popular conservation bill before time runs out MORE (D-Md.) with companion legislation in the House introduced by U.S. Reps. Dave ReichertDavid (Dave) George ReichertWashington Rep. Kim Schrier wins primary Mail ballot surge places Postal Service under spotlight Bottom Line MORE (R-Wash.) and Ron KindRonald (Ron) James KindDemocrats, GOP fighting over largest House battlefield in a decade Republican fears grow over rising Democratic tide Wisconsin Rep. Ron Kind wins primary MORE (D-Wis.), will help more Americans gain retirement savings and security through expanded support for employee ownership.

These bills seek to incentivize owners of S corporations to sell their stock to an employee stock ownership plan, provide needed technical assistance for companies that are interested in forming an employee stock ownership plan, and level the playing field between S and C employee stock ownership plans. Furthermore, the legislation ensures employee stock ownership plans retain their certification by the Small Business Administration and affirm the importance of preserving the employee stock ownership plan structure in the Internal Revenue Code.

Employee ownership is the solution real American families need to ease the financial fears gripping households throughout the country. If employed by employee stock ownership plan companies, working Americans can spend less time worrying about job security and retirement savings and enjoy a clearer path to prosperity. Congress and the Trump administration should look to employee ownership to promote job growth, higher wages, and ways for struggling middle class workers to build retirement savings at no cost to them. It’s a win-win solution.

Charles Boustany, M.D., is a partner at Capitol Counsel in Washington, D.C. He represented Louisiana in U.S. Congress from 2005 to 2017.