Employee-Ownership, ESCA, and a Visit from Congressman Joe Morelle
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Employee-Ownership, ESCA, and a Visit from Congressman Joe Morelle

This week, Butler/Till had the privilege of hosting the Employee-Owned S Corporations of America (ESCA) at our Rochester headquarters for a roundtable discussion and general Q&A session. Alongside ESCA, we were grateful to receive input, perspective, and connect with local ESOPs, ProAct Pharmacy Benefits Management, Lewis Tree, KJT Group, Inc., and Eastern Shore Associates Insurance. An exciting addition to our day was Congressman Joe Morelle, who joined our ESOPs in discussing the benefits, legalities, and importance of employee-ownership.

About ESCA

ESCA is the Washington, D.C., voice for employee-owned S corporations. Since 1998, ESCA’s membership has grown to 180 companies with more than 220,000 employee-owners in every state. S ESOP companies engage in a broad spectrum of business activities and come in all sizes–from 50-person businesses to 15,000+ employee-owners–but all have one thing in common: a commitment to ensuring that no harm comes to S ESOPs as a result of intentional or unintentional federal policies and actions, therefore working with policymakers on incentives to promote more private, employee-ownership.

About ESOPS

ESOPS are companies that are 100-percent owned by their employees. The benefits of being an employee-owned company have proven greater wealth, increased productivity and employee engagement, and heightened reliability.

The proof is in countless studies, including one by John Zogby Strategies–in partnership with ESCA–which surveyed mid- and lower-level employees at employee-owned private companies that tells an encouraging story about the financial stability of S ESOP employees during the COVID-19 pandemic. Survey results found those employee-owners reported significantly less financial adversity, better housing security, and consistent retirement savings compared to non-ESOP employees.

In the midst of a public health emergency, nonESOP employees reported experiencing:

  • Financial insecurity at more than three times the rate of employee-owners.
  • Inability to pay down debt at more than twice the rate of employee-owners.

Another analysis by Ernst & Young (EY) released in 2022 finds that employee-owners of privately held businesses called “S corporations” (S ESOPs) benefit from far better retirement savings compared to other U.S. workers.

The analysis–which EY conducted on behalf of ESCA–examines trends in S ESOP retirement plans from 2002 through 2019, including S ESOP plans’ net asset value, number of participants, average account balances, and distributions to participants.

EY’s key findings include:

  • S ESOP assets and participants grew significantly since the beginning of the millennium and assets grew faster than participants, leading to higher assets per participant.
  • S ESOP employee-owners saw returns at rates higher than the stock market.
  • S ESOP’s distributions to employee-owners, typically when they retire, totaled more than $77 billion from 2002 through 2019.

These findings, along with the “ah-ha” moments throughout our roundtable with ESCA, fellow ESOPs, and Congressman Morelle confirm what employee-owners have known to be true for decades, working for a private ESOP company leads to greater wealth, increased productivity and employee engagement, and strengthens reliability.

To learn more, connect with our experts.

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