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The Economic Benefits of ESOPs for Employees and Companies

Research shows that when a company sponsors an employee stock ownership plan (ESOP), both the ESOP participants and the company tend to benefit economically, even aside from tax incentives and all the other benefits. The infographic below highlights some salient findings.

THE ECONOMIC BENEFITS OF ESOPS

For Employees and Their Employers

How ESOP Participants Benefit

$166 Billion
in Payouts for One Year Alone

ESOP participants have larger retirement account balances than comparable workers nationwide and have better job security. In 2023, ESOPs paid out over $166 billion to participants.[1]

$114 Billion
in Contributions for One Year Alone

ESOP participants have larger retirement account balances than comparable workers nationwide and have better job security. In 2023, total contributions to ESOP accounts were over $114 billion.[2]

Over double the average retirement balance vs. comparable workers[3]
ESOP Participants Average balance
$132,362
Non-ESOP Equivalent Average balance
$63,925
Less than 25% of the job losses seen at comparable firms during COVID[4]
ESOP Job Losses During COVID-19
4.8%
Non-ESOP Job Losses During COVID-19
19.5%

How ESOP Companies Benefit

2.3%
Higher Sales Growth

A major academic study comparing private ESOP companies to other private companies found ESOP companies grew faster in employment, sales, and sales per employee.[5]

2.4%
Greater Annual Employment Growth
2.3%
Greater Annual Sales Growth
2.3%
Greater Annual Sales Per Employee Growth

[1] Source: Employee Ownership by the Numbers, https://www.nceo.org/r/numbers.

[2] Source: Employee Ownership by the Numbers, https://www.nceo.org/r/numbers.

[3] Source: "Measuring the Impact of Ownership Structure on Resiliency in Crisis," a 2021 NCEO study for ESCA, p. 9. This compares ESOP balances in the most common ESOP type, the S corporation ESOP, to average non-ESOP 401(k) balances.

[4] Source: Declines in average total employment reported in p. 4 of "Employee-Owned Firms in the COVID-19 Pandemic," a study conducted by Rutgers University and SSRS in 2020. Other studies also find positive outcomes at ESOP companies.

[5] Source: Blasi, Kruse, and Weltmann, "Firm Survival and Performance in Privately-Held ESOP Companies," Sharing Ownership, Profits, and Decision-Making in the 21st Century (Emerald, 2013), pp. 119–20.