Employee Ownership is Good for Local Economies


Newsletter Article




Employee ownership stabilizes the economic base of local communities.

Promotes economic security for workers
Employee-owned companies create quality jobs that offer living wages and good benefits. By providing employees with a stake in the profits through ownership shares, employee-owned companies directly build individual and family wealth in their local communities. Furthermore, employee owned companies have greater job stability, evidenced by their significantly lower turnover rates.

Data: ESOP employees earn more in wages and retirement income than their counterparts at traditional firms.
Data: Employee-owners have assets (as measured by household net worth) that are nearly twice as high as non-owners in similar industries.

Retains jobs in the community
Employee-owned companies are more resilient. In past recessions, they outlasted their peers. They are also much less likely to lay off workers. Employee ownership conversions also help to stem the tide of business closures by offering retiring business owners an opportunity to access the wealth they’ve built while also ensuring that their businesses remain financially viable and rooted locally. This version of business succession avoids the asset-stripping and layoffs that often occur during acquisitions, and simultaneously benefits retiring owners by unlocking tax benefits associated with selling a business to your employees.

Data: 12.1% of all working adults in the private sector reported being laid off in the last year compared to just 2.6% of those respondents who say they own stock in their company through some kind of employee ownership plan.

Anchors local businesses in place
Employee ownership strengthens ties between business, people, and place. Locally-owned businesses serve as anchor institutions that play a key role in creating community wealth. These institutions foster a sense of mutual exchange and interdependence with the community that contributes to the neighborhood’s long-term economic viability. When ownership is vested in workers who have strong ties to the community, company relocations are less likely.

Supports community leadership
Employee-owned companies provide opportunities for workers to participate in decision-making processes and have a say in their workplace. Employee ownership allows residents to influence investment decisions and economic policy, which promotes greater community control of local assets. Local businesses are also based on local relationships, fostering increased trust and civic engagement in communities.

Anchors capital in local economy
Employee-owned companies increase the circulation of resources within communities and build more resilient economies. By spending and producing locally, employee-owned companies stop the leakage of dollars, allowing communities to retain the wealth they generate and finance strong public services.

Data: Locally owned businesses circulate three times more money back into the local economy than absentee-owned firms or chain businesses.

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