New Research: Employee Ownership in the US Food System During COVID-19
The NCEO has just completed a large-scale project to examine whether and how employee ownership affected firms and workers in the U.S. food system during the COVID-19 pandemic.
Drawing on an industry-focused survey of food businesses with employee stock ownership plans (ESOPs) and a comparison group of non-ESOP food businesses, along with retirement plan filing data and qualitative interviews, we found that employee ownership was associated with substantial benefits for firms and workers during the height of COVID-19 across a variety of measures. We highlight key survey findings below. (See survey methodology at the end of this article.) We truly appreciate the participation of the survey respondents who make this research possible.
Workforce Retention
- ESOP food companies laid off fewer employees, with a median involuntary separation rate of 2% in 2020, compared to a 5% rate in non-ESOP food companies.
- ESOP food companies also had far fewer employees quit. ESOP food companies had a median quit rate of 6% in 2020, while non-ESOP food companies experienced a quit rate of 20%.
- ESOP food company respondents were far less likely to view employee retention as a challenge: Just 6% cited retention as a very large challenge, compared to 22% of non-ESOP food company respondents.
Benefits and Retirement Security
ESOP food companies in the survey provided employees an advantage in terms of benefits and retirement security throughout the pandemic. Eighty-nine percent of ESOP food companies offered employer-paid health insurance, compared to 71% of non-ESOP food companies. Similarly, paid sick leave was found to be more common in ESOP food companies, with 86% offering sick leave compared to 69% in non-ESOP food companies. ESOP food companies are similarly more likely to offer a secondary 401(k) retirement plan than non-ESOP food companies are to offer any 401(k) plan.
| Which of the following benefits are offered at your company? (choose all that apply) | ESOPs | Non-ESOPs |
|---|---|---|
| Employer-paid health insurance | 89% | 71% |
| Paid sick leave | 86% | 69% |
| Tuition reimbursement for certain types of schooling | 49% | 31% |
| Profit sharing | 46% | 24% |
| Stock options | 25% | 23% |
| 401(k) plan | 70% | 68% |
| [None] | 2% | 6% |
| N | 112 | 222 |
The median ESOP balance calculated from all the reported medians is $30,000. In contrast, across all U.S. households, the median retirement savings is $0, and just over 50% of households have any retirement account.
Firm Performance
ESOP company respondents feel more strongly positive about the performance of their workforce through the pandemic compared to the non-ESOP companies (56% vs. 47% rate workforce performance as excellent). ESOP company respondents were more likely to have seen an increase in revenue from 2019 to 2020 (53% versus 35%) and were more likely to say their company fared somewhat or much better than competitors during the pandemic (52% versus 45%).
Survey Methodology
To conduct the survey of food companies, we contracted with Braun Research, Inc. (BRI), a national survey research firm, to collect data from executives at ESOP food companies and a comparison group of non-ESOP food companies. The survey was conducted from November 2021 to March 2022 through the telephone and online. All eligible contacts were offered an incentive in the form of a charitable contribution. For the ESOP group, we provided BRI with the full list of 258 ESOP food companies. BRI contacted the entire list using a mixed-method approach including phone, online, and text message outreach. The survey received valid responses from 112 of these companies, or 43% of all ESOP food companies. For the comparison group, the polling firm used Dun and Bradstreet and other listings to contact food businesses with no ESOP, and received 222 valid responses. We weighted the non-ESOP comparison respondent group to match the ESOP respondent group on industry subgroup and size.