New NCEO Research Shows the Benefits of Being an ESOP in the Food Industry
The NCEO just completed a large grant-funded project examining whether and how employee ownership affected companies and employees in the U.S. food system during the COVID-19 pandemic. This project involved commissioning a national polling firm to collect original survey data from executives at ESOP and non-ESOP-owned companies. It speaks to important issues of workforce retention, business competitiveness, and the retirement security crisis. Namely:
- ESOP food companies laid off fewer workers than comparable non-ESOP companies in 2020, the year the pandemic struck: 2% vs. 5% (median involuntary separation rate) and had fewer workers quit in 2020, with a median 6% quit rate for ESOP companies versus 20% for non-ESOP companies.
- Across an array of benefits, the survey data shows the advantage for ESOP workers. For example, 89% of ESOP food companies offer an employer-paid health insurance plan, compared to 71% of non-ESOPs companies and 86% of ESOP companies offer paid sick leave compared to 69% among the non-ESOP companies.
- The median ESOP balance reported by the ESOP company respondents of $30k is striking given that across all U.S. households, the median retirement savings is $0, and just over 50% of households have any retirement account at all. Meanwhile, 70% of ESOPs in this study sponsor a 401(k) plan in addition to the aforementioned ESOP.
- Finally, food ESOPs in the survey were more likely to have seen an increase in revenue from 2019 to 2020 (53% versus 35%) and more likely to say their company fared better than competitors during the pandemic (52% versus 45%).
Employee ownership is not a panacea. ESOP companies in our study were not immune to layoffs and other disruptions. Still, this study shows that ownership structure clearly has a role to play in helping workers and businesses in the food system thrive even under extraordinary economic circumstances.
The survey was conducted by Braun Research, Inc. from November 2021 to March 2022 using a mixed-method approach including phone, online, and text message outreach. The survey received valid responses from 112 ESOPs 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, which we then weighted to match the ESOP respondent group on industry subgroup (i.e., manufacturing, retail, etc.) and size (number of employees).
Click here to see the full NCEO research report.