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The Employee Ownership Update

Corey Rosen

December 19, 2003

(Corey Rosen)

New Data Provide Estimates of Numbers of Employees Owning Stock in Their Companies Through ESOPs, Options, and Other Plans

Employee ownership has become a major factor in the American economy, according to a new national survey of working adults. The data come from a 2002 random sampling of working adults performed by the National Opinion Research Center (NORC) of the University of Chicago and a survey of organizations from the NORC's National Organizations Survey (NOS), performed in 2003. The individual data are based on 1,242 respondents; the organizational data on 315. Joseph Blasi and Douglas Kruse of Rutgers and Richard Freeman of Harvard, all affiliated with the Shared Capitalism Project of the National Bureau of Economic Research, organized the questions and their analysis. The National Center for Employee Ownership was one of the sponsors of the survey questions, along with the Shared Capitalism Project, the Beyster Institute, and the Employee Ownership Foundation. The Shared Capitalism Project receives support from the Rockefeller and the Russell Sage Foundations. The larger GSS and NOS surveys, which involve hundreds of questions, are primarily funded by the National Science Foundation.

The data are reported in detail in a separate page on this site. In sum, however, they showed that as of 2002, 23.3% of all employees working for for-profit companies report owned stock in their companies, while 14.4% held stock options. The two categories are exclusive of one another, but other data indicate that almost all employees holding options also own company stock in other ways. That would mean that approximately 25 million Americans own employer stock through ESOPs, options, stock purchase plans, 401(k) plans, and other plans; while 14.6 million hold stock options (and, usually, other stock). In 2002, 4.8% of employees received an option grant, but because many programs are not annual, the number holding options is much larger. Looked at on the basis of companies, in 2003 37.8% of for-profit companies provided employee ownership plans for 50% or more of their employees, and 16.3% granted options to a similarly broad group.

Because of the differing estimating techniques and inevitable ambiguities of data collection and interpretation in this area, however, variations in results are to be expected. These numbers, as well as any other estimates, should always be understood with the caveat that they cannot be precise. The data would likely be different if compiled after 2003. A number of companies have said they will cut back on broad-based options, as well as employee stock purchase plans, in response to expected changes in accounting rules. We estimate that the number of employees holding company stock could drop by three to four million people as a result, but that competitive labor market pressures will likely make these short-term changes.

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