ESCA Releases NCEO Research on the Economic Impact of S Corporation ESOPs
Executive Director
ESCA Releases NCEO Research on the Economic Impact of S Corporation ESOPs
A new NCEO research report, S Corporation ESOPs and Retirement Security, by Nancy Wiefek and Nathan Nicholson, documents the impact of employee ownership on employees, based on data for 61,000 plan participants at 39 ESOP companies. The survey was conducted online between January and March 2018 among members of Employee-Owned S Corporations of America (ESCA). Among respondent companies, the median number of ESOP participants is 600. Most of the companies in the survey are 100% owned by their employees through the ESOP.
The analysis compares various groups of employees in these ESOP companies to their peers in the work force as a whole. The table below summarizes the results for different age categories:
|
|
Surveyed S corporation ESOP participants |
All workers in the U.S. |
|||
|
Employee age |
Number of employees |
Average ESOP account balance |
Average non-ESOP retirement balance |
Average total retirement balance |
Average retirement savings |
|
Under 25 |
13,748 |
$3,424 |
$2,213 |
$5,637 |
$2,740 |
|
25-34 |
16,736 |
$33,612 |
$17,109 |
$50,722 |
$12,405 |
|
35-44 |
11,532 |
$132,726 |
$46,990 |
$179,716 |
$37,039 |
|
45-54 |
11,174 |
$294,605 |
$79,335 |
$373,940 |
$91,054 |
|
55-64 |
8,027 |
$323,823 |
$102,276 |
$426,098 |
$142,124 |
|
65 or older |
1,543 |
$233,602 |
$92,039 |
$325,641 |
$108,363 |
Writing about the report in the Washington Examiner, Phillip Swagel at the University of Maryland’s School of Public Policy observed:
S-ESOP employees surveyed have more than twice the national average in their retirement accounts — $170,326 versus $80,339. Those savings don’t just make their way to highly compensated workers; they are spread across the ranks. S-ESOP employees making less than $25,000 a year have on average more than twice the retirement savings of similar workers nationally.
The full report includes a number of other findings, such as comparing low-, moderate-, and high-income workers between the surveyed S corporation ESOPs and the U.S. workforce. Beyond retirement wealth, the report also examines other measures of employment. For example, ESOPs are clearly associated with reduced turnover. Respondent companies report quit and separation rates that are more than two times lower than national rates.