Content, Small business

Study: Employee-Owners More Confident About Financial Future

A new study suggests that employees who have an ownership interest in their companies are more financially secure and less likely to have economic anxieties than the overall workforce. The study largely involved employees at ESOP (Employee Stock Ownership Plan) businesses.

Employee-owners are twice as likely to say their financial outlook has improved in the last 12 months, and they are more likely to believe they have opportunities for financial advancement, according to a survey conducted by John Zogby Strategies (JZS) in late March and the first half of April 2017.

“They have a more optimistic view of their finances and professional prospects, and they are far more confident about their ability to handle unexpected medical bills, make mortgage payments, and pay student loans,” the study concluded. “They lose less sleep over finances, and the are much less worried that they will lose their jobs.”

The results were based on an online poll of 3,415 members of the Employee-Owned S Corporations of America (ESCA), which commissioned and paid for the study. All participants work for privately-held companies that are either majority or wholly-employee owned.

The answers were then compared to an October 2016 Marketplace-Edison poll that asked the same questions of 1,036 people in the overall workforce in both online surveys and telephone interviews.

Employee Ownership Research: Key Findings

The study was commissioned largely because of the economic anxieties that became a central story in the most recent election cycle. Even with low unemployment and rising wages, Americans reported feeling insecure about their financial futures.

ESCA set out to find if employee-owners at corporations with employee stock ownership plans (ESOPs) felt differently, and it revealed that they did -- in some cases, but not all, by considerable margins.

Specifically, some key findings were:

  • Two-thirds of ESOP employees considered their personal financial situation better than a year prior, while only 30 percent of non-ESOPs said the same.
  • Eighteen percent of employee owners reported not feeling financially secure, compared to 26 percent of the overall workforce.
  • Sixty-nine percent of ESOP workers reported having advancement opportunities, while only 52 percent of overall workers felt that way.

The pattern was similar for questions about fear of losings their jobs and confidence in their ability to pay bills.

All workers reported having concerns about their retirement, but the anxieties were not as intense among ESOPs. They were 30 percent less likely to say they worry “a lot” about retirement.

Survey Limitations

The study threw out any questions that were not equivalent in an effort to make an apples-to-apples comparison, but a perfect matchup wasn’t possible, of course, because demographics were different.

Two-thirds of ESOP survey respondents were men, while responses were split fairly evenly between men and women in the earlier survey. Five-four percent of ESOPs had a bachelor’s degree, compared to 42 percent in the overall workforce poll. ESOP respondents were older, on average, and more likely to be white and Republican.

Quite a few MSPs, by the way, have transitioned to ESOP models. Examples include Modern Technology Solutions Inc. (MTSI) -- a company that gradually transitioned to an ESOP business over the past decade.