On Monday, October 6, 2014, the Pennsylvania Senate approved State Senator Stewart J. Greenleaf’s SR 408 urging the Pennsylvania Department of Community and Economic Development (DCED) to promote employee ownership initiatives for the purpose of encouraging business retention and growth.
Senator Greenleaf introduced the resolution after meeting with employees of an employee-owned company in his senate district where the entire staff shares ownership in the company. Since adopting an Employee Stock Ownership Plan (ESOP), the company has seen an increase in productivity, improved customer relations, and increased sales.
“Employee ownership benefits employees, businesses, and the economy,” said Senator Greenleaf. “ESOPs provide retirement savings and stock ownership for employees as well as being a financing method for businesses. ESOPs prevent American jobs from being moved overseas, and ESOP businesses are far less likely to lay off employees during a recession.”
According to the National Center for Employee Ownership (NCEO), ESOP-owned companies are 25% more likely to stay in business and employee-owners were 4 times less likely to be laid off during the recent recession. ESOPs have a 25% higher job growth rate than comparable companies over a 10 year period.
Greenleaf said, “Despite the benefits, many business owners are unaware of ESOPs or lack a clear understanding about such plans and how they operate.”
SR 408 asks the Department of Community and Economic Development to develop a public education and outreach plan for employees and owners about ESOPs and offer guidance and assistance to companies seeking to become employee owned.
DCED has expressed interest in helping promote ESOPs and they have already started to work with the PA Economic Development Agency to set up a webinar on employee ownership in coming months.