Employee stock-owned companies saved the federal government more than $37 million in 2010 during high employment, according to an analysis by the National Center for Employee Ownership and the Employee Ownership Foundation.
The analysis finds that employee stock-owned companies laid off employees four times less than more traditional companies.
"When a person has a job, she or he pays federal income taxes, Social Security taxes, Medicare taxes and does not collect unemployment compensation," says J. Michael Keeling, president of Employee Ownership Foundation. "So the fact that employee owners were more than likely to pay taxes and not collect unemployment compensation means Uncle Sam's fiscal house would be so much better off if there was more employee ownership."
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The analysis is based on a survey that finds ESOPs laid off employees by a rate of 2.6 percent in 2010 as opposed to 12.1 percent of traditional companies. In 2010, 18 million Americans were employed by employee stock-owned, and another 11 million Americans were at companies that offered employee stock ownership plans. With the low layoff rate, savings for ESOP participants totaled to $14.5 billion in 2010, which is seven times more than the estimated $2 billion a year tax expenditure from the special laws promoting ESOP creation and operation.
"Hopefully our federal decision makers, all preaching support for policies to create jobs, will take heed that the best jobs policies are those that keep the unemployment rate low, and a low unemployment rate is also the best deficit reduction policy, which is having more employee stock ownership," Keeling says.
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