Americans Want Employee Ownership

It’s no surprise that Americans disagree about a lot of things….

Just try getting consensus on a group of people’s preference for cats or dogs, pie flavors or person most likely to take the Iron Throne in Game of Thrones. Close to impossible.

However, in new research released in May, funded by the Employee Ownership Foundation, and conducted by Rutgers researchers, it has become clear that the one thing we can all agree on is that we want to work for a company owned by its employees.

Nearly three-fourths of respondents (72 percent) to the General Social Survey would rather work for an employee-owned company than one owned by conventional shareholders or the government. 

The research also reveled that employee owned businesses enjoy uniquely broad support among Democrats, Republicans, and Independents.

Employees’ preference for employee owned companies transcend ideological and partisan divides, with 74 percent of Democrats, 72 percent of Republicans, and 67 percent of Independents voicing a preference for employee ownership.

Among respondents who cast a ballot in the 2016 presidential election, 76.5 percent of Trump voters and 75.5 percent of Clinton voters prefer employee share ownership.

“These results show that employee ownership is the equivalent of a political unicorn—something very large majorities of Americans agree upon, completely independent of political leanings,” said Jim Bonham, President of the Employee Ownership Foundation. “This research shows that employees across the spectrum value owning a stake in the companies where they work. After decades in Washington, I can say this level of political agreement is truly unique and shows that employee ownership transcends our nation’s political divide.”

“These results show that employee ownership is the equivalent of a political unicorn—something very large majorities of Americans agree upon, completely independent of political leanings,” said Jim Bonham, President of the Employee Ownership Foundation.

“Americans disagree about a lot of things, but this is not one of them,” said Beyster Distinguished Professor Joseph Blasi, Director of the Rutgers Institute for the Study of Employee Ownership and Profit Sharing. “Democrat or Republican, female or male, black or white, union or non-union, a majority of respondents said they prefer to work for a company with employee share ownership. It is rare to find such a national consensus on anything.”

The survey findings align with recent bipartisan support for employee share ownership on Capitol Hill. In 2018, the Republican chairs and Democratic ranking members of the Senate and House Committees on Small Business co-sponsored the Main Street Employee Ownership Act. Signed last August, the new law makes it easier for retiring business owners to sell to their employees through an ESOP.

Guest Post – C. S. Davidson, Inc: From Family-Owned To Employee-Owned Business

Today, we welcome David M. Davidson Jr., Chief Financial Officer of C.S. Davidson, Inc. located in York, Pennsylvania. C.S. Davidson is a member of The ESOP Association and will be celebrating 90 years in business this year. In this guest post, Mr. Davidson shares his thoughts on the value of employee ownership. Congratulations to C.S. Davidson on a successful 90 years.

C. S. Davidson, Inc: From Family-Owned To Employee-Owned Business

David M. Davidson Jr., P.E., P.L.S., Chief Financial Officer, C.S. Davidson, Inc.
David M. Davidson Jr., P.E., P.L.S., Chief Financial Officer, C.S. Davidson, Inc.

By David M. Davidson Jr., P.E., P.L.S., Chief Financial Officer, C.S. Davidson, Inc.

In 1923, Carl Schaefer Davidson opened a modest surveying and engineering business in Hanover.  He later moved to York and, in 1948, incorporated the business as C. S. Davidson, Inc.  This is the story of a company that spanned three generations of the Davidson family, and continues to this day as an ESOP, or employee-owned, business.

Things were much more straightforward in the early years.  There were no regulations to speak of, and zoning was a concept that had only recently been introduced in New York City.  Engineers were hired for their imagination, creativity and ability to design.  Calculations were done painstakingly by hand – our archives are filled with hand-lettered calculations and meticulously drafted diagrams that reflect the time that could be spent on the design of a project.  Labor was cheap back then – old invoices show surveyors’ billing rates of less than a dollar an hour.

From the very beginning, C. S. Davidson, Inc. was very much a family-owned and family-operated business.  Carl’s sons David and Bayard and I, his grandson, got our introduction to “engineering” by working on survey crews, cutting brush and carrying bundles of stakes.  My father, David Sr., became president of the firm in 1965, and I in 1983.

At some point, every business owner has to deal with “ownership transition.”  The options are limited: internal sale, external sale or closing the doors – although there are many variations within each option.  We initially attempted a direct sale of stock to a limited number of employees.  As is usually the case, the value of the business exceeded the financial resources and/or risk tolerance of the prospective purchasers.  We could see that a straight cash sale would never accomplish the intended goal.

We have never considered a sale to an outside interest, although we receive many inquiries.  Acquisition by another firm—no matter how similar in services and size—would inevitably lead to the loss of the culture that makes us uniquely “CSD.”  Even though we’ve become a large firm (by local standards at least), we’ve managed to retain the feeling of a much smaller firm.  We like that.

An ESOP (“Employee Stock Ownership Plan”) seemed to be the answer.  Not only does it provide a mechanism to gradually transfer ownership to employees, it doesn’t require any investment (other than their continued hard work!) on their part.  It has the added advantage of a tax-deferred sale (to the owners), a tax-deferred retirement benefit (to the employees) and a tax deduction (to the corporation).

In addition to the tax advantages, it has a less tangible (but in my opinion, more important) benefit of educating everyone to think like they’re an owner.  It may seem an insignificant distinction, but as time goes on it is essential that the sense of ownership, as well as the actual ownership, changes hands. It’s the only way that CSD can expect to enjoy continued success for, hopefully, another 90 years.

All in all, an ESOP seemed like the right thing to do from a variety of perspectives.  It was expensive, time-consuming and difficult – but in the long run it will be one of the best investments we’ve ever made.

CS Davidson Post - CSD.90thLogo.Site