Imagine a company where all employees share in the financial success and accumulate significant wealth for retirement income security. This dream becomes a reality in an ESOP company. An Employee Stock Ownership Plan is a defined contribution plan designed to invest primarily in company stock.
Americans are living longer and have not saved enough for retirement. The National Institute on Retirement Security reports that 57 percent (more than 100 million) of working-age individuals do not own any retirement account assets and finds that four out of five working Americans have less than one year's income saved in retirement accounts. ESOPs are an effective business model and a proven option to create jobs, grow our economy, strengthen the middle class and provide retirement income security.
I am very honored to lead Border States, one of the largest and most successful 100 percent employee-owned ESOP companies in America. Border States' growth and success has significantly outpaced market benchmarks, largely driven by our ownership culture. Our employee-owners know that when our customers succeed, we succeed. The ESOP benefit is provided at no cost to employee-owners. As of March 31, 2018, the company had over 2,300 participants in the ESOP.
Employee-owners working at companies with ESOPs "have greater confidence in their financial security, less fear about losing their job and are more confident in their ability to handle major expenses like mortgage payments, children's college costs and unexpected medical bills," according to a May 2017 study conducted by John Zobgy Strategies. This study found ESOP retirement savings are three to five times higher than 401(k) savings. Further, Nancy Wiefek, National Center for Employee Ownership, studied a group of 9,000 new entrants to the workforce from 1997 to 2013. She found the individuals who worked "for companies with Employee Stock Ownership Plans, namely ESOPs and similar plans, had 33 percent higher median wage income, 92 percent higher median household wealth and greater access to other employee benefits. The two groups of young people started out in 1997 with about the same wages and wealth, similar education, marital status and parents' education. They came from similar parts of the country."
October is National Employee Ownership Month. A time to promote employee-ownership and a time to celebrate the undeniable benefits employee-owners earn working for companies they own. In recognition of employee-owned companies in our state, Gov. Doug Burgum proclaimed October Employee Ownership Month in North Dakota.
There are many other successful ESOP-owned companies in our region and approximately 7,000 ESOPs in the country covering about 11 million employees. As we look for ways to create jobs, grow our economy, strengthen the middle class and provide retirement income security, ESOPs are a proven option. Employee-owners working in ESOP companies are living the American dream working for the companies they own.
Miller is CEO and board chair of Border States Electric