NCEOC & UNC Charlotte’s Urban Institute Conduct Research on Employee Ownership as a Mechanism for Reducing the Racial Wealth Gap

The North Carolina Employee Ownership Center (NCEOC) and UNC Charlotte’s Urban Institute, with support from The Gambrell Foundation, conducted research on employee ownership as a mechanism for reducing the racial wealth gap in Mecklenburg County.

The Executive summary says that the research found employee ownership “can concurrently address a number of the factors contributing to the racial wealth gap. Employee ownership has been found to reduce wealth disparities by providing equity to working-class people and distributing wealth more evenly across all demographic groups. In addition to the positive impact on wealth distribution, some forms of employee ownership give small business owners access to liquidity at fair market value and an opportunity for workers to diversify their assets efficiently. Employee ownership can significantly improve the business closure-to-sales ratio, helping business owners of closely held companies to retire with significant wealth and sustain local jobs.”

Despite the effectiveness of employee ownership as a mechanism for reducing the racial wealth gap, and the need for business succession planning (in Mecklenburg County, about 46% of privately held businesses are owned by people ages 55 and older), researchers found little awareness of employee ownership among the over 100 business owners and executives at registered minority, women and small business enterprises in Mecklenburg County surveyed. Ely Portillo of UNC Charlotte’s Urban Institute wrote a blog post about the research and said, “Employee ownership can take different forms, from employee stock ownership plans to employee-owned trusts or cooperatives. But awareness of all was low ? for example, just 6% of companies with under 20 employees said they were aware of ESOPs.”

In order to raise awareness and ultimately facilitate the conversion of area businesses to employee ownership, the research provides an array of recommendations around targeting candidates with good conversion potential, raising awareness, providing feasibility analysis and technical assistance, and improving access to capital.

See links below to the Executive Summary, the full White Paper, and Ely Portillo’s blog about the research, “Could Employee Ownership Help Close the Racial Wealth Gap? Yes-If More People Knew About it.”