Expanding Employee Ownership Across America

At Village Labs, we develop AI solutions specifically for companies and service providers working with Employee Stock Ownership Plans (ESOPs).

The simple idea behind our firm is that employee ownership is good for society—benefiting workers, businesses, and the American economy. The more employee-owned businesses there are, the better.

Employee ownership has been around for centuries, but it really gained momentum with the creation of Employee Stock Ownership Plans under the Employee Retirement Income Security Act (ERISA) in 1974. Louis Kelso, the architect of the ESOP, believed deeply in the ideas of "binary economics" which reasoned that broad-based employee ownership would give everyday Americans the chance to generate meaningful wealth, and unleash the full potential of the American Economy.

Since then, thousands of companies and tens of millions of workers have experienced employee ownership firsthand, receiving shares in the businesses they work for. Today, there are roughly 7,000 ESOPs in the United States, involving 10.5 million employee owners who collectively hold around $1.4 trillion in assets. Every year, over a hundred billion dollars are distributed out to employee owners, fueling local economies and building meaningful retirement savings.

After decades of growth and refinement, employee-owned businesses have repeatedly shown their benefits: higher productivity, greater stability during economic downturns, and better retirement outcomes for workers. Moreover, research suggests that employee-owners often have more retirement savings compared to their peers at conventionally owned companies.

Even with all of the progress made, there's still enormous potential for employee ownership in America—and many reasons to be optimistic. Congress and various state governments continue to pass legislation supporting ESOPs, private equity firms have started to explore ways to grant workers more direct ownership stakes, and employee ownership has made gains in mainstream awareness. These efforts are further supported by significant tax benefits that make the ESOP model appealing for businesses of diverse sizes and industries.

Looking ahead, there are three main levers for expanding employee ownership across America:

1. Reducing Administrative Complexity: ESOPs are complicated to set up and maintain.
2. Increasing Awareness: Most businesses aren't aware of how ESOPs work or the rewards they can bring.
3. Strengthening Tax Advantages: Enhancing the existing tax benefits would encourage more businesses to embrace employee ownership.

Our team is focused on the first lever. By leveraging emerging technologies such as generative AI, we provide tailored solutions that simplify ESOP administration for both companies and the service providers who support them. We aim to break down the barriers that keep organizations from transitioning to or sustaining this powerful ownership model.

If you're curious about how technology might benefit your ESOP or are a service provider interested in leveraging the power of AI, we'd love to connect.