According to an analysis of data provided by the United States Department of Labor, there are approximately 6,237 companies in America with an ESOP.
The United States ESOP model is tied to the unique US system encouraging private retirement savings plans and tax policies that reflect that goal.
The United States Congress established S ESOPs in 1998, to encourage and expand retirement savings by giving millions more American workers the opportunity to have equity in the companies where they work.
A study of a cross-section of Subchapter S firms with an Employee Stock Ownership Plan shows that S ESOP companies performed better in 2008 compared to non-S ESOP firms, paid their workers higher wages on average than other firms in the same industries, contributed more to their workers' retirement security, and hired workers when the overall U.S. economy was pitched downward and non-S ESOP employers were cutting jobs.
[8] Critics say, however, that such studies fail to control for factors other than the existence of the ESOP, such as participatory management strategies, worker education, and pre-ESOP growth trends in individual companies.
[9][10]: 27 One study estimates that the net US economic benefit from S ESOP savings, job stability and productivity totals $33 billion per year.
[10]: 8–11 [20] Moreover, ESOPs concentrate workers' retirement savings in the stock of the same company on which they depend for their wages and current benefits, such as health insurance, worsening the non-diversification problem.
The Washington study, however, showed that ESOP participants still had about 60% of their retirement savings invested in employer stock.
[20][21] Critics argue that pro-ESOP studies did not establish that ESOPs results in higher productivity and wages.
ESOP advocates concede that it may be an excessive concentration in a plan specifically meant to be for retirement security.
In contrast, they maintain that it may not be a serious problem for an ESOP or other options, which they say are meant as wealth-building tools, preferably to exist alongside other plans.
Because ESOPs are the only retirement plans allowed by law to borrow money, they can be attractive to company owners and managers as instruments of corporate finance and succession.
[10]: 14–16 In addition, ESOPs can be attractive instruments of corporate succession, allowing a retiring shareholder to diversify the company of stock while deferring capital gains taxes indefinitely.