“While this particular bill is just one step in that direction

“While this particular bill is just one step in that direction

What a ‘silver tsunami’ of retiring Baby Boomer business owners could mean for their workers

canada goose Sen. (Jacquelyn Martin/AP) canada goose

By Jena McGregor

Canada Goose Jackets As Labor Day arrives and economic inequality rises on the political agenda a little noticed measure in the recently signed defense spending bill aims to address the widening wealth divide between workers and the owners or top executives who manage them. The measure, co official canada goose outlet sponsored by Sen. Canada Goose Jackets

Canada Goose Coats On Sale The new provision canada goose outlet black friday could also help address what has been called a “silver tsunami” of retiring Baby Boomer business owners. Much has been made of what that generation’s departure from the workforce will mean a loss of institutional knowledge, a shift in the job market and a drain on Social Security. But canada goose outlet shop less attention has been paid to the wave of retiring Boomers who own canada goose outlet canada closely canada goose outlet held private businesses. They will need to sell their companies, transition them to a new canada goose outlet generation of owners or risk shutting them down, cutting jobs in the process. Canada Goose Coats On Sale

canada goose uk black friday The provision, known as the Main Street Employee Ownership Act before it was added to this year’s defense bill, will make it possible for firms to use Small Business Administration loans to finance what’s known as employee stock ownership plans, or ESOPs, canada goose outlet uk an arrangement that can help transfer ownership of the company to employees rather than have to find a suitable buyer or rely on family members who may be ill suited or unprepared to keep the lights on. canada goose uk black friday

In an ESOP, companies get tax incentives to either set up a trust fund into which they contribute canada goose outlet store shares or to finance the purchase of shares through a loan. Companies then give shares to all employees in amounts based on their relative pay or on a more equal basis.

The new provision also empowers the SBA to assist with employee ownership plans and raise awareness of the approach. The plans are predominantly canada goose outlet online used by closely held or privately owned companies and while some publicly traded companies, including Procter Gamble, use them, they are much canada goose outlet new york city rarer.

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canada goose uk shop The new measure is “the most significant policy change on employee share ownership in over two decades,” said Joseph Blasi, the director of the Institute for the Study of Employee Ownership and Profit Sharing at Rutgers University, who worked with Gillibrand’s office on the bill. Still, its immediate impact is probably limited to small companies: The SBA loans that can be used are capped at $5 million, though they can be combined canada goose outlet online uk with other financing. canada goose uk shop

uk canada goose outlet But it’s also a rare bipartisan stab at finding a way to address the gap in wealth, canada goose outlet jackets according to Corey Rosen, founder of the National Center for Employee Ownership, a nonprofit membership group. One economist’s analysis found that the richest one percent of American households own 40 percent of the country’s wealth, the canada goose outlet in usa highest it has been in 50 years. uk canada goose outlet

canada goose coats “We’re grasping for ways to deal with economic inequality and pretty much the two sides can’t agree on anything except this,” Rosen said. “While this particular bill is just one step in that direction, it indicates here’s a path that’s worth exploring.” canada goose coats

As of the end of 2014, the average employee share in ESOPs of closely held private companies was $134,114, said Blasi. (The average 401(k) balance at the end of 2015 was $73,357, according to data from the nonprofit Employee Benefits Research Institute.) Workers can only pocket the value of their shares from ESOPs when they leave the company; they then sell the shares back to their employer.

Canada Goose Parka While ESOPs can help workers build wealth, some research has shown benefits for employers. (That could send a mixed message to workers: We’re going to give you ownership, but not make you feel like you have any.) Canada Goose Parka

Another study found that companies that set up employee stock ownership plans were less likely than those without them to go bankrupt or disappear for other reasons.

cheap canada goose uk And Paige Ouimet, a professor at the University of North Carolina’s business school, has found in research that publicly held companies with ESOPs had improved productivity. But whether more of the gains from higher profits went to employees (in the form of raises) or canada goose outlet parka shareholders (in the form of higher stock prices) depended on whether there was a competitive labor market. She said it’s not always clear in some research whether companies perform better because they have employee ownership, or whether better performing companies are just more likely to implement equity plans. cheap canada goose uk

canadian goose jacket Employee ownership plans are far less canada goose jacket outlet prevalent among publicly traded companies, who may not to offer them for various reasons investors may perceive they are a way to entrench managers with friendly employees, company officers could believe that equity should be reserved for top managers or top performers, or they may want to focus on more diversified retirement plan options. Meanwhile, employee stock ownership plans canada goose outlet reviews are complicated structures that mean additional governance issues, which could limit the growth of their use. canadian goose jacket

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Still, some companies have decided to add canada goose outlet nyc them to give more employees access to equity, increase a sense of ownership canada goose outlet store uk among workers, and try to plan for the future. In June, Tuff Shed, the Denver based maker of outdoor storage buildings, added an ESOP for its more than 1,300 employees after seeing that many of its employees weren’t participating in their 401(k) canada goose outlet sale plan or getting the full company match.

canada goose clearance CEO Tom Saurey could have made a straight, no strings attached contribution to workers’ 401(k) canada goose outlet toronto factory plans, but that wouldn’t goose outlet canada have also helped him begin to plan for the future transition of his company once he’s ready to move on, said Phil Worth, the company’s vice president of marketing. The new plan will give most employees 3 percent of their salaries in the form of company stock to an ESOP and still offer them a 401(k) to which they can contribute canada goose factory outlet themselves. canada goose clearance

canada goose clearance sale Even if Saurey isn’t predicting he’ll https://www.canadagoosejacketsoutsale.com go anywhere for more than a decade, an ESOP still helps the company prepare for that eventual handoff. “Who’s going to be in control of the company someday? If not [Saurey], who’s the most passionate about the company? Employees,” Worth said. canada goose clearance sale

uk canada goose Making employees feel more like owners at the company was also a rationale. uk canada goose

canada goose store “The day you give somebody a raise is great. Everybody feels good, but the lasting effect canada goose black friday sale only goes so long,” he said. “A sense of ownership is a different conversation.” canada goose store.

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