While stock market volatility dominates headlines, it’s easy to forget that for most people in the United States, this turbulence is far from their day-to-day reality. Even with stock ownership at a record high, over 90 percent of all US stocks are owned by the wealthiest 10 percent of the population, demonstrating the importance of scaling solutions such as employee ownership.

For millions of people, especially in low-wage sectors and communities of color, ownership remains out of reach. People in the United States are living on the edge, economically, with more than half of them reporting that if they lost their income, they would run out of money within a month. This affects not only their finances, but also people’s sense of agency, stability, and belonging.

The growing divide between those who own assets and those who don’t fuels deep fractures. The scale of the problem is daunting. There are no easy solutions. However, employee ownership of businesses is a powerful tool that can help narrow these divisions.

Why Employee-Owned Businesses Matter

When workers have a stake in the companies they help build, the benefits ripple far beyond a bigger paycheck. Research from Project Equity shows that when ownership is broadly shared among workers, economic inequality declines.

Employee-owned businesses build wealth for workers, perform well financially, lower turnover rates, improve job quality, are more resilient to economic shocks and, importantly, reduce gender and racial inequality. Frontline workers, even in low-margin industries (like bakeries, restaurants, and house cleaning), have received profit-sharing payments in the range of $10,000 to $20,000 in their first years of employee ownership.

Over a career, employee ownership can generate hundreds of thousands of dollars in retirement accounts for employee-owners on top of standard 401(k) plans. In addition, employee-owned businesses often have beneficial spillover effects in the communities and local economies where they operate.

Types of Employee Ownership

In the United States, employee ownership takes three main forms: employee stock ownership plans (ESOPs), worker cooperatives, and employee ownership trusts (EOTs). Each of these offers a unique mix of features. Our descriptions below of all three of these forms lean heavily on Camille Kerr’s excellent NPQ article on the transformative power of employee ownership.

Read the full article about scaling employee ownership by Julie Menter and Alison Lingane at Nonprofit Quarterly.