Platform Cooperativism Resource Library


How Does Employee Ownership Affect Employment Stability? Understanding the determinants of employment stability during economic downturns is a topic of keen interest to academic researchers , government policymakers, and firms. In this chapter, we examine whether broad-based employee ownership affects employment stability within firms. As described in Chapter 2, the prevalence of employee ownership has been growing over the past several decades in the United States and other advanced economies. According to the 2014 wave of the General Social Survey (GSS), 19.5 percent of U.S. workers own company stock, and 7.2 percent own company stock options. And according to data from the U.S. Department of Labor (USDOL) Form 5500 firm pension records, between 1999 and 2010 the share of publicly traded U.S. firms with employee ownership plans grew from 16.8 percent to 17.5 percent, and the share of workers participating in employee ownership at the typical such firm rose from 11.0 percent to 12.6 percent, on average. Given the increasing prevalence of employee ownership, along with the high economic and social costs that can accompany job loss, understanding the relationship between employee ownership and employment stability carries great policy significance. Data from the GSS indicate that employee ownership and employment stability are positively correlated. As was shown in Chapter 1, involuntary layoffs and turnover intentions are lower among workers who are employee owners. Moreover, between 2006 and 2010, while the figures for EO workers remained relatively stable, layoffs and turnover intentions at non-EO firms grew. Put differently, layoffs and turnover became more likely among non-EO workers than among EO workers following the Great Recession. At the same time, job satisfaction was higher among EO workers than among non-EO workers. In this chapter, we conduct an in-depth empirical analysis of how firms with employee ownership programs weathered the recessions of 48 Kurtulus and Kruse 2001–2003 and 2008–2010 in terms of employment stability relative to firms without employee ownership programs, and also of whether such firms were less likely to lay off workers when faced with negative shocks more broadly.

Added May 1, 2020