New York State Comptroller Releases Employee Ownership Report

The New York State Comptroller, Thomas P. DiNapoli, released a comprehensive report on the state of employee ownership in New York State along with recommendations to advance various models of employee ownership in the Empire State. Prepared by the Office of Budget and Policy Analysis, “Employee Ownership of Businesses in New York State” reviewed empirical research relating to ESOPs, worker cooperatives, and employee ownership trusts (EOTs) while also citing data on the level of adoption in New York State. In his opening introduction to the report, Comptroller DiNapoli emphasized support for employee ownership:

“Research has shown that employee ownership can positively impact employee compensation and retirement assets making it an effective tool to create lasting wealth and improving employee satisfaction. Facilitating expansion of employee ownership models in which workers have an ownership stake in the companies they work for is one way to help achieve this goal.”

He went on to provide the following recommendation: “State policymakers could consider additional opportunities to educate businesses, workers and labor organizations on the advantages and risks associated with different forms of employee ownership and, if appropriate, leverage resources to assist New York companies pursuing these business models.”

The report cited data from the National Center for Employee Ownership (NCEO) that shows New York State as the leading state with the greatest amount of assets held in ESOP plans on behalf of plan participants (e.g. employees) and noted that in 2020, manufacturing businesses constituted the greatest number of ESOP companies in the Empire State. The compatibility between employee ownership and the manufacturing sector is well-noted and suggests that any strategy to “re-shore” and otherwise strengthen the domestic manufacturing sector should include an emphasis employee ownership.

The report concluded with three final recommendations:

  • Expand networks and partnerships of business owners, employees, labor unions, and economic developers to provide technical assistance to and educate potential employee-owners on the benefits and drawbacks of EO;
  • Creatively leverage resources or identify new opportunities that can support EO as a way to create or retain jobs and strengthen communities; and
  • Develop ways to educate the public on what EO is and which companies around the state and in their local communities are employee owned.

Based in Albany, the New York State Comptroller is the sole trustee of the $272.1 billion New York State and Local Retirement System. In addition to overseeing one of the largest institutional investors in the world, the Comptroller manages state debt issuances, administers the New York State and Local Retirement System for public employees, manages the state payroll, and several other functions.

Additional actions the New York State Comptroller could take (along with any other institutional investor) would be to 1) explore allocating investment funds to GPs that focus on an ESOP investment strategy, and 2) engage public companies in their portfolio to disclose the amount and reach of employee equity ownership in the company given the link between employee ownership and financial materiality.