How Does Employee Ownership Close Wealth Gaps?

On average, employees who participate in ownership plans can accumulate wealth. Research evidence shows that when employees who participate in Employee Stock Ownership Plans (ESOPs) specifically, they accumulate substantially more wealth, on average, than comparable workers without access to these forms of ownership.

Employee Stock Purchase Plans (ESPPs) have also been shown to deliver financial gains to participating employees, on average.

This wealth builds through retirement accounts (in ESOPs), discounted stock purchases (in ESPPs), and increases in company share value.

Employee ownership has the potential to narrow racial and gender wealth disparities because it provides access to an asset that many workers—especially workers of color and women—are less likely to hold through traditional stock ownership. When participation is broad-based and inclusive, employee ownership can build wealth for groups historically excluded from capital ownership. However, the equity impact depends on eligibility rules, allocation methods, occupational segregation within the firm, and differences in tenure and pay.

Employee ownership reflects—and can reproduce—existing workplace inequalities if not designed carefully. Because allocations are often tied to compensation or tenure, higher-paid and longer-tenured employees may accumulate substantially larger balances.  Low-wage workers—who may have shorter tenure, part-time status, or higher turnover—may see smaller gains. Occupational segregation by race and gender can further shape outcomes–unless plans and systems are intentionally structured. Models can better reduce wealth gaps by prioritizing broad eligibility and allocation formulas that are less tied solely to pay.