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Own Your Future: Why ESOPs Matter to Young Workers

You’ve heard of 401(k)s—but what if your job also gave you the benefits of ownership?

Explore ESOPs today!

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Quick intro to ESOPs

  • Extra Retirement Savings

       Earn a ownership stake in your company without needing to pay anything out of your own pocket

  • Stronger Communities
    ESOPs keep profits local instead of sending them to investors outside your community

  • Purpose-Driven Work
    Working for an ESOP-owned company is all about working together for the benefit of all employees, their families and their community

Our Mission

This blog is dedicated to educating Gen Z students and workers on Employee Stock Ownership Plans (ESOPs), highlighting their unique advantages and why young workers should actively seek out ESOP-owned companies as employers of choice.

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Diving Deeper into ESOPs
 

How an ESOP Works (Step-by-Step)

  1. Company sets up a trust

  2. Employees are allocated shares over time typically based upon their compensation

  3. Share values grow as the company succeeds and becomes more valuable

  4. Employees receive the value of their shares when they retire or leave

How Do You Actually Benefit as an Employee?

  • ESOP retirement accounts are often worth 2–3x more than 401(k)s

  • Shares = real value that builds over time

  • No out-of-pocket cost to participate

  • The longer you work the more shares you can get

How ESOPs Build Stronger Companies

  • Employees think and act like owners

  • More collaboration, higher productivity

  • Lower turnover and stronger workplace culture

  • The company gets tax advantages that reduce tax payments to the IRS and be used to invest back in the company

Myths vs. Facts

​1. “ESOPs are risky or unstable”

   - Actually, many ESOP companies outperform non-ESOP companies financially.

2. “Only old workers benefit”

    - ESOP's are a retirement benefit but the longer you work for the company the more shares you can earn so ESOPs are most advantageous for younger employees.

3. “It replaces your 401(k)”        

- Most ESOP companies offer both a 401(k) and an ESOP.

“One piece of advice I would give to a young worker deciding whether to work for an ESOP or not is: imagine where you want to be 10–15 years from now and what you want your work to look like. From that perspective, I think you’ll see significant benefits in working for an ESOP rather than a non-ESOP company."

Vikesh Chandrasekhar, Senior Project Manager, Economic Growth Institute at The University of Michigan

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