ESOP companies see strong growth, future industry opportunities
A surge of funding will soon flow into American communities through the Infrastructure Investment and Jobs Act, which President Biden signed into law Nov. 15. The money will be used to shore up the nation's critical infrastructure, from roads and bridges to water systems and power grids.
Next comes the hard part: Federal agencies, states and communities must work together to identify the projects that need funding. A U.S. Department of Transportation state-by-state fact sheet shows how the country will benefit from the $1.2 trillion deal. Illinois is outlined to receive $17.81 billion over five years, including $11.2 billion for highways and bridges, $616 million for airport upgrades and $4.5 billion to improve public transportation.
While the infrastructure deal is exciting and will generate new jobs in various industries, the nation is facing a shortage of skilled workers to fill those roles, especially in construction and manufacturing.
"The Great Resignation" - the ongoing trend in which many employees are voluntarily resigning and moving into new jobs in the wake of the COVID-19 pandemic - has taken a toll. Labor statistics show more than 24 million workers in the United States quit their jobs from April to September in 2021; however, since that time initial claims for unemployment benefits have fallen.
While the disruption may be concerning, not all companies are losing employees at a rapid rate. In fact, a recent Rutgers University study shows employee-owned companies with employee stock ownership plans (ESOPs) are outperforming non-ESOP companies in several key areas, including job retention.
What is an ESOP? It is an employee benefit that gives workers ownership interest in the company, most often as shares of stock. Employees with an ESOP own the company.
There are more than 6,500 ESOPs in the United States holding total assets of over $14 trillion, according to the latest data compiled by the nonprofit National Center for Employee Ownership.
The companies represent a variety of industries, from health care to retail trade to waste management. According to NCEO, some of America's largest majority employee-owned companies include Publix Super Markets, Penmac, WinCo Foods and Amsted Industries. The number of ESOP companies is also growing. Since 2014, an average of 263 new privately held ESOPs have been created each year.
Employee ownership is a business model that's working, even during these tough times. The Rutgers study shows that during the pandemic ESOP companies were between three and four times more likely to retain their staff than non-ESOPs. They were also less likely to cut employee hours or pay.
I have firsthand experience as an employee-owner. My company - engineering, architecture and construction firm Burns & McDonnell - has been an ESOP since 1986. Unlike many other companies, Burns & McDonnell is growing its team to increase its presence in cities nationwide.
Burns & McDonnell is on a veritable hiring spree. And while it will likely take months - or even years - for the infrastructure package to evolve into new opportunities, the demand for professionals to manage and execute each federal, state and city project is evident.
Skilled workers are needed to build and repair our highways, install wind turbines, operate water plants and update electrical grids. It's now time to go to work and strengthen our nation's infrastructure.
• Scott Newland, PE, is senior vice president and general manager of the Midwest regional office of Burns & McDonnell. Based out of Chicago, he joined the 100% employee-owned firm as a structural engineer in 1999 and leads a team of professionals offering a full range of engineering, construction, design-build, program management, commissioning/decommissioning, permitting and environmental services for multiple industries.