A new IZA Discussion Paper by Adrianto, Avner Ben-Ner, Jason Sockin, and Ainhoa Urtasun reveals that employees in U.S. manufacturing firms with Employee Stock Ownership Plans (ESOPs) — the most common system in the United States for implementing broad-based employee ownership — experience significantly higher job satisfaction compared with their counterparts in conventional firms. The research draws on nearly 200,000 employee reviews from the online platform Glassdoor, providing a detailed analysis of the impact of employee ownership on worker well-being.
The study finds that workers in employee-owned firms report greater overall job satisfaction, with particularly strong results in areas such as company culture and work-life balance. The overall job satisfaction premium is significant, amounting to approximately 0.10 stars higher on a 5-star scale, equivalent to nearly one-tenth of a standard deviation.
Collective bargaining contributes to a more positive work environment
One of the key findings of the research is the role of collective bargaining in amplifying the benefits of employee ownership. ESOPs that are the result of collective bargaining agreements show even higher satisfaction levels, suggesting that the collaborative process between unions and management contributes to a more positive work environment. Firms in which employees own larger shares of the company report greater satisfaction, indicating that the degree of ownership matters for employee well-being as well.
The research highlights that this satisfaction premium is not limited to specific groups of employees. Both managerial and non-managerial, as well as current and former, employees report higher satisfaction levels in employee-owned firms. Employees who have since left the firm in particular report having had higher job satisfaction in the presence of an ESOP.
Non-pecuniary aspects of work play a crucial role
Further analysis suggests the elevated satisfaction in ESOP firms is not merely a result of greater compensation. Instead, the non-pecuniary aspects of work, such as a supportive culture and effective leadership, play a crucial role. This underscores the idea that employee ownership can produce a more engaged and motivated workforce, in turn contributing to a more productive and harmonious workplace.
Overall, the study provides robust evidence that employee ownership can significantly improve employee well-being in the manufacturing sector. By fostering a sense of ownership and aligning the interests of workers with those of the company, ESOPs create a work environment where employees are more satisfied, more invested in their work, and more likely to experience a positive work-life balance. This research adds to the growing body of literature demonstrating there are non-wage benefits to workers from participating in employee ownership.