John Hoffmire: While people are here in the US, why not teach them to be owners?
Editor's note: Adam Turville did the vast majority of the work on this piece.
The potential for a long-term job with competitive wages, cash bonuses, paid sick leave and an outstanding retirement plan is an attractive employment opportunity for any job seeker, especially in the wake of what has at times been called “the jobless recovery.” These are real benefits that are provided as part of an employee stock ownership plan (ESOP) company available to 75 full-time and 80 seasonal employees at Mckay Nursery in Waterloo, Wis.
Mckay Nursery is a retail and wholesale nursery in business for more than 110 years. The last 25 have been, quite possibly, the most influential for Mckay’s employees as they have been offered participation in the company’s ESOP.
Founded prior to the turn of the 20th century by William G. Mckay, ownership was transferred for the first time to key employees and others in 1959 at Mckay’s death. About 30 years later, in 1986, the company ownership was transferred once again when an ESOP acquired the stock, providing a new opportunity for Mckay’s employees.
First, Mckay pays a competitive wage. Then, on top of that, Mckay contributes about 20 percent of each employee’s pay to the ESOP. Through this process, Mckay Nursery has become a driven company, carried forward by its motivated workforce, which is comprised 65 percent by Hispanics, often migrant workers.
Mckay Nursery has provided this competitive employment package while also enjoying financial success as a company. The opportunity it provides for migrant workers is unrivaled in other labor-intensive jobs and has lifted many employees to transcend dependency on short-term and unreliable income patterns.
While the debate regarding the path to citizenship is a separate issue, it is widely accepted that migrant workers provide a beneficial service to the U.S. economy, working in many labor-intensive industries that are starved for human capital.
However, instability and irregular work patterns provide many obstacles for this section of the workforce and of the community. An ESOP provides a unique solution to those who have come to the U.S. in order to make a living and follow the American dream. Few things provide a realization of that dream more than establishing ownership in a company and working hard to grow that investment.
This business structure provides an opportunity for many migrant workers to not only maintain employment, but also become invested in their company as business owners. There is a sense of pride attached to contributing to a thriving company, and yet claiming ownership in a company escalates the motivation to see the company through to success. Employees develop interest in the direction of the company and increased motivation for efficiency and productivity, while dozens earn a share in the benefits of profits.
Regulated by the state of Wisconsin, migrant workers enter contractual agreements with Mckay Nursery and are provided an opportunity to become owners of the company while they reside in the U.S. After working for a full year or working 1,000 hours within a fiscal year, each employee is eligible for participation in the ESOP and Mckay provides substantial contributions. Cash bonuses are paid as profits permit and seasonal employees have incentives to return year after year. Employees regularly become eligible for an increase in wages and find stability and company integration, rarely available elsewhere.
By providing this income to a struggling demographic, ESOP companies such as Mckay Nursery maximize value to the company and the community. The Bureau of Labor Statistics reports a seasonally adjusted 9.3 percent unemployment for Hispanics as of August 2013. This exceeds the national unemployment rate by 2 percent and demonstrates the need for an increase in stable opportunities for many migrant workers residing in the U.S.
As Mckay Nursery has experienced, ESOP integration has coincided with tremendous success for the company. Many who are driving the company forward are also the beneficiaries of the company’s financial success. There seems to be nothing more American than enjoying the well-deserved fruits of one's labors.
John Hoffmire teaches at SaÏd Business School at the University of Oxford.
Adam Turville is an economic analyst at the Utah Governor’s Office of Economic Development and a graduate of Brigham Young University.
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