The Quiet Rise of Employee Ownership in New Jersey and New York

Sponsor Post: The New Jersey State Women's Chamber of Commerce (NJSWC)

As thousands of business owners across the United States approach retirement, a major question looms over the future of many companies: who will take over? While traditional exits often involve selling to private equity firms or competitors, a growing movement in New Jersey and New York is promoting a different path, employee ownership.

Leading that effort is the New Jersey and New York Center for Employee Ownership, based at Rutgers University’s School of Management and Labor Relations. The center is working to expand awareness of employee ownership as a viable strategy for business succession, workforce stability, and regional economic growth.

Employee ownership allows workers to hold an ownership stake in the company they help build. The most common structure is an Employee Stock Ownership Plan (ESOP), which enables employees to acquire shares in their company over time. Another model, the worker cooperative, allows employees to collectively own and democratically manage the business.

The NJ/NY Center for Employee Ownership focuses on three key goals. The first is raising awareness of employee ownership among business leaders and policymakers. The second is increasing the number of employee owned companies in the region. The third is strengthening local economies by keeping businesses and jobs rooted in their communities.

A major initiative supporting this effort is the New Jersey ESOP Assistance Program created by the New Jersey Economic Development Authority (NJEDA). Through the program, eligible business owners with at least 20 full time employees can receive partially funded feasibility studies to explore whether transitioning to an ESOP makes sense for their company.

For many owners, the biggest barrier to considering employee ownership has been a lack of information or the cost of professional guidance. According to Bill Castellano of Rutgers’ Institute for the Study of Employee Ownership and Profit Sharing, the program is designed to address exactly that challenge.

Research from the institute suggests employee owned companies often experience stronger productivity, improved performance, and greater employee engagement. Employees also gain the opportunity to build long term financial wealth through their ownership stake.

To complement the state program, Rutgers has partnered with NJEDA to expand education and outreach efforts. The NJ/NY Center for Employee Ownership has also launched a free online education program, supported by the Kellogg Foundation, to help business owners understand the mechanics and benefits of employee ownership models such as ESOPs and worker cooperatives.

As more companies face generational transitions, advocates believe employee ownership could become a powerful tool for preserving local businesses while sharing economic opportunity with the workers who sustain them.

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