Knowledge is power: Closing the nation’s racial wealth gap through employee ownership

Transferring ownership of their companies to employees could not only be a viable, smart option for small-business owners as they approach retirement age, but could also help close the country’s racial wealth gap. This is, of course, pending business owners are even aware the possibility exists. More often than not, they aren’t, according to a new study recently completed by UNC Charlotte and the North Carolina Employee Ownership Center with support from the Gambrell Faculty Fellows program.

Matthew Metzgar, clinical professor of economics in the Belk College of Business, helped lead the study that surveyed business owners and executives at more than 100 registered minority, women and small business enterprises in Mecklenburg County.

Employee ownership can take different forms, from employee stock ownership plans to employee-owned trusts or cooperatives. But awareness of all was low — for example, just 6% of companies with less than 20 employees said they were aware of employee stock ownership plans.

Converting some of those businesses to employee ownership models could substantially increase the wealth held by minority communities, and represent a sustainable path towards greater intergenerational equity.

“It represents a tremendous opportunity, because it is a proven tool,” said Metzgar.

Read more about the study on the Urban Institute website.