How To Buy Stock: Two Senators Push A Bill Making It Easier For Employees To Buy Shares Of Their Company

The percentage of Americans with stakes in the stock market dropped to its lowest level in years in 2016, but two senators are seeking to increase investment in private companies—by those firms’ own employees. Sen. Mark Warner (D-Virginia) and Sen. Pat Toomey (R-Pennsylvania) have plans to introduce a draft bill, the “Encouraging Employee Ownership Act,” a spokeswoman for Warner’s office told Reuters on Thursday.

Warner and Toomey introduced a bill under the same title nearly two years earlier. Intended to incentivize companies to promote long-term investment amongst their employees, the 2015 bill targeted privately held companies—often startups and small businesses—which can issue $5 million in stock each year to workers without having to file mandatory reports and disclosures, such as financial statements, to the Securities and Exchange Commission. The senators’ measure would have raised that cap to $10 million and indexed it in accordance with the inflation rate. The new draft law, according to Reuters, entails the same regulatory adjustment.

While it deals entirely with companies that aren’t up for public trading, Warner and Toomey’s bill would arrive after a year in which just 52 percent of Americans invested in stock market, according to Gallup. Middle-income earners saw a 22-percentage-point drop in shareholding between April 2016 and the same month of 2007, to 50 percent, while the share of people making less than $30,000 annually owning stocks stood at just 23 percent, down from 28 percent in 2007.

The practice of providing employees access to shares of their own companies has long held widespread support, and research has shown that the nearly 7,000 companies mostly or entirely owned by employees exhibit faster growth, increased longevity and fewer layoffs.

Privately held, Norwich, New York-based Greek yogurt maker Chobani LLC made headlines in April when its founder, Hamdi Ulukaya, doled out shares of the company to employees, potentially turning some of them into millionaires when the company, valued at $3 billion to $5 billion, goes public.