- Equity ownership can be a powerful tool for rebuilding middle-class wealth, offering employees a stake in the success they help create. Employee shareholders also have longer tenures and higher engagement in the companies they work for.
- Outside of the tech sector, broad-based stock compensation is limited. Even when offered, employees rarely receive amounts large enough to move the needle on wealth creation.
- Equity compensation also presents unique financial planning challenges, which has spawned a cottage industry of wealth advisors and tech platforms. Utilizing tools that have traditionally been reserved for the ultra-wealthy, platforms like Cache are making it easier for employees to manage and diversify concentrated stock holdings, helping protect their financial future.
KEY INSIGHTS:
America has long promised that hard work leads to prosperity. Yet that advancement wasn’t built on wages alone. For much of the 20th century, middle-class security came from passive, long-term wealth-building mechanisms like homeownership and pensions.
Today, as sky-high home prices have put homeownership out of reach for many and pension plans for private sector employees grow extinct, the American Dream is under pressure. The onus of building wealth has shifted to individuals. Instead of a guaranteed income from a pension, Americans are taking from their paychecks to contribute to 401(k) plans, where the median balance for working-age employees is just $28,000—barely enough to cover a year of retirement.
“For much of the 20th century, middle-class security came from passive, long-term wealth-building mechanisms like homeownership and pensions.”
For decades, policymakers and economists have tried to revive the American Dream through new education initiatives, housing incentives, and retirement reforms. But maybe the answer isn’t a new policy — it’s an old idea hiding in plain sight: Give people a stake in the success they help create.
The tech model
In the tech industry, equity compensation has enabled millions of workers — from early-career employees to experienced executives — to build real wealth. From startups to tech giants like Apple, Google, Meta, and Nvidia, companies have turned employees into owners, and in many cases, into millionaires.
What sets the tech sector apart is the sheer scale of this model. Technology companies spent over $190 billion on stock-based compensation last year, accounting for more than 50% of the $350 billion in stock-based compensation across public companies in America. Across these companies, an average of 6–8% of revenue and nearly 10% of gross profit goes to stock-based compensation, far higher than in any other sector of the economy. For comparison, the financial services and healthcare industries spend just 2–3% of gross profit on employee equity, while industrials, staples, and utilities spend less than 2%. The differing levels of shareholder dilution are also striking. Each year, technology companies routinely issue equity equal to nearly 1% of their market cap, while most other sectors disburse closer to 0.2%. Tech, in other words, is the only major part of the U.S. economy where equity has become a central component of compensation, functioning as a true wealth-building mechanism, rather than a token benefit.
Sharing the wealth
Imagine if this practice weren’t just a perk for tech workers, but a standard feature of employment across the economy. It would provide the kind of background wealth creation that homeownership and pensions once offered, opening the door to a more inclusive economy.
The math speaks for itself. Since 1994, the S&P 500’s total return with dividends reinvested has exceeded 2,200% — roughly a 23x multiple. Even modest stock ownership held over decades can compound into meaningful wealth. According to the National Center for Employee Ownership, employees with equity compensation have five times the retirement wealth of workers with 401(k) plans.
The problem is that these riches have not been evenly distributed. Today, the top 10% of U.S. households own 93% of all U.S. stock wealth, while the bottom half owns just 1%. Employers can play a part in the solution. A stock grant from your employer isn’t just compensation; it’s an initiation into ownership. It forces you to think about investing, risk, and growth in ways that cash alone never will.
International models show what’s possible. For example, policies in the UK have sought to enhance employee ownership through the use of employee ownership trusts, a model where a trust owns a company on behalf of its employees, who then benefit from income-tax-free profit sharing (up to a limit). France is also cited as a leader in broad employee share ownership among large companies, thanks to long-standing incentives like tax-advantaged employee savings plans and profit-sharing requirements.
Of course, ownership comes with risks. When companies fail, concentrated holdings can mean a loss of both your job and your savings. That’s why the future of broad-based equity depends on pairing access with financial infrastructure. At Cache, we’re building exactly that: making diversification and tax-advantaged planning tools, once reserved for the ultra-wealthy, more accessible. We believe this is an important part of making equity a sustainable wealth engine for millions more Americans.
Why we need a new wealth engine
To understand the urgency, consider what we’ve lost. In 1975, 44% of U.S. workers had access to a pension. Today, just 9% do. The 401(k) was meant to fill the gap, but it hasn’t, in part, because it requires employee contributions that many can’t afford. Many Americans now rely on these funds for financial emergencies, instead of socking them away for retirement.
Pensions and home equity both allowed people to create wealth on autopilot, separate from their regular income. Equity compensation can serve the same purpose.
Yet despite its benefits, just 18% of U.S. employees have some form of ownership stake in the company where they work. And many of these companies offer their workers an Employee Stock Purchase Plan (ESPP), a tool with limited wealth-building impact. ESPPs offer workers a chance to buy company stock through payroll deductions, often at a modest discount. By law, employees can purchase no more than $25,000 worth of stock per year (based on the fair market value at the offering date). Many companies add tighter limits, capping contributions at 10–20% of salary. In practice, most employees invest only a few thousand dollars annually since these plans directly reduce their paycheck.
Most tech companies, by contrast, use a different mechanism. Restricted stock units (RSUs) and stock options are often awarded on top of salary, with no contributions required, making them far more powerful wealth builders.
More than a paycheck
When done right, employee ownership isn’t just financially beneficial; it changes how people feel about their jobs. Research shows that when employees have a stake in the business, they’re more engaged, more loyal, and more motivated. According to a 2024 Nasdaq survey, 95% of HR leaders see equity compensation as the most effective lever for employee motivation and engagement, and 80% of employees say they value it. In a study looking at employee-owners aged 28-34, these workers also have longer tenures at a company, with a median stay of 5.2 years versus 3.4. This is why tech companies often have highly driven, mission-oriented cultures.
“When done right, employee ownership isn’t just financially beneficial; it changes how people feel about their jobs.”
Walmart, the country’s largest private sector employer, seems to agree. Last year, the retailer announced that all 4,700 U.S. store managers would receive between $10,000 and $20,000 in company stock annually. While Walmart has long offered a stock purchase plan for associates, this requires employees to buy in and is capped at $1,800 per year. The new initiative uses the far more generous mechanism of providing stock outright. Walmart described it as an investment in the future of the company, highlighting the role store managers play in leading teams and running what are, effectively, multimillion-dollar operations.
The rise of an equity-support ecosystem
Equity compensation has enormous potential, but it also creates challenges most employees aren’t equipped to solve on their own. Vesting schedules and tax liabilities turn what should be a wealth-creation opportunity into a financial puzzle. Lopsided portfolios also represent an existential threat. Lehman Brothers, for instance, heavily compensated its employees in stock, and when the firm went under in 2007, $20 billion in employee wealth vanished overnight. Similarly, WeWork’s failed IPO in 2019 left thousands of employees holding worthless options. These episodes underscore a hard truth: If too much of your wealth is tied to your employer, a downturn can wipe out both your job and your savings.
These tensions have given rise to an entirely new support ecosystem.
Specialized financial advisors: Over the last decade, a growing number of registered investment advisors (RIAs) have built practices that cater specifically to equity-heavy employees. Instead of generic portfolio advice, these firms specialize in exercise strategies, tax optimization, liquidity planning, and risk management for people whose net worth is tied up in a single stock. Many operate in tech hubs like the San Francisco Bay Area and Seattle, where equity holdings are often the centerpiece of household wealth, and require bespoke planning.
Tax-advantaged diversification tools: Historically, the ultra-wealthy had exclusive access to vehicles like exchange funds, which let them swap concentrated stock into a diversified portfolio without triggering capital gains taxes. These structures allow investors to continue to let their capital work for them while deferring their tax liabilities. But until recently, the entry bar was prohibitive: a minimum $1 million investment per fund and at least $5 million in net worth. That model is now changing.
Cache is breaking down barriers to exchange fund investing with lower minimums and ETF-enabled mechanics that make tax-efficient diversification more accessible and predictable. Our exchange fund has a $100,000 minimum and is open to any accredited investor — defined as someone earning $200,000 a year ($300,000 with a spouse) or with a net worth of $1 million, excluding a primary residence. Nearly 1 in 5 U.S. households already meet that threshold, and the number is expected to rise to 30% by 2030. For the first time, mainstream employees can access the same tools that billionaires and family offices have used for decades.
“If equity is going to become a pillar of the new American Dream, employees need not just stock, but also the infrastructure to manage it responsibly.”
Together, these trends signal the rise of a booming cottage industry around equity management. Advisors, platforms, and tax-efficient vehicles are converging on the same idea: If equity is going to become a pillar of the new American Dream, employees need not just stock, but also the infrastructure to manage it responsibly.
A pragmatic path forward
Broad-based equity compensation won’t, by itself, restore the middle class or fix inequality. However, it can serve as a modern pillar of wealth-building, replacing some of the functions that pensions and homeownership once provided.
To get there, companies need to go beyond symbolic programs and offer equity in meaningful amounts (Walmart serves as an exemplary implementation). Employees need better tools to understand and manage this equity. And policymakers should take cues from international models, creating incentives for companies to share ownership broadly.
The promise of the American Dream has always been that work leads to wealth. If leaders embrace equity as part of the paycheck, that promise can be renewed for a new generation.
Important Disclosures
Cache Securities, LLC is a broker-dealer registered with the SEC and Member FINRA/SIPC. Cache Advisors, LLC is an investment adviser registered with the SEC, which advises the Cache Exchange Funds. Both of these are under the common control of Cache Financials Inc., commonly referred to as “Cache”. Registration does not imply a certain level of skill or training.
Cache Exchange Funds are alternative investments available only to investors who meet certain eligibility standards. Exchange Funds are intended for eligible investors who are willing to accept long-term investment risk and limited liquidity, and may incur higher fees than traditional investments. Exchange funds defer but do not eliminate the need to pay taxes when assets are sold. Diversification may help manage risk, but it does not guarantee profit or protect against lohsss. All investments carry risk, including loss of principal.
This material is for educational purposes only and does not offer investment, tax, or legal advice. This material should not be considered an offer or solicitation to buy or sell securities. Cache does not consider individual investor objectives and makes no investment recommendations. For additional information and important disclosures, please visit our website.
Quiet Capital is not directly affiliated with Cache, but it does have an ownership stake in Cache Financials, Inc.
