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Stephania Zamorano has been an educator in New York City for 15 years. Since 2021, she has worked at Imagine Early Learning Centers, a childcare organization that serves nearly 600 children across 12 sites, , in the New York metropolitan area. Zamorano described her time at Imagine as quite different from her past employers. She receives higher pay, experiences less stress and has something rare for early educators 鈥� ownership in the company.

Imagine operates as an Employee Stock Ownership Plan, or ESOP, giving staff the unique opportunity to become co-owners of the organization and participate in company decision-making. In a profession often marked by , minimal benefits and , the model stands out: Imagine is the only childcare program in the country that is 100% employee-owned through an ESOP, according to the National Center for Employee Ownership, a nonprofit organization supporting the ESOP community.

At first, when she became an employee owner, Zamorano thought, 鈥渨hatever, I don鈥檛 own anything.鈥� But once she participated in the company鈥檚 ESOP education programs to learn more about the benefit, she said, 鈥淚 started to figure it out, and it feels great 鈥� like you鈥檙e the CEO of the place you鈥檙e at.鈥�

Could this business model be part of the solution for some of the sector鈥檚 longstanding challenges that make it tough to retain staff? And as New York City explores pathways to recruit and retain the staff needed to expand childcare access with its , could Imagine鈥檚 approach offer inspiration?

Breaking down the ESOP model

An ESOP is a retirement plan that allows employees to build ownership in the company through shares granted over time. The longer an employee stays at the company, and the better the company does financially, the more workers earn. The value of the ESOP is realized when an employee leaves, retires or if the company is sold. 

鈥淚t feels nice to own something, especially nowadays when you can’t own anything,鈥� said Zamorano, adding that the ESOP is a critical tool for her future, particularly because she believes 鈥渟ocial security is not going to exist鈥� by the time she retires.

According to Laura Tulchin, Imagine鈥檚 chief executive officer, the nearly 200 educators at the company get a salary that ranges from $37,000 to $90,000 depending on seniority and tenure and have ESOP accounts with balances that range from $1,484 to $167,000.

The center, which has operated since 2002, became partially employee-owned in 2018 and it transitioned to 100% employee ownership in 2026. Because Imagine is fully employee-owned, any gains go directly to employees instead of to outside shareholders.聽

The ESOP model isn鈥檛 new: The . But it鈥檚 gained steam in recent years: Well-known companies like and are both ESOPs.

As of 2023, there were in the United States, with 15.1 million participating employees, according to the NCEO.

There鈥檚 evidence that the ESOP model has plenty of workforce benefits. According to research from the Institute for the Study of Employee Ownership and Profit Sharing at Rutgers University, companies that adopt an employee ownership model have when compared to non-employee-owned companies. More from the institute suggests that ESOP workers enjoy higher work autonomy, are more satisfied and feel less futility with their participation in workplace decision-making than non-ESOP workers.

That appears to be true at Imagine. 鈥淲hatever your position is here,鈥� said Tijuana Jackson, a lead teacher, 鈥渂ecause we鈥檙e an employee-owned company, you also have a voice in the direction of the company. That鈥檚 what I love.鈥� 

鈥淲hat I appreciate about Imagine is they trust my insight 鈥� I help with the school aesthetics, I helped develop the curriculum for the week of the young child,鈥� Jackson said, noting that lead teachers are also given a credit card to make direct decisions on classroom supply purchases.

Jackson鈥檚 experience is what Imagine leadership was going for when they transitioned to the model. 

鈥淥ur hope is that we have a competitive advantage from a business sense, by centering our employees and being a more resilient, stable childcare company in an industry that is unstable,鈥� said Tulchin.

To be a more stable business, Imagine hasn鈥檛 just worked to improve employee retention, but it has established a unique structure, which Tulchin describes as 鈥渕ultisite, not tiny and not a huge chain.鈥澛�

And that makes a difference when it comes to the program鈥檚 ability to leverage the ESOP model. The childcare sector includes a mix of for-profit and non-profit models, with center- and home-based programs that range from small operations to large organizations. 

Imagine鈥檚 size puts it in a unique spot, Tulchin said. 鈥淭he culture is still the mom-and-pop personal feel with the benefits that come from a larger company, where we have a recruitment manager and finance person.鈥�

Can this shared ownership model help attract and retain childcare workers?

As an ESOP, Imagine is in a better position than most to meet the demands of Mayor Zohran Mamdani鈥檚 initiative to increase access to childcare in New York City.

At the beginning of the year, the state and city of New York jointly announced the . The program is planned to roll out in phases with opening in the , 12,000 seats expected to be available in the fall of 2027, and by 2029, when the program is fully built out, advocates estimate that nearly 55,000 children will participate.

To create the spots the program promises, Lauren Melodia, director of fiscal and economic policy at the Center for NYC Affairs and one of the leading voices on the structural economics of child care in New York, said the city needs to address a core issue: retention challenges. 

Melodia, whose area of focus is explained that childcare programs face significant staffing challenges and are often 鈥渇orced into a situation where they’re hiring temps, early career people, training people up, hoping that they’ll stay with them long-term, then they move on to higher wages in the public sector.鈥� This creates a vicious cycle, she added. Centers invest in training staff only to lose them to better-paying K-12 positions.

Leaders at Imagine are working to disrupt this cycle. According to Imagine鈥檚 annual employee survey, 83% of staff report being satisfied with their jobs, and 81% of staff say they see themselves working at Imagine in two years. Despite employees鈥� high satisfaction rate, the business still competes with the public school system. 

Imagine gets its revenue from multiple sources, including a mix of private tuition, publicly funded child care subsidies and employer-sponsored child care agreements with government and university institutions. In a time of federal and state budget cuts and rising costs for families, childcare centers like Imagine are at the mercy of legislators and the economy, while public schools have less risk.

Even as an employee-owned childcare center with a diverse revenue model, Imagine isn鈥檛 immune to the challenges of running a childcare business.

The economics of childcare may prove challenging for ESOPs

The retention power of employee ownership lies in its promise of something wages alone don鈥檛 offer: wealth-building. 

鈥淚t lifts you up to know that you own something and you want to make sure that it grows bigger and bigger,鈥� said Zamorano.

Owning a share of a profitable business can greatly increase a worker鈥檚 wealth and financial security, but owning a share of a struggling business that doesn鈥檛 have a reliable cash flow cannot. 

鈥淭he one factor that all successful employee-owned businesses have from their outset is that they are starting from a place of profitability,鈥� said Tim Garbinsky, head of communications at NCEO. 

For Imagine to make good on the growth of employee ESOP account balances, the company has to remain profitable enough to have cash on hand to reinvest after covering its financial obligations. 

For many childcare centers, profitability remains a challenge. Melodia recognizes the business realities that could limit the expansion of childcare access. 

鈥淪mall business owners are always facing risk,鈥� she said. 鈥淎ny childcare center is going to have a hard time guaranteeing job quality and job security if they鈥檙e not able to charge what it actually costs to run these programs, which none of them are able to.鈥�

New York City leaders are looking at ways to enable providers who contract with them to charge what it costs, said Emmy Liss, the executive director in the Mayor鈥檚 Office of Child Care and Early Childhood Education. 鈥淲e have to take care of the people who provide this essential service.鈥� 

Liss acknowledges that 鈥渇olks who work in childcare programs face challenges when it comes to wages and benefits,鈥� and that across the industry, teachers don鈥檛 make enough to 鈥渓ive and thrive,鈥� and providers don鈥檛 have the resources to change the equation. It鈥檚 a problem that needs to be solved if care is going to be expanded across the city, and as more states like New York and New Mexico seek to provide residents with universal childcare. 

In a field rife with workforce challenges, notably low compensation and poor benefits, the ESOP model offers providers an approach to building their wealth over time. But the model鈥檚 promise as a solution to the sector’s longstanding retention challenges hinges on reliable revenue 鈥� and for most childcare programs, that requires systemic change.

For Tulchin, the economic challenges are hard to ignore. 鈥淚t’s still a very low-paid industry,鈥� she said, and while the goal of shared ownership is to do right by employees, the math is difficult when workers are 鈥渓iving paycheck to paycheck, and the value that you’re talking about is 40 years down the road.鈥�

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