Explosion of Interest in Worker Cooperatives Drives Economic Changes

It’s been more than 10 years since the financial crisis of 2008, and working people are still being hammered by its effects — stagnating wages, a widening gap between the rich and the poor, and a rise in the sharing economy to meet basic needs. At the same time, one legacy of the 2008 crash has been the growth of the movement for democratic worker-ownership.

Many have turned to the worker cooperative model as a way to build more sustainable jobs and communities, in large part because collective ownership allows for workers to equitably share the benefits in the good times and the burdens in the hard times. In the past decade, the number of worker-owned cooperatives in the United States has almost doubled from roughly 350 companies to nearly 600. This growth has primarily taken place in communities of color and immigrant communities. As a result, worker cooperatives now exist in diverse sectors across the country, including in the taxi industry, elder care, home cleaning, tech, construction and more.

I’ve been a worker-owner with The TESA Collective, a worker co-op, since 2010. TESA, which develops board games and tools for social and economic change, has been heavily involved in advocating for the cooperative movement. Over the past decade, our work has ranged from making a board game about cooperatives and co-creating a free documentary on how to start a cooperative, to working with incarcerated people to organize cooperatives behind prison bars. In that time, we’ve seen an explosion of interest in the cooperative movement from everyday working people, and now from policy makers and business owners alike. We’ve witnessed on the ground floor the innovative ways the cooperative movement is growing, and the impact it can have on the larger economy as a whole.

A New Path: Converting Traditional Businesses to Worker Ownership

In 2012, after four years of on-and-off strikes and union negotiations, workers at a Chicago window factory decided to buy their factory and own their jobs together, launching New Era Windows, a worker-owned cooperative. In 2014, employees of a small chain of businesses in Deer Isle, Maine, were worried about terminations when they learned that their founders were retiring. With support from the co-op movement, the employees were able to train themselves on democratic governance while finding the funding they needed to buy their stores, transforming into the Island Employee Cooperative. Just this year, the owner of Downtown Sounds, a music shop in Northampton, Massachusetts, pitched the idea of converting the store into a worker co-op, and selling his business to his longtime employees. The staff readily accepted his proposal.

These stories are just the tip of the iceberg when it comes to the growing trend of businesses being bought out and democratically owned by their employees. And these aren’t isolated incidents: they’re in large part due to organizing from the worker cooperative movement. This shift to converting traditional business to worker-ownership has been a key strategic decision by cooperative advocates.

“It’s actually been happening for a long time, with up to a third of existing worker co-ops having formed from transitions from private ownership,” said Noémi Giszpenc, executive director of the Cooperative Development Institute (CDI), which helps aid new and established cooperatives throughout the Northeast.

Yet the worker co-op movement has dramatically increased its focus on business transitions in recent years for a simple reason: It’s easier to obtain funding and support for an existing business than a new one.

“While startups are no doubt still vital, conversions allow you to build democratic workplaces on the foundation provided by businesses which are already successful,” said John Duda of the Democracy Collaborative, an organization focused on advocating for worker co-ops.

And with the growing demographic wave of retiring baby boomer business owners, there’s an imminent and urgent opportunity for employees to buy out their jobs.

“There are millions of jobs that could become jobs at worker-owned companies if we can build this pipeline soon enough,” Duda told Truthout.

A large portion of the worker co-op movement’s success in recent years around transitioning businesses to employee-ownership has been due to its engagement with economic developers and policy makers on the local level. The Democracy at Work Institute (DAWI), a worker cooperative think tank based in Oakland, California, launched an initiative that “convenes and equips city leaders with tools, resources, and expertise” centered around converting traditional businesses to democratic ownership.

“We weren’t sure how much interest there would be, and we’ve been blown away not just by how much interest there is, but by how quickly the cities we’re working with have taken up this issue as their own,” said Melissa Hoover, executive director of DAWI. Those cities include Atlanta, Georgia; Miami, Florida; Philadelphia, Pennsylvania; and Durham, North Carolina.

To participate in the program, each city selected three of their own leaders to work within a team, focusing on developing local strategies for transitioning business to employee ownership as a means to address their city’s economic challenges. According to DAWI, each city’s team has been fully committed and engaged in the project.

“For them, it’s a matter of preserving legacy businesses — those longstanding, community-serving businesses that everyone loves, often owned by people of color, often an integral part of the social fabric of a city,” Hoover said. “They intuitively understand the appeal and benefits of employee ownership, and they’ve now become advocates and researchers and outreach conduits in their cities.”

Political Support for Worker Cooperatives Is on the Rise

Along with business owners, the worker co-op movement has been making inroads with policy makers and legislative agendas across the country. This support from politicians and municipal governments is the direct result of advocacy and organizing by members of the worker co-op movement. And it’s a key component toward forging a cooperative economy.

“We were pleased that in the recent Maine gubernatorial election, all of the candidates were vying to display strong support for worker ownership,” said Giszpenc of the CDI. “The eventual winner, Janet Mills, has made support for worker ownership part of her economic development policy platform.”

During the campaign, CDI staff had multiple meetings with the gubernatorial campaigns, including Mills’s, in order to garner their support for employee ownership in Maine. Mills eventually proposed a state initiative that would offer low-interest financing to help cut the costs of companies transitioning to employee-ownership.

“We need support from policy makers at the state, local and federal levels to help support the growth of cooperatives,” said Peter Frank, a co-op developer with the Philadelphia Area Cooperative Alliance, which recently partnered with Philadelphia’s City Council in order to aid the conversion of businesses to worker-owned cooperatives. “Pretty much everywhere in the world where there are significant concentrations of cooperatives, there are government policies in place that support cooperatives.”

So far, the bulk of policy success of worker cooperatives in the United States has been concentrated in cities and states, and that work is continuing. Organizers in Illinois, for instance, are pushing for new legislation that would make it easier to launch worker cooperatives in the state. In March, after advocacy from the co-op movement, the state of Massachusetts decided to resurrect its defunct Office for Employee Involvement and Ownership (EIO) in order to make it easier for retiring business owners to sell their companies to their employees. The governor of Colorado, who formerly served in the state’s Cooperative Business Caucus, also made employee ownership a policy priority and launched his own state-wide initiative to make it easier for retiring businesses to be taken over by their employees. Just around the same time, the City Council in Berkeley, California passed a resolution to give preference to cooperative businesses for city contracts, as well as to dedicate technical assistance to small businesses transitioning to a worker cooperative model.

Still, the success of the cooperative movement on the local level is allowing it to expand into national conversations as well. During his 2016 run for the Democratic presidential nomination, Sen. Bernie Sanders included worker cooperatives as the third point in his 12-point agenda. More recently, Rep. Alexandria Ocasio-Cortez included worker cooperatives in the Green New Deal and has begun mentioning them as a part of her overall economic vision.

The worker co-op movement has even been able to affect federal policy by successfully advocating for the passage of the Main Street Employee Ownership Act of 2018, which improves access to capital and technical assistance for employee-owned businesses – Employee Stock Ownership Plans (ESOPs) and worker co-ops. According to a press release from DAWI, the legislation also includes directives to the Small Business Administration to improve training and education around the options to transfer businesses to employee ownership.

An Economy Shaped by Worker-Ownership

While the worker co-op movement in the US nearly doubled in the past decade, what would the impact be if it truly blossomed?

“The effects for working people as worker cooperatives scale are profound,” said Hoover of DAWI. “Just look at the largest worker cooperatives in the country, how much better they are to work at than their peers in the industry, and the influence that [they] have on their industries. Employee-owned companies traditionally offer greater job stability — including benefits, training and higher wages, and the ability to have a say in your working life; they provide opportunities for owning technology instead of being outright replaced by technology; and they provide access to business ownership for those without the capital to buy a business or qualify for a loan on their own.”

“This would be transformative, especially in the context of larger parallel shifts toward employee, community and public ownership,” said Duda. “As we scale up the democratic economy, we also displace the corporate economy, which is going to benefit working people more generally.”

Thankfully, worker cooperatives in the U.S. don’t have to reinvent the wheel to achieve this dream. They can pull on the success of co-op movements in other parts of the world, including in the Mondragon region of Spain and the Emilia-Romagna region of Italy. Both of these regions have hundreds of interconnected cooperative enterprises, supporting each other through a system of cooperation.

Duda says that the goal isn’t just to start more worker cooperatives, but instead to cultivate entire ecosystems of cooperatives that transform the way the economy works.

“I would like to think that the worker co-op movement of the future looks like a vibrant, pluralistic network of innovation, tied together by formal associations at national, regional and local levels … all linked to a larger movement advancing the democratic economy more generally.”

That’s certainly a lofty goal. But with the enormous strides the worker cooperative movement has made just in the past decade, it may be one that’s more achievable than it seems.