Obama Forgot to Share Inspiration of Ohio’s Worker-Owned Business Revolution

It’s fitting that President Obama in his State of the Union address chose Youngstown, Ohio, as a model for a high-tech manufacturing hub initiative, but it would be even more fitting if he pointed out that Ohio is also the inspirational home for the fast-growing idea that workers should become not just employees but owners of the companies in which they work.

In his State of the Union address President Obama praised creation of the National Additive Manufacturing Innovation Institute in Youngstown, Ohio, and announced the launch of similar “manufacturing hubs” that can introduce new technologies elsewhere in the United States.

Youngstown is a fitting place for this . . . probably, the president feels, because Youngstown is a place where old technologies have left the city in radical decline. A thriving steel town of almost 140,000 in 1970, today Youngstown has only 66,500 residents.

“A once-shuttered warehouse,” the president proclaimed, “is now a state-of-the art lab where new workers are mastering the 3-D printing that has the potential to revolutionize the way we make almost everything.”

So yes, it’s fitting to choose Youngstown for this high-tech initiative. But it would be even more fitting if the president were to take the next step: move to put the new technologies under cooperative worker ownership.

More fitting! Why? Let me explain.

Youngstown is the inspirational home for the modern and fast-growing idea that American workers should become not just employees but owners of the companies in which they work.

Many years ago – in 1977 – a very large steel mill in Youngstown was shuttered on a very unhappy September day. Five thousand workers lost their jobs, their livelihoods and their futures when Youngstown Sheet and Tube went down.

Five thousand on one day was a very big deal, nationally, in 1977. It made the front pages and was the top story on the evening news. This had not happened very often in America up to that point. (Tragically, today such a closing is hardly news, since it happens all the time.)

Back in 1977, the steelworkers called it “Black Monday.” I remember all too well how, as the reality sank in, we heard reports of men who could no longer support their families going out into the garage and putting a pistol to their heads.

That was not the only response, however. A young steelworker named Gerald Dickey somehow got to thinking that there was no reason the steelworkers themselves couldn’t run this facility, and he began to urge and organize and push and shove to get some interest in his outrageous idea.

Just to give you an idea of what outrageous meant in Youngstown: Dickey was taken aside by one of the town’s leading businessmen and advised: “If you’re interested in steel mills, let me suggest a couple stocks you might buy . . . ” But of course, Dickey had a somewhat different idea, and together with many others, began to get serious.

First, the group got a number of activist who worked at the mill together. Second, they found that many of Youngstown’s religious leaders were also upset because if the huge mill went down, a good part of the economy and livelihood of the community would go down.

The steelworkers and an ecumenical coalition headed by a Catholic and an Episcopal bishop began to demand that the mill be put back to work under some form of worker or worker-community ownership. They found a sympathetic ear in Washington in the shape of an assistant secretary of housing and urban affairs named Bob Embry. Suddenly they had enough money to finance a really professional plan for how to put the old mill back into operation with the latest modern technology.

I was called in to help oversee the development of the plan and to help advise on other matters. (All this now seems like only yesterday . . . ) To make a long story short: The young steelworkers and the ecumenical coalition became very sophisticated about what they were taking on.

They knew their only chance against the big steel companies (all of which were less than enthusiastic about the idea of workers owning mills) was to build a popular political base around the state and, to the extent feasible, around the nation. This meant capitalizing on the bold tale of workers taking on the big guys, drawing in the press and also mobilizing the national religious community.

At the time, they also had to take on the national union leadership. The United Steelworkers in 1977 had absolutely no interest in the idea – and indeed thought of the young steelworkers in Youngstown as upstart troublemakers who might perhaps one day cause problems for the established national union leadership.

Then a major victory occurred. The Carter administration studied their plan and agreed to allocate at least $100 million in loan guarantees to put it into operation.

However, though they won the first major battles, the Youngstown steelworkers lost the war. Somehow, not surprisingly, just after the midterm elections of 1978 and the national politicians no longer had to worry about a backlash, the Carter administration’s interest simply faded away. The $100 million somehow never quite got allocated.

Not surprisingly, the major steel corporations and the Steelworkers Union, it was rumored, were somehow, maybe involved – though, of course, no one could prove anything.

The story did not end there. Neither the young steelworkers nor the ecumenical coalition were naive. They knew they were up against some of the most powerful corporate (and at the time, union) players in the country. They were fully aware they might well lose the battle. They also knew, however, they were on to a very important idea, one whose time – they hoped – would one day come no matter what.

“Why should workers not own the companies in which they work?” they kept asking. Why can’t this become an idea to put into everyday practice – now or in the future? Accordingly, as part and parcel of their strategy they made it their business to help educate the public and the press and the politicians in the state and around the country about what they were trying to do both locally and, in a much more fundamental sense, as a larger national strategy and vision.

And so the Youngstown story did not, in fact, die when the Carter administration turned its back on the workers in 1978. Instead, the inspiring example of the workers and the ecumenical coalition – plus the very sophisticated educational and political work done by the local steelworkers and the religious leaders to spread the word – had ongoing impact.

There are now many, many worker-owned businesses in the state of Ohio, and the support system for building them is one of the best in the nation. There is also a very energetic organization, the Ohio Employee Ownership Center at Kent State University that provides assistance to workers and others who want to establish such firms. (The center was put together by a Kent State professor, the late John Logue, who was directly and personally inspired by the Youngstown effort.)

And the simple idea that workers can and should own their own factories or stores or other businesses is an idea that is now almost conventional in many parts of Ohio. And not only among workers but also among businessmen, many of whom (aided by certain tax benefits) now sell their successful businesses to their former employees when they retire.

That last paragraph compresses roughly 30 years into a few sentences. Obviously, there was a lot more to the tale. But the point is not simply that the idea of worker ownership is now pretty much commonplace in many parts of the state.

Something else has happened: It has also gotten much more sophisticated over time as people have thought about things and worked on them in different ways. Innovation has also occurred.

And as a result of work done in the last several years, there now exists in Cleveland a group of very sophisticated worker-owned companies, linked together with a community-building nonprofit corporation and a revolving fund designed to help create more and more such linked, community-building cooperative businesses over time.

Furthermore, part of the new design involves getting big hospitals and universities in the area (like Cleveland Clinic, Case Western Reserve University and University Hospitals) to agree to make purchases from the worker-owned companies.

The goal now is not simply worker ownership, but worker ownership linked to a community-building strategy – and supported in part by larger institutions that not only have broad interests in the community but also are dependent in part on public programs supported by the workers’ and the community’s tax dollars, such as Medicare, Medicaid and educational funds.

Put another way, the process that can be traced to the Youngstown effort – including its seeming failure – has also led to innovation, further development and greater sophistication.

As time has passed, new priorities and another set of alliances have also begun to develop. Now, all of the linked worker-owned companies are green by design. For instance, the Evergreen Cooperative Laundry operates out of a LEED Gold-certified building and it uses (and heats) around one-third as much water as that used by other commercial laundries. Evergreen Energy Solutions is poised to install twice as much solar capacity in the near future than currently exists in the entire state of Ohio.

And Green City Growers Cooperative – 3.25-acre hydroponic greenhouse (the largest in any American city) – currently produces some 3 million heads of lettuce a year, along with hundreds of thousands of pounds of herbs. In the future, new cooperative businesses will come online as the building processes continue.

By the way, a number of local businessmen have been helpful in all this. The overall effort builds consumers, helps the local economy and supports the tax base, and thereby, all local businesses as well. Many also feel good about doing something for the community. And the politics of this seems to work, too: The mayor as of this writing, Frank Jackson, looks very, very good in the press.

As noted, at one point, the Youngstown effort focused also on a joint “Community-Worker Partnership” – following the idea that the interests of the whole community, not just the steelworkers at one particular plant, were at stake. And the Cleveland effort – along with many others – offers further ways to think about this idea, about many different ways to democratize ownership and about the logical community building and other relationships involved in a different economic system.

The tale does not end in Ohio. Many other workers’ groups and many other cities around the nation have picked up on – and been inspired by – the line of development represented in the above tale. Efforts like that in Cleveland are being developed in Atlanta; Pittsburgh; Washington, DC; Amarillo, Texas; and many other cities.

Nor is that all. The United Steelworkers, whose national leadership once opposed the Youngstown effort, have also evolved. The union recently announced a very creative strategy to help build “union co-op” worker-owned companies around the nation. Efforts are under way, in particular, in Pittsburgh and Cincinnati. There are also signs that other unions are beginning to realize they might gain additional leverage by exploring new strategies.

The Service Employees International Union (SEIU) is launching a worker-owned and unionized laundry project in Pittsburgh and is involved in a ground-breaking partnership with New York City’s Cooperative Home Care Associates, an effort that provides home services for the elderly, chronically ill and people living with disabilities, and it is the largest worker cooperative in the United States.

And the United Food and Commercial Workers Union and Homeland Acquisition Corporation, an Oklahoma- and Texas-based grocery chain, have joined to transform the company into a 100 percent employee-owned business.

Also, lots of people are suddenly talking about Mondragon – a spectacular 83,000-person grouping of worker-owned cooperatives in Spain’s Basque region that is teaching the world how to move this idea into high gear and large scale. The first Mondragon cooperative dates from 1956, and the overall effort has evolved over the years into a federation of more than 100 cooperatives – all based on the one-worker, one-vote principle. The modern steelworkers’ effort is a joint project undertaken with Mondragon; and the Cleveland co-ops have drawn on many of the Mondragon principles, particularly in connection with revolving loan funds to help incubate new co-ops.

Some of the nation’s business schools are now offering courses on worker ownership and other democratized business structures never offered before.

And by the way (speaking as something of an old-timer who has been concerned with this kind of thing for longer than I care to mention), there are lots and lots of ordinary people who are now beginning to get very serious about changing ownership and about this as an idea whose time has come – or might come, if we get serious.

It’s important to note, too, that support for worker ownership doesn’t always necessarily sway left or right. Take a guess at who said this, as long ago as 1987: “I can’t help but believe that in the future we will see in the United States and throughout the western world an increasing trend toward the next logical step, employee ownership. It is a path that befits a free people.” It was Ronald Reagan.

So, to return to President Obama’s initiative. Yes, certainly, it is time to boost advanced technology in rustbelt areas. But we should be doing it in ways that build new democratic ownership and really honor the modern tradition that began in Youngstown on Black Monday in 1977.