Time for Worker Cooperatives to Go Mainstream

Posted by Natalie Abatemarco on July 8, 2014

Worker at Evergreen Laundry CoopCities are at the crosswalk of talent and density, and they have a lot to lose by not thinking innovatively about economic policy.

Cities suffer from the widest income disparities in the nation, according to the U.S. Census Bureau, and this trend is exacerbated by the dissolution of many middle-income jobs. Across the United States, there are nearly two million fewer jobs in mid- and higher-wage industries than there were before the recession took hold, while there are 1.85 million more jobs in lower-wage industries, reports the National Employment Law Project. Stronger policies to counter this pattern could produce a tax base that better supports municipal government, accessible housing, and more resilient neighborhoods.

The question for cities today must be this: How can we support the creation of sustainable jobs that strengthen the middle of the range and offer a pathway to economic security?

One idea that should be recognized for its merit is worker cooperatives—and more policymakers are agreeing.

The New York City Council in June endorsed $1.2 million in funding to support the expansion of worker cooperatives.

In the past, worker-owned cooperatives were often associated with certain ideologies and dropping out of the mainstream economy. They were traditionally confined to the food industry and rural America.

But today, “shared entrepreneurship” can be a buzz phrase that reflects the new economy and empowers a cooperative’s members to take the reins to the mainstream. 

It can be a tool for asset building that finally helps people climb up that ladder. With a little innovation, we now see this framework is applicable across industries.  Almost 400 worker cooperatives established across America now appear to agree. So does Citi Community Development, which is supporting the Democracy at Work Institute and Project Equity to assess the opportunities for worker cooperatives to scale and impact the lives of low- and moderate-income people in U.S. cities.

In worker cooperatives, the employees are the business owners. That means the success of an enterprise matters as much to workers as to a boss, leadership opportunities are more accessible, and profits are more likely to be recirculated into the communities where employees reside. In this way, cooperatives can be an agent for change on both small and grand scales. Their very structure is about closing the income gap. Some also suggest that cooperative workers are more likely to be loyal to their company and community in the long term, which could lead to more robust and sustained business growth and to the retention and circulation of wealth in areas where worker cooperatives are prevalent.

Their strengths are particularly valuable in immigrant communities. Immigrants are twice as likely to start a business as U.S.-born citizens, yet access to capital is difficult. In addition, cooperatives offer immigrants market advantage in wage negotiation, workplace protection and active participation in the growth of a business. The participating workers don’t just join a business, but a community that offers greater financial inclusion. Indeed, the US Federation of Worker Cooperatives forecasts immigrant-owned enterprises to be the fastest growing group of cooperatives in the coming years.

Success stories include Cooperative Home Care Associates, a home healthcare agency in the Bronx and one of the largest worker cooperatives in the United States with over 2,000 workers. Another is Evergreen Cooperative Laundry, an industrial laundry service that offers on-the-job training with a particular focus on groups who often face barriers to securing regular employment, such as formerly incarcerated individuals. And, The New York Times recently featured a profile on the worker-owned Arizmendi Bakery near Golden Gate Park in San Francisco.

However, a lack of appropriate capital and investment mechanisms, public policy support, and technical assistance have undermined the ability of worker-owned cooperatives to gain scale as an approach to asset building.

In addition, more support for personal financial education could build a bridge to greater financial confidence and ability to start a business.

Worker cooperatives are an underutilized tool in our kit to restore communities, increase wages, and build local economies. It’s time to look to the past to power future policy innovations.

[Ed note: Look to our upcoming issue of Shelterforce for more stories on cooperatives in low-income communities.]

(Photo of Evergreen Cooperative Laundry, by Janet Century, courtesy of the Cleveland Foundation.)

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