Worker Co-ops

T here are around 300 worker-owned businesses in the United States, totaling about 10,000 workers, according to recent figures from the Grassroots Economic Organizing newsletter, the movement’s major organ. CICOPA, the branch of the International Cooperative Association that promotes worker ownership (which is known by its French acronym) says some element of worker ownership reaches about 50 million people worldwide. 

Still, worker-owned businesses represent only a tiny slice of the United States’ economy. But that, democratic workplace advocates maintain, can change. Leaders from Midwest worker cooperatives gathered mid-April 2003 at the University of Wisconsin’s Madison campus to talk through plans for a national worker cooperative federation and strategies to gain prominence on national and regional stages. The Madison meeting followed conferences on both coasts last year, the first gatherings of worker co-ops in decades.  

A good share of the weekend conference in Madison, though, was devoted to discussions of basic business finances and mechanisms for handling interpersonal conflict—the nuts-and-bolts sharing that shows how far the concept of worker cooperatives and the alternative economy they represent has come and how far it has to go.
“Those of us who recognize the economy doesn’t work for the majority of people need to have a viable alternative that’s not theoretical,” says Lance Haver of Phoenix Foods, an urban Philadelphia basil farm transitioning to worker control. “We’re very aware that we’re the only alternative to the Enron model that has any type of credibility right now.” 

Gathering Forces 

A t CICOPA’s international headquarters in Geneva, there is a gaping hole in North America on the map of worker-owner federations around the world. Bruno Roelants, CICOPA’s representative at the Madison conference, would like to see that changed. Lobbying efforts on behalf of worker cooperatives in international bodies would be taken more seriously, he says, if the movement showed strength within the world’s superpower. Participants approved sending representatives to the national conference next summer, where the structure and initial tasks of the U.S. federation of worker cooperatives will be planned. Its supporters see marshaling the political power of worker-owners in the United States, and, like a trade group, offering resources and a public face for the movement. 

Despite the appearance of consensus, a major battle over the scope of the national federation brewed under the surface. Should it focus on purely worker co-op issues or embrace a “big tent” approach and broaden its membership beyond worker-controlled firms? 

Opening up the federation to businesses with minority worker control met resistance. The principal groups the federation could partner with are Employee Stock Ownership Plans, offered by many corporations as a loyalty enhancing incentive over the past decade. The stock sharing plans made headlines recently because right-wing commentators blamed United Airlines’ bankruptcy on the corporation’s ESOP, even though portions of the company—including flight attendants—didn’t participate. ESOPs have been criticized by democratic workplace activists because very few are designed for actual worker control—most operate by doling out shares based on compensation, allowing managers to maintain significant clout. 

“If the nascent federation wants to hold itself out to conscientious members of the public as representing non-exploitative enterprises, then it might want to admit only democratic workplaces,” says Bob Stone, an editorial board member of the GEO newsletter. Leaders in the worker co-op community downplay the issue, saying it makes sense for the national federation to restrict membership to worker- owned businesses, but welcome linkages with other groups pushing for an equitable society. 

“Worker ownership is a very dicey strategy for social change unless people are aware of the nature of the system in which they’re operating,” says Charles Derber, a Boston College sociology professor who writes on the cooperative movement. “They can simply become one more player in the market economy, very much constrained by the market system, subject to the same pressures of competition and profit. They’re too micro a set of changes on their own, beyond the well-being of their workers, to create the larger change that will be meaningful.”  Worker cooperative activists seem to hear that concern, but whether it becomes an integral part of the federation remains an open question. “I’m working toward a post-capitalistic future, but it’s not going to happen without social organizing as well as co-op organizing,” says Tim Huet, part of the Arizmendi Development & Support Cooperative, which helps establish worker-owned bakeries in the San Francisco Bay Area. “People in power would not just allow worker co-ops to slowly grow and take over the economy. We’ve got to support other organizing.” 

The Elephant In The Corner 

A t the moment, though, co-ops are out of reach for many people. The apparent inability of worker co-ops to impact low-income and non-white communities became the topic of heated discussions at the Madison workshops. Depending on scale and ambition, it takes tens or hundreds of thousands of dollars to start a small business and banks are not tripping over each other to line up behind radical bookstores and worker-run bikeshops. 

Of course, larger firms and worker buy-outs of failing businesses require even more massive capital infusions, the source of which is unclear. Could “socially responsible” investment firms and pension funds, worker held, at least in theory, be convinced to leverage their money? 

Equity is a red herring in the worker co-op community, Huet says. “Banks will give you money if you can show them you can pay them back. The real concern is building technical capacity so the co-op survives.” 

Still, most worker co-ops start with workers paying thousands of their own dollars in an initial “membership fee” to get the new business running. But if you don’t have a fat bank account, inherited wealth, or friends with MBAs, worker co-ops don’t look so good. Indeed, Jane and Joe Cooperative Worker are “overly educated white people who are downwardly mobile,” as Lance Haver put it. “It shouldn’t surprise anyone. We don’t make it easy for people of color. You need to have the equivalent of a degree from Wharton business school to run these businesses. Why should we be surprised if they don’t jump into it?” 

The Brookline, Massachusetts -based ICA Group, a loan fund and consultant for cooperatives, has built a strategy around increasing access for minority populations. Concentrating in poor urban areas, it funds start-ups familiar in the low-wage job market, such as home health care and day labor/temp agencies that provide better wages and some elements of worker control. Democratic workplace activists are also hunting for a revolving loan fund to create new worker co-ops, which could reduce the initial equity problems.  

Stick A Label On It 

I ncreased demand for goods produced in egalitarian workplaces could boost the number of worker co-ops and Lance Haver has an idea how to make it happen. Organic and fair trade activists put labels on their goods and markets blossomed for their products. Haver thinks it is time worker-owned businesses tapped into the labeling game. It drives up demand and gives incentive to traditional firms to cede some control to their workers. 

Cesar Chavez’s union grapes campaign in the late 1960s also succeeded with labeling, thanks in large part to the huge activist effort behind the label, says Jessica Gor- don Nembhard, an economist at the University of Maryland-College Park and GEO board member. But businesses with less than majority worker control could still have their goods labeled, making it hard for consumers to differentiate between worker-friendly firms and manipulative pretenders. Labeled goods are typically more expensive, at times explicitly catering to the Volvo set. These concerns don’t dissuade Haver.  “Twenty years ago, if you would have said, ‘let’s label organic food,’ people would have laughed at you,” he says. Now organic food is a burgeoning $6.3 billion business, up from $1.8 billion just 5 years ago. Organic food grew a bumper crop of confusing labels and certifications, smoothed out by the recent USDA label, whose requirements are set low enough to create a major ruckus among food activists. 

Even if the worker-owned label started with less-than-savory businesses attached, it could be improved over time, Haver says. A compromise floated in some circles is to have the label list the percentage of worker ownership. “Some people are anxious to get the (worker) label moving soon,” Nembhard says. “It has potential, but I’m more comfortable if it comes out of a national entity, where issues and standards can be hashed out.” 

On The Home Front 

T he Bay Area is home to the largest concentration of U.S. worker cooperatives and also the nation’s best-organized cooperative community. The Network of Bay Area Worker Co-operatives (NoBAWC)—the acronym is pronounced “no boss”—has attracted about 55 member co-ops Traditional businesses seek out No- BAWC for help converting to worker control, enough of them that the network recruited “best practices” experts to help them find insurance, lawyers, and other essentials. A network of mutually supportive, like-minded cohorts helps struggling co-ops and a 10 percent discount card for members draws business. Thankfully, thinkers behind the national federation plan to support and not supplant such successful local networks by allowing co-ops to devote portions of their dues to regional organizations. 

The Madison Post Capitalist Business Association, created in February, draws together nine worker co-ops into a sort of shadow Chamber of Commerce. So far they have published a map of the association’s members, and two—Union Cab Company and grocery cooperative Mifflin Street Co-op—have pooled funds to start a bookstore.  “People want to do something socially responsible, putting your money where your values are,” says Valeria Benner, a worker- member at Mifflin. “And having a socially just, ecologically responsible way of doing things is very positive as a model for other businesses.” 

But Madison’s association is not yet on the larger map, which speaks to the weakness of some U.S. worker co-ops. They are small, often fewer than 15 members. Some struggle—surviving only with volunteer labor—and even in small lefty towns like Madison that should be their natural habitat they can be ignored. “I don’t know much about them, honestly,” says Robert Brennan, president of the Greater Madison Chamber of Commerce. “Anybody that’s doing the kind of work that improves the quality of life in Dane County, we’re in favor of them.” 

Even people who want to do away with capitalism? “It isn’t going to happen,” Brennan says. “To make a community work, not one single element can force the others along with it”—evidently missing the irony of modern capitalism’s grinding tendency toward monoculture. “The American economic system has worked a long ways and is the envy of the world. We’ll be here forever.”  

Flexing Muscles 

T he war on Iraq proved an ugly truth about the worker-owner community’s weakness as an organized political force. Debate raged over a national email listserv —would issuing a statement alienate people, especially customers? But with no national federation, there was no unified response and a lot of confusion. Finally, several Bay Area worker cooperatives signed a “no business as usual” statement and shut down the day after the war started, as did a few other scattered co-ops. As a political force, worker cooperatives are only beginning to find their voice. Because they have been historically linked to progressive causes, they may put off people hostile or indifferent to the slate of causes that motivate the left. Tim Huet does not like that argument. “I don’t think we’ve alienated ourselves,” he says. “But I tend to the proposition that it’s smart not to be drawn into divides over every international issue.” 

Worker cooperatives are inherently political, Huet says, because they train people to be self-managing and give them greater confidence and skills they can employ in social activism. “As we learn to have more control over our worksite, we learn to have more control over our government,” Haver says. 

Worker cooperatives may be points of light in the darkness of antisocial market behavior, but how long can they stay lit on their own? Derber, the Boston College sociologist, says worker co-ops are easy to co-opt, unless they stay close to social movements with concerns outside their own. “It’s a little like what happened to labor unions,” he says. “They developed relationships with managers instead of maintaining relationships with social movements. Without explicitly embracing a social agenda, cooperatives will be assimilated into the larger system.” 

The experience of the plywood worker cooperatives in the Northwest provides a cautionary example. After decades of success, the worker-owners sold their stakes to multinational corporations—making themselves rich, but dooming the next generation of timber workers, who could not afford to buy out the old members, to punching a time clock. 

 What Next? 

I think we’re on a wave right now and it’d be nice to ride that wave,” Jessica Nembhard says. Activity is building around worker ownership and perhaps the biggest question is how to channel that energy into a successful economic and political force. 

As manufacturing left the United States over the last two decades, democratic workplace advocates paid much attention to worker buy-outs of failing factories and other large-scale efforts. Huet thinks it is time to use the successful models worker cooperatives have developed to grow and link thousands of small service-sector and community-based businesses, instead of focusing on big industries. At the same time, the national and regional federations should look outward. “We can’t just realize we’ve gotten what we want,” he says. “We’ve got to be concerned about people who can’t get a job at all—and see ourselves as part of the larger labor movement.” 

But first, Nembhard says, people need to know that worker ownership can work. “I don’t think we can get far off the margins unless peoples’ understanding of businesses change,” Nembhard says. “We think only profit and greed motivate people. We need to change what people understand is possible.”