Compared to the rest of the world, worker cooperatives make up a tiny proportion of the US economy—a 2021 study counted 612 worker cooperatives in the country. However, that number has risen significantly in recent years. Interest in worker cooperatives is also rising among businesses and workers, as well as investors, policymakers, and researchers. Those newly interested in cooperatives are coming to the movement at a time of deep economic inequality, wage stagnation, and job precarity.
Against this backdrop, it is no surprise that a model for democratic workplaces where workers benefit more directly from the profits of their labor is enjoying increased attention and support. In worker cooperatives—where workers jointly own and manage the businesses and have agency over their working conditions and input into the business’ governance—these benefits translate into tangible economic outcomes. Cooperatives are more resilient to economic shocks, experience lower turnover among workers, and have higher productivity levels than traditional businesses. These economic benefits for worker cooperatives translate into economic benefits for individual workers and their families, who earn equal or higher wages than workers in similar jobs and often have more family-friendly workplaces.
A few weeks ago, the Aspen Institute Economic Opportunities Program (EOP) hosted a discussion titled Democratizing Work: The Role, Opportunities, and Challenges of Worker Cooperatives in the US—the first in a three-part series on employee ownership models and the current momentum in the US employee ownership movement.
The conversation, moderated by EOP’s Executive Director Maureen Conway, began with an overview of the US cooperative movement from Esteban Kelly, the Executive Director of the U.S. Federation of Worker Cooperatives. Kelly described cooperatives’ success in other countries and the many models for how governments, philanthropy, labor movements, and grassroots organizers have approached building cooperatives. Comparatively, the US has much room for growth. “There’s millions of worker-owners all around the world and only thousands of them in the US,” he said. “And so we have so much to learn from our colleagues overseas and around the world.”
On the role of cooperatives in the US today, the panelists discussed worker cooperatives as one model, existing alongside other forms of cooperatives and other types of employee ownership. They emphasized that beyond impacting individual companies, democratic workplaces help people participate more actively in civil society and electoral democracy. Worker cooperatives have a long tradition in the United States, despite their low numbers today. Kelly shared how worker cooperatives shift power into the hands of workers and their communities. Cooperatives—and employee ownership more broadly—can help reimagine who should hold economic and decision-making power within companies and communities.
Stacey Sutton, Associate Professor of Urban Planning and Policy at the University of Illinois-Chicago and Director of Applied Research and Strategic Partnerships at the school’s Social Justice Initiative, spoke to the role of cooperatives in social movements and as part of a solidarity economy. “People, especially marginalized people, are able to utilize this formal structure to both get by and get ahead,” she said. “For folks that may not be able to start an enterprise individually, they’ve been able to come together and—whether it’s a formal cooperative or it’s a collective—pool resources and collectively benefit.”
Picking up on the idea of shared rewards for workers, Hilary Abell, co-founder and Chief Policy and Impact Officer at Project Equity, discussed seeing co-ops’ benefits on the ground, especially for those historically excluded from the economic benefits of their labor like low-income and immigrant workers. Beyond the decision-making power gained by workers who become co-owners, Abell describes seeing workers’ incomes doubling or tripling, benefits improving, and families’ financial cushions growing. According to Abell, “The co-op development we were doing was really changing the economies of some of the lowest income, and the folks with the most barriers to quality jobs, in the United States.”
Sara Chester, co-executive director of The Industrial Commons, emphasized wealth building as a key benefit of worker cooperatives, not just for individual workers but for communities with a higher density of cooperatives. She saw her hometown in rural Western North Carolina go through a severe decline in jobs due to manufacturing offshoring. Chester used this as an opportunity to use worker cooperatives to revitalize the local community and create good jobs for workers who had been left behind. She said of this community-based approach, “We wanted to have a place where wealth was really truly rooted locally.” This is evident in the model of The Industrial Commons, which integrates the cooperative approach into the local business environment, creating high-quality jobs for workers and building sustainable economic power for the community. Chester is seeing the model’s success. She says there is little to no turnover at The Industrial Commons’ cooperatives. Moreover, other local businesses are taking notice and want to learn how these cooperatives are building workplaces where workers want to stay. This creates understanding in the local business environment of what workers consider to be good jobs.
Building out a supportive ecosystem for cooperatives is vital, says Chester. She emphasized that success is dependent on building local programs and infrastructure to help them sustain themselves.
This idea of supportive ecosystems for cooperatives is also central to Sutton’s work. She explained that the first step in building out cooperatives in Chicago was asking if the city had the services and supports needed to help cooperatives thrive. Building out this support ecosystem, from incubators to accountants and other professional services, creates a more sustainable set of resources for new cooperatives and existing businesses transitioning to a co-op structure. City grants to cooperatives were supplemented by this focus on building out support services. “If we do it correctly, even if this [city grant] is a one-time infusion, we will have a more robust landscape, far more robust than what we began with. And so we’ll be able to hold that work going forward,” Sutton said, Hilary Abell added that part of creating an ecosystem supportive of cooperatives is policy work—helping pass legislation that makes it easier to form and maintain worker cooperatives, such as the California Employee Ownership Act.
Cooperatives are also ripe for innovation—trying new business ideas and models. Esteban Kelly has seen platform cooperatives bringing together gig workers or contract workers to pool their risks and resources. One such cooperative, Guilded, is bringing together freelancers with a focus on artists. The co-op has created a mechanism that guarantees workers payment from a shared pool of funds within 14 days of finishing their contracted projects—providing economic stability in a profession where delayed payments from clients are extremely common. Abell added that platform co-ops are similar to staffing cooperatives, an innovative structure that provides stability to workers normally hired through staffing agencies and who make up a large portion of workers at major tech firms, the healthcare industry, and beyond. Abell and Kelly also discussed novel approaches to cooperative management that bring together new stakeholders, from investors to nonprofits and unions. These collaborations open up new avenues for building cooperatives that serve the needs of workers and communities—as well as building larger coalitions that can then advocate on behalf of the cooperative movement, including for supportive legislation.
The speakers also reflected on the idea of scale. Sutton raised the point saying, “All enterprises don’t need to be scaled. Everything doesn’t need to be large.” Mondragon Corporation in Spain is often cited as the top example of a successful worker cooperative but Sutton wonders if this is because it “aligns with the American logic, in terms of capitalist pro-growth logic.” She cited examples from Italy, Brooklyn, and Chicago, of cooperatives that are maintaining their smaller size while still meaningfully impacting the lives of workers and contributing to the local economy. Esteban Kelly clarified that one of the key problems for small cooperatives is that, due to the pro-growth mindset, fewer resources and supports are available for smaller initiatives or cooperatives that don’t have the potential or desire to scale—even though they create value for their workers and local communities at their smaller size.
Maureen Conway and Sara Chester connected the idea of scale to organizational culture. In the cooperative model, many benefits for workers stem from having a voice in the running of the cooperative, decision-making power within the enterprise, and personal investment in its success. There is a worry that with scale, the cooperative culture is diluted. However, Chester brought the conversation back to her work with The Industrial Commons and the idea of building supportive ecosystems for cooperatives. Scale does not necessarily come only from growing a single cooperative but also from building more cooperatives in their local community, making it easier for all cooperatives in the ecosystem—regardless of size—to thrive.
In their closing thoughts, multiple speakers emphasized the importance of raising awareness of worker cooperatives as an option, while also focusing on building ecosystems for cooperatives through funding, support services, and legislation. Hilary Abell put it into a call-to-action for the audience. “One thing that everyone can do to create more co-ops—and we need more small co-ops, we need more medium, we need more large, we need all of that—is get involved in advocacy for cooperatives.”
Throughout the conversation, speakers emphasized some models of employee ownership are better suited for certain businesses or contexts. We will continue to discuss employee ownership models at the next event on Employee Stock Ownership Plans in 2023.
Tweet While the US cooperative movement is small, it is gaining momentum and has a long history — especially in helping marginalized communities build wealth and economic power. Read more from @Merrit_St on the @AspenInstitute blog.
Tweet When workers have a voice in their working conditions, both #jobquality and business performance improve. That’s why co-ops often have lower turnover, higher wages, and more family-friendly workplaces than similar companies.
Tweet Cooperatives benefit both workers and the community, but they need a supportive ecosystem in order to grow. This includes help from service providers and legislation that makes it easier to adopt this model. Insights from @AspenJobQuality’s @Merrit_St.
Tweet Worker co-ops have many benefits, including making workers more active in civil society and pooling risks and resources for gig and contract workers. Read more from @Merrit_St on the @AspenInstitute blog.