By Caroline Harrison
| In the wake of economic downturn, wage inequality, job insecurity, and increasing worker dissatisfaction, a fast-growing business model is becoming increasingly relevant. This model is called worker cooperatives, where companies’ majority ownership and management power reside in the hands of their employees. These democratic businesses allow employees to literally invest in their workplace and, subsequently, share equally in its success.
Any type of business can be worker-owned, and regular businesses can also transition into co-ops if the majority of the company ownership is sold to the workers. Currently, the majority of worker co-ops in the U.S. are small businesses. Upon hiring, workers typically buy into the company and every year these worker/owners are paid a portion of the surplus money that remains after business expenses. The distribution of the surplus is determined democratically and may be equally administered or distributed based off of other factors such as seniority or hours worked. This democratic process is yet another distinguishing factor of a worker co-op. Usually, each worker gets one vote, regardless of seniority or specific job. In smaller companies, decisions are often made by consensus or majority vote amongst the pool of workers. In larger co-ops, a board of directors or managers may be internally elected by the workers in order to streamline the decision-making process while still remaining responsive to the workers’ interests.
There are numerous benefits to such an arrangement. Worker co-ops promote long-term jobs, better community relations, and sustainable business practice as workers’ investment in the company ensures that they have a direct stake in the well-being of the local environment and community. Additionally, in circumstances of economic hardship, those employed at worker co-ops may fare better since worker/owners will be disinclined to shut down when faced with low sales and profits. Instead, the personal stake the workers have in the company pushes them to make improvements by finding creative ways to increase productivity or efficiency without cutting jobs. This model provides a stark contrast to the behavior seen in the aftermath of the 2008 financial crisis where many CEO’s who let their companies crumble walked away with severance packages in the multi-millions. Finally, in a time of growing income inequality and wage stagnation, worker co-ops help close the wage gap between employees and owners, ensuring a more equitable distribution of profits.
Granted, there are concerns that worker co-ops face an uphill battle to survive within the competitive U.S. economy. This could change, however, if the government was willing to encourage worker co-ops by, for example, protecting them from large one-time buy-outs or creating tax incentives for companies to transition to worker cooperatives. This may seem like a polarizing political issue, but it shouldn’t be. Worker co-ops help to stabilize consumer incomes and employment, which creates a more sustainable economy for everyone. Additionally, they have utility as a model for the kinds of democratic and collaborative businesses that are best equipped to deal with the inevitable fall-out of unhealthy economic growth. Economics Professor Nancy Folbre puts it best saying, “Maybe worker-owned and managed companies with more complex goals than maximizing profit are less growth-oriented than other companies. Don’t tell Wall Street, but that could be a good thing.” Worker co-ops have, not only economic, but personal value as they allow workers to take initiative and feel they have control over their labor. Ultimately, though they are but one way to begin re-thinking the U.S. workplace, the success stories of worker cooperatives provide a compelling argument for sharing the prosperity.
A short except from the documentary “Shift Change” which follows the stories of several successful worker cooperatives in the U.S. and Spain.
Image Credit: http://tinyurl.com/ksypmpl