Worker Cooperative Intro

RED EMMA'S • INTRO TO WORKER COOPERATIVES
Intro to Worker Cooperatives
Version 0.1, April 2014

History of cooperatives
There are many antecedents for cooperatives in the
commons—the many ways that communities have
shared control of their means of survival for the
majority of human history.

Cooperatives proper really only get started as a
response to the rise of industrial capitalism in 18th
and
19th
centuries: the basic idea is that by banding
together, people have more economic power.

Most early cooperatives were consumer cooperatives;
workers forming associations to purchase larger
quantities at better prices, selling them to themselves
in cooperatively owned stores.

The Rochdale Society of
Equitable Pioneers,
founded in 1844, laid the
basis for the modern
cooperative movement

What is a cooperative?
1. Voluntary and Open
Membership
2. Democratic Member
Control
3. Member's Economic
Participation
4. Autonomy and
Independence
5.
●
5. Education, Training,
and Information
6. Cooperation among
Cooperatives
7. Concern for
Community

1. Voluntary and Open Membership
●
Cooperatives are voluntary organizations, open to
all people able to use its services and willing to
accept the responsibilities of membership, without
gender, social, racial, political or religious
discrimination.

2. Democratic Member Control
●
Cooperatives are democratic organizations
controlled by their members—those who buy the
goods or use the services of the cooperative—who
actively participate in setting policies and making
decisions.

3. Members' Economic Participation
●
Members contribute equally to, and democratically
control, the capital of the cooperative. This benefits
members in proportion to the business they
conduct with the cooperative rather than on the
capital invested.

4. Autonomy and Independence
●
Cooperatives are autonomous, self-help
organizations controlled by their members. If the
co-op enters into agreements with other
organizations or raises capital from external
sources, it is done so based on terms that ensure
democratic control by the members and maintains
the cooperative’s autonomy.

5. Education, Training and Information
●
Cooperatives provide education and training for
members, elected representatives, managers and
employees so they can contribute effectively to the
development of their cooperative. Members also
inform the general public about the nature and
benefits of cooperatives.

6. Cooperation among Cooperatives
●
Cooperatives serve their members most effectively
and strengthen the cooperative movement by
working together through local, national, regional
and international structures.

7. Concern for Community
●
While focusing on member needs, cooperatives
work for the sustainable development of
communities through policies and programs
accepted by the members.

Cooperatives today
●
1 billion people worldwide in cooperatives
●
300 largest co-ops have annual revenues of $1.6
trillion
●
130 million people in co-ops in the US
●
●

Types of cooperatives
●
Consumer cooperatives
– Co-op grocery
– REI
●
Financial cooperatives
– Credit union
●
Producer cooperatives
– Organic Valley, Land of
Lakes, Ocean Spray
●
Purchasing
cooperatives
– ACE Hardware
●
Housing cooperatives
●
Worker cooperatives
– Red Emma's!
●
Hybrid cooperatives

Worker cooperatives: political economy
In a standard capitalist
employment situation, a
worker receives a wage,
but the product of their
labor is worth more than
what they are paid. That
surplus is turned into
profit, and the owner of
the capital controls its
distribution.
●
In a worker cooperative,
the workers jointly own
and control the capital,
and they can decide how
to allocate any surplus
themselves in a
democratic fashion.
Strictly speaking, there is
no profit and no wages.

Worker cooperatives: examples
Mondragón:
Founded during the Franco years
by a Catholic priest and a handful
of workers, now a major complex
of cooperatives that acts at
multinational scale.

Emilia-Romagna:
Massive interconnected network of coops
in an area of Italy that was a few decades
ago one of the poorest, now one with the
least unemployment and highest average
standard of living. Multiple (Communist,
reformist, and Catholic!) co-op federations
building regional power, with support of
government policies encouraging
reinvestment in the co-op economy.

Argentina
Worker cooperative sector
exploded in the wake of
the 2001 financial crisis.

Isthmus Engineering
(Madison, WI)
Advanced industrial
automation, about 30
worker-owners.
●

Equal Exchange (MA)
About 100 worker
owners, dedicated to
providing a platform for
large scale truly fair trade
coffee sales in the US
●

Cooperative Home Care
Associates (NYC)
About 1000 worker-owners in a
company of 2000; women of color
(primarily) doing formerly
precarious domestic care work.
Institutionalized the gains of an
innovative SEIU organizing drive.
●

Evergreen (Cleveland, Ohio)
About 75 worker-owners in three
co-ops, designed to service stable
demand for goods & services
from large non-profits like
universities & hospitals, and to
create green jobs in underserved
communities.
●

WAGES (Bay Area)
A nonprofit incubator for
green housecleaning
cooperatives for
immigrant women.
●
●

Real Pickles (MA)
Company operating a 100%
solar-powered local organic
pickle factory crowdfunded a
conversion to a worker
cooperative to lock in its
social mission for the long
haul.
●

New Era Windows
After occupying their factory
twice, a portion of the UE
workers in Chicago decided
to go the worker cooperative
route, and successfully
bought out enough the old
company to restart
production cooperatively.
●

Cincinnati Union Coop Initiative
Multiple unions working together to create green
worker-owned jobs
●
●

Worker cooperatives: legal/financial
Cooperatives?
Some states have
provisions for cooperative
ownership structures,
these may or may not be
suited to worker
cooperatives.
In states like Maryland,
you have to fake it, by
using other business
structures and tweaking
them for use as the legal
basis of a cooperative.

Option #1: Corporation
Each cooperative member owns a share in the business; all shares are equally
valued and have equal voting power.
Advantages: Lower corporate income tax, separate corporate person which
can do things like own the assets of the company, possibility of using shares
to raise external (none-voting) equity
Issues: Corporations are required by law to have certain governing structures,
which may not be compatible with all models of workplace democracy.

Option #2: Limited Liability Company (LLC)
Each cooperative member is an equal partner in the business; an operating
agreement spells out cooperative rights and responsibilities.
Advantages: Much more flexibility to define a structure that reflects you actual
concrete commitment to workplace democracy.
Issues: All profit and ownership of property passes through to members at the
individual level, where it's taxed at a potentially higher rate.

Worker cooperatives: management
A default option,
especially for small,
politically motivated
cooperatives, is the
collective structure, where
management and
governance are both
maximally horizontal and
everyone does everything.

The collective model doesn't necessarily scale well:
●
In a collective of 5, there are just 10 person-to-person relationships
that need to work well for the project to function
●
In a collective of 10, there are 45
●
In a collective of 25, there are 300
●
In a collective of 50, there are 1,225
●
In a collective of 100, there are 4,950
●
….
●

Solution:
Separate management
from governance, with
management happening
collectively at a
departmental level, and
governance happening
through a representative
elected body.

One further complication related to scale is that while small collectively
managed teams work well for some kinds of work, they aren't
necessarily the best option for running an efficient business in certain
situations.
●
Sometimes tighter coordination is needed to match production to
sales demand
●
Sometimes cooperative members lack necessary business expertise
●
Sometimes the business has other priorities besides maximal internal
democracy (i.e. higher wages, more jobs created, or more ethical
products in the marketplace)

Solution:
Incorporate a more traditional
business structure, with a
board of directors governing
the project, possibly including
external advisors who aren't
worker-owners, and with that
board hiring management to
direct business operations.

Equal Exchange:
Very hierarchical and
traditional business
structure, but with
ultimate democratic
control of the company
located in the
worker-owners.

Worker cooperatives: challenges
Education
●
Need the general public to take coops seriously
●
Need more technical expertise and know-how
Capital Access
●
Starting sustainable businesses isn't cheap, but most sources of
business credit don't work easily for cooperatives
Policy
●
Need incentives for co-ops
●
Need public support for co-op infrastructure and development

More info....
●
Advocacy &
networking:
●
USFWC
●
NCBA
●
Legal:
●
SELC
●
UB CDC
●
Policy :
●
Democracy
Collaborative
●
BCWB
●
●
Other support:
●
Union Coops
●
Shift Change
●
Grit TV/Yes!
●
Financing:
●
The Working
World
●
NCDF
●
Technical
assistance:
●
DAWN &
DAWI

Worker Cooperative Intro

Recommended

Recommended

More Related Content

What's hot

What's hot (20)

Viewers also liked

Viewers also liked (8)

Similar to Worker Cooperative Intro

Similar to Worker Cooperative Intro (20)

Recently uploaded

Recently uploaded (20)

Worker Cooperative Intro