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Worker-Owned Cooperatives

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The Cooperative Development Center at RMFU is actively researching agricultural worker-owned-and-operative co-op structures. Learn more about what organizations, as well as their potential benefits in this article by Dr. George Chaney.

We knew this business—or corporate group—was different on our first day there for a six-month stay in 1994. Right after we entered the training center of this collection of worker co-ops with over 100,000 worker owners, my wife Sally and I were introduced to everyone who worked in that facility, including custodial staff, delivery persons, the cook and kitchen assistants. All of them, along with the administrative and technical staff, were on equal footing in terms of job security—and worker dignity–as members of the Otalora training co-op 

This was my introduction to worker cooperatives—through spending many months and later many more visits—reading histories, observing work and decision making, attending meetings, interviewing hundreds of people in their shops and offices in addition to on-the-street informal conversations. The Mondragon Cooperative Group, in the Basque Country, Spain, remains the largest single worker-owned corporation in the world, although it is a much larger network of cooperatives in the Emilia-Romagna region of northern Italy. Today we find worker cooperatives in well over 100 nations of the world.

Mondragon is worth mentioning here for another reason: The case has inspired the development of many other worker co-ops, including in the UK, Canada, and the US but also in Latin America, Asia, and Africa. Worker cooperatives can be found in a wide range of fields and industries, from bicycle and machine shops to accounting and marketing firms, to media enterprises and book shops, to food systems and health care, to engineering and technology.

Despite the great success of worker co-ops like Namaste Solar, in Boulder, Equal Exchange in Massachusetts and elsewhere, and Cooperative Home Care Associates in the Bronx, worker co-ops are an option for business start-ups and conversions hidden in plain sight. This is in part because of persistent stereotypes—especially that democracy can’t work for workers.

Worker cooperatives are not the only form of employee-owned business, of course, but they are distinctive in terms of the degree to which they privilege economic control and governance by worker-members. Employee-Stock Ownerships Plans (ESOPs) involve a certain percentage of equity (or the worth of the firm) to be held by employees and may also involve a strong system of employee participation.

Shared equity in practice means that worker-members make modest investments—as a stake– in the co-op which can be in the form of payroll deduction. Worker-members receive wages or a salary. Importantly, the wage differential is kept fairly narrow. This means, for example, that the highest paid member may not make more than “X” times the amount of the lowest paid member, in contrast with there being no limits in most conventional firms. Patronage dividends are accrued in the member’s account from a significant portion of profits. By statute, worker co-ops also reinvest designated amounts in the firm itself and devote a specified amount to community projects. Formulas vary, but these are the typical ways profits are utilized.

In a worker cooperative, the ultimate decision-making body is the committee of the whole, regardless of the size of a worker co-op. Of course, as we move from a small one to a larger one, then committees or councils become essential. The beauty of the Mondragon system in terms of structure is its dual or “bicameral” nature. Each co-op has both an elected president and a selected manager. Beyond that, though, there are committees that help to create checks and balances. This balanced model has been adapted by many other co-ops, even when they are small in size. In healthy co-ops, participation in any committees—whether standing (for key functions like finance, production, etc.) is high.

Worker co-ops are also known for their commitments to maintaining employment. The International Labour Organization (ILO) found that worker cooperatives were less likely to lay off worker-members in the global economic crisis that began in 2008 than their conventional business counterparts. One reason for this is that major decisions in a worker co-op are made by the entire collective, thus allowing all worker members to weigh in ideas such as voluntary sacrifices in pay or dividends for a year or two in the interest of preserving employment for everybody.

As with any new business, a worker co-op start-up needs to have a sound market and feasibility studies, effective leadership and other key skills represented in the founding workforce, sufficient capital for up-front costs and investments, and a realistic and motivating business plan. Worker cooperatives also place a huge emphasis on mission and core values. A vibrant system of communication, with the transparency sharing of key information, is also important.A major measure of success for a worker co-op is the development and maintenance of a thriving “ownership culture”—which means worker-members all take seriously their stake in the firm and this affects how they approach their jobs and daily activities.

The full extent of what an ownership culture can mean is captured well in the ten core principles of the Mondragon cooperatives:

Open Admission: Meaning no discrimination in hiring
Democratic Organization: One worker, one vote
Sovereignty of Labor: Worker-members are in charge
Participation in Management: Systems for information, consultation, and negotiation
Instrumental and Subordinate Nature of Capital: Jobs and dignified work are privileged
Wage Solidarity: Maintaining a narrow pay scale
Intercooperation: Or cooperation among cooperatives
Universality: In solidarity with other efforts at economic and workplace democracy
Social Transformation
Education: To promote cooperative principles 

While there isn’t space here to go into depth on these, it’s important to note how the commitments of the co-ops are both “internal”—to the employee-owners—and to the larger community. The commitment to education, then, goes far beyond supporting the further development of worker-owners, although it includes a comprehensive training program for all worker-members.

Effective worker co-ops integrate several types of training into their work experience. Technical training is assumed but obviously important. Financial training for all becomes important both for transparency and effective participation.  A critical piece is ongoing organizational training, especially in terms of values and decision making. In other words, many worker co-ops conduct training in the democratic process itself. Also, some worker co-ops stress the advantages of having everyone complete some kind of training in conflict management.

Today there are many opportunities to transition individual proprietorships or partnerships into co-ops. With the tidal wave of Baby Boomer retirements, many business owners are looking for ways to maintain their firms and the firms’ contributions to local communities. Converting to a worker co-op can help ensure continuity of employment and afford tax benefits as the owner sells her or his business to employees. Conversions are becoming much more common, such that employee-ownership centers in Vermont, Ohio, and Colorado (among other co-op development centers) now devote a great deal of their outreach and workshops to assist with retirement planning and co-op conversions.

The benefits of worker co-ops are summarized below in a list adapted from Co-op Cincy, a network of worker-owned co-ops in the Cincinnati area that also includes significant involvement by labor unions:

1. Fostering meaningful work in positive work climates.
2. Enhancing skills for worker-owners; cultivating leadership.
3. Providing reliable, professional services and products to clients/customers.
4. Building solidarity, both internally and with clients and partners.
5. Strengthening community and regional economic interdependence and joint asset building.
6. Responding to crises and pressing needs: social, economic, and environmental.
7. Being part of a larger eco-system of co-ops, socially inspired private enterprises and non-profits. 

A brief but vivid introduction to worker co-ops can be seen in the 12-minute documentary, “Arizmendi’s Secret”. A more in-depth account of Mondragon and numerous worker co-ops in the US can be found in the longer documentary “Shift Change”.

To learn more about worker cooperative start ups and conversions, you’ll find many resources from the US Federation of Worker Co-ops. For broader discussions and examples of employee ownership, consult National Center for Employee Ownership. If you’re interested in exploring worker and other cooperative possibilities in the states of Colorado, New Mexico, and Wyoming, please contact Rocky Mountain Farmers Union Cooperative Development Center at co-op.center@co-ops.org.

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Worker Cooperatives and The Mobile Farm and Food Workforce

In 2017, Rocky Mountain Farmers Union Cooperative Development Center, Veterans to Farmers, the Good Food Collective, and UpRoot Colorado partnered to pilot a mobile farm workforce project, designed to provide supplemental, on-demand, and efficient labor to Colorado producers.

Now in its fourth year, the Farm & Food Mobile Workforce pilot has provided Colorado producers with extra hands that have supported local producers by completing a variety of on-farm tasks, including the harvest of more than 750,000 pounds of market-ready product with a market value of more than $2 million.

Now, to decide what comes next, we need your help. If you’re interested in following along with the progress of this potential new cooperative, or if you’re interested in becoming a worker-owner of a client, please contact David Laskarzewski at dave@uprootcolorado.org.

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