Why Workers are Embracing the Co-op Movement
Let’s face it: while corporate CEOs and big banks might be enjoying the state of the economy, millions of working people are still struggling—and will likely be doing so for quite some time.
This is one of the many reasons a recent trend has emerged of workers embracing the cooperative movement. While the traditional economic system and government institutions are failing workers, people are realizing that their only true path towards stability and empowerment will come from working together. I’ve seen this first-hand as a member of the Toolbox for Education and Social Action (TESA), a worker-owned cooperative. We’ve facilitated hundreds of co-op workshops around the country, and taught thousands with our fun and engaging resources – including Co-opoly: The Game of Cooperatives. What we’ve taken away from these experiences is that people are hungry for a new way of working. They want a new economy, one that’s not based on exploitation and cycles of boom and bust.
The Co-operative Solution
Cooperatives are businesses that are democratically owned and run by a specific group of people, called the membership. This membership can be made up by workers, or by producers, or by consumers, and so on. Each member, or owner, has only one share and one vote in the co-op. This ensures its democratic structure. During the good times, these members share the benefits of the co-op equally. In contrast, during the hard times, they share the burdens equitably. This might mean that rather than laying any one person off, workers in a worker co-op decide together to temporarily cut wages. In such cases, the workers have decided how to address the solution and don’t allow any one group to take the brunt of the hardship.
Below are a few examples of how worker co-ops are making a difference on the small and big scale.
Madison, WI: Cab Drivers Steer Their Own Business
The cab industry can be one of the most abusive and exploitative industries in the country. But that’s not the case in Madison, WI. Union Cab is a worker-owned co-op. It was born out of a series of strikes against terrible labor conditions in the 1970s, and it now employs—and is equally owned by—over 200 people. Every permanent worker, from the dispatchers to the drivers, is an equal owner, with only one share and one vote. In most cab companies, drivers are considered independent contractors and they rent out the car from the business. At the end of the day, they can actually end up owing the company money if they don’t make enough fare. At Union Cab, though, the workers own the company and its assets together, including the cars, and this means they are a part of the decision-making process in the company. As a result, the workers determine how they are compensated fairly.
“Union Cab is one of the only, if not the only, cab companies in the US to provide drivers with health insurance and we subsidize the premium as well,” says John McNamara, Union Cab’s Business Manager. “While the industry is known for poverty wages, many of our members not only own homes, but have been able to help put their kids through college. Our 95% retention rate is proof of our ability to offer a decent job in an industry known for being anti-worker.”
And this is the cooperative difference in action.
West Bridgewater, Massachusetts: The Sweet Taste of Workplace Democracy
Equal Exchange is a worker co-op that distributes Fair Trade goods from around the world, including coffee, chocolate, and bananas. A multi-million dollar company, the co-op is comprised of nearly 100 people, and it’s been growing steadily for years. In any other business, workers would have to fight to get a share of the fruits of their labor while CEOs and absentee stock-owners would get rich from the company’s success.
At Equal Exchange, it’s different. As the workers are all equal owners, they share equitably in the money the co-op owns. This money is put into better wages, improved benefits, and an equitable form of patronage dividend/profit sharing for the workers. And why not? They’re the ones who made the money for the company through moving the products in the warehouse to getting their products in stores.
“Thanks to Equal Exchange’s worker co-op model more of our success—be it financial, social, emotional—flows back to the workers than would happen otherwise, and through the employees’ control, we can make sure that this doesn’t change,” says Rodney North, an Equal Exchange worker-owner and their ‘Answer Man.’ “Financially we can ensure that our own compensation is adequate, egalitarian, and yet in line with our Fair Trade mission to serve farmers. And more abstractly, but importantly, we benefit tremendously from our direct involvement in operating and governing our own business – and doing that together.”
One way that this has been realized is the rule that Equal Exchange’s highest paid employee cannot earn more than four times what their lowest paid employee makes. This pay equity model ensures that all members are kept on a democratic level, despite the fact that some people might work in traditionally undervalued roles (like in the warehouse) or are newer to the organization.
Co-ops: Not Just a Small Scale Solution
One of the most common immediate reactions we hear about cooperatives is that they sound great, but that they wouldn’t work on a very large scale. However, from India to Spain, from Italy to Argentina, there is proof that large co-op systems can exist and change the economy of entire communities and regions.
The Mondragon worker co-op system, based in the Basque region of Spain, is a primary example that co-ops can offer everyday benefits to ordinary people as well as create systematic changes. Mondragon is a co-op network that today includes around 200 worker co-ops and nearly 100,000 worker-owners. Founded in the 1950s, Mondragon helped lift an economically depressed area of Spain out of poverty—and continues to do so today. What’s more is that in Italy, the Emilia-Romagna region has an extremely vibrant cooperative movement, comprised of all kinds of co-ops, and the lowest unemployment rate of the entire country. This is not a coincidence.
These are powerful examples of how cooperatives can fundamentally change our communities, economy, and society – and that’s why workers are increasingly turning to the cooperative movement for solutions.