Money

Don’t Start Just Any Kind of Business; Start a Worker Co-Op

Worker co-ops get employees invested in their company’s success—literally—and put an end to, “The boss makes a dollar, I make a dime.”
Katie Way
Brooklyn, US
February 22, 2021, 3:11pm
A group of people in a meeting pointing at an iPad.
Photo by PeopleImages via Getty Images
A fresh look at how young people are striking out and pursuing their independent ambitions.

The workplace is not where many people feel most powerful. Sure, if you’re the big boss of your restaurant, or candle store, or car dealership, or financial planning firm, or zoo, you might walk into work with a little swagger in your step, knowing you control the box of free donuts in the break room (Take One!) and whatever the “Q2 strategy” is. But most people aren’t the big boss, which means most people don’t get the kind of agency and decision-making power that makes work feel like an investment in and of itself. Instead, at the end of the day, it’s all just for a check (and health insurance, if you’re lucky). 

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Bleak, huh? Well, according to the fiercest advocates of worker cooperatives, it doesn’t have to be like this. A worker co-op is a business that is “100 percent owned by the people who work there,” said Mo Manklang, policy director of the U.S. Federation of Worker Cooperatives (USFWC). Manklang said that ownership confers every “worker owner” (the job title, versus “employee”) with an equal amount of stake in the company, plus the power to steer the direction of their workplace by participating in democratic decision-making processes.

“I tell people to think about wherever they work now and imagine if they got a say in things like, ‘What do we do when the workplace needs to go digital during COVID?’ and ‘How do we accommodate everyone’s needs during this time?’” she said. Worker-owners also help determine things like HR policy, workflow, and workplace structure. 

The democratic decision-making process doesn’t mean a workplace without managers; It means that managers aren’t the only ones who get a say. “It’s not like every single day, every single decision is something that has to go to a committee,” Niki Okuk, board member of community development non-profit Downtown Crenshaw, said. “You delegate things and you create systems and structures. It confuses people because they haven't had it. But we operate in super complex structures at work right now—we're just used to them.”

A small but mighty movement  

In 2011, Okuk founded a worker co-op called RCO Tires, a tire recycling business that created green-collar jobs and focused on hiring formerly incarcerated workers. (The co-op disbanded in early 2019 due to discrimination in the industry and difficulty recouping on operational costs.) She sees worker co-ops as an indispensable part of the equation. “We don't just want to invite outside corporate businesses in. We want businesses that are locally owned and locally operated, that create dignified jobs with decent pay,” she said.

Per a 2019 census by the USFWC, there are currently around 465 known worker co-ops operating in the U.S. employing an estimated 6,454 workers, although Manklang expects to see that number change as the group conducts its 2021 census. These co-ops are spread across the country, scattered across the rural U.S. along with hubs in the Bay Area, New York City, the Boston metropolitan area, and Madison, Wisconsin.

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The majority of worker owners are women and people of color, the kind of workers normally shut out from the roles that would grant them power in a traditional workplace. According to Manklang, because worker owners tend to be involved in other aspects of community organizing, their businesses are often more attuned to the needs of the communities they serve. “These kinds of cooperatives particularly serve communities of color, people that are lower income, and in industries that are typically more high risk, more frontline, with higher turnover in the workplace,” Manklang said. Those industries include food service, retail, homecare, administrative services, manufacturing, and childcare—and recently, media, thanks to a pair of worker-owned media companies: Defector and Discourse Blog.

Esther West, a cooperative development specialist at the University of Wisconsin Center for Cooperatives (UWCC), said that worker co-ops are the rarest kind of cooperative in the U.S. Agricultural cooperatives like Ocean Spray and consumer cooperatives like REI are more common. But West said just because they’re rare doesn’t mean they’re weak. “Worker co-ops offer an incredible opportunity to shift power in our economy, to democratize power,” she said. “They’re a tool to help communities address systemic discrimination and build up their own strong, internal systems.” 

The big pros of co-ops

How does being a worker owner pay off? In the literal sense: the average worker owner makes $19.67/hour, almost three times the federal minimum wage of $7.25/hour. On top of that, worker owners receive an average of $8,241 at the end of each year as a cut of their company’s surplus profit, known as “patronage.” 

Manklang said worker co-ops also do their part to smash the “boss makes a dollar, I make a dime” paradigm. “We talk a lot in this country about the disparity in big corporations between, say, what Jeff Bezos makes versus the average worker in an Amazon factory,” Manklang said. “The typical pay ratio between a CEO and a frontline worker is 303-to-1 right now. The vast majority of worker co-ops have maintained a 2-to-1 ratio between the highest-paid and lowest-paid worker owner.” 

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This wage security translates into sustainable workplaces and job stability—something that was critical during the COVID-19 pandemic. A report from USFWC on worker co-ops during COVID found they were more likely to reduce hours and institute furloughs for worker owners than outright fire them.

Before her time at UWCC, cooperative development specialist West spent five years as a worker owner at Equal Exchange, a fair trade food distributor that works with farmer cooperatives around the world to source foods like chocolate, coffee, nuts, and avocados. 

Shared principles among business partners were a priority for West and the other worker-owners at Equal Exchange. Because of that, they worked to organize the entire supply chain, from farmer cooperatives they bought their products from to the grocery cooperatives they sold to, around being consistent with those values. “If [customers] weren’t co-ops themselves, they were mission-based organizations like congregations,” West said. “Or just individual people who bond over a great cup of coffee.”

How it works 

”When it comes to making broad decisions about the core values of the organization, what direction it's moving in, and what principles cannot be compromised, then we're looking around the room and saying, ‘Well, geez, you guys are all the people that actually make this organization work. Maybe you should have a say in it,’” Okuk said. 

Each worker owner gets one vote, and they also have the ability to involve themselves further in running the business, through committees that dictate financial decisions, steer marketing campaigns, and business planning—experiences a typical worker wouldn’t get. “Worker owners have a deeper view and a lot more skin in the game, frankly, when it comes to the longevity and the success of the business because they're sharing in the profits, they're sharing in the making, and they're able to have that kind of voice,” Manklang said. 

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Manklang said the co-op model particularly paid off during COVID-19, because they already forefronted worker wellbeing. “Worker co-ops are already set up thinking about things like, how do we communicate with each other and how do we make decisions together?... Some workers have families with more needs right now, some workers are immunocompromised, and they were able to move forward and plan accordingly,” shifting schedules, reallocating shifts, temporarily altering wages, and making the transition to a digital workplace as needed.

Does all of this open communication translate into a lot of meetings? Sure—the worker owners we spoke to for this story reported spending anywhere between four and eight hours a week in meetings that deal with business operations. It’s a daunting chunk of time at face value, but it’s not like long meetings are a drastic departure from “normal.”

It also translates into compromise. Kate Khatib, one of the founding members of Red Emma’s, a bookstore, restaurant, and coffeehouse in Baltimore, Maryland, said serving the collective needs of a co-op means adjusting your vision according to the will of the group. “When you're a part of a worker-owned cooperative, your work is in the service of the greater whole,” Khatib said. “Yes, you have a say and no, you don't have a boss who's directly telling you what to do. But at the same time, you're working collectively with other people, so the path forward always has to be something that works for everyone.”

Co-op isn’t a synonym for “utopia” or “stress-free workplace”

According to Khatib, being a worker owner isn’t just about building something you care about—it’s still work, after all. “When I walk into Red Emma's, one of the first things I see is the giant sign on the wall that says: ‘This is a worker-owned business’ and has the names of all of the cooperative members,” she said. “That's a really important reminder for us that when we set foot in the building, anything that happens is our responsibility.” 

When something goes well, everyone gets credit, but when something goes wrong… “Say the roof leaks, and there was a flood. I can't call the manager and say, ‘Hey, there's something here that you have to deal with!’ I have to deal with it,” she said. “But I also know that the next person who comes in after me is also going to be responsible for dealing with it too. When we're using our creative skills to problem-solve and it works, it’s a tremendous experience. It’s irreplaceable.”

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In past workplaces, especially in the restaurant industry, Khatib said she felt confined to a lane—or shut out altogether, thanks to a lack of formal training. “I have no formal training in any of the things that I do as a business owner,” Khatib said. Matilde Cachiguango, founding member of community health worker co-op Roots4Change and Mariela Quesada Centeno, now working as a contractor for the organization, faced similar credential and experiential barriers due to the fact that they’re both immigrants: Cachiguango is from Ecuador and Quesada Centeno from Costa Rica. 

Luckily, the worker co-op environment encourages learning by doing. At Red Emma’s, a culinary or business degree isn’t a prerequisite for working in the kitchen or balancing the checkbooks. “Our business is really structured in a way that prioritizes creating jobs and building skills for workers who have been marginalized in our industry,” she said.

The flexibility of a worker co-op has allowed Khatib to build up a variety of skills over the years. “I have been able to learn how to do pretty high-level financial management, how to manage our books, how to do recipe development, how to do menu development, and all of that I've learned on the job just working with my co-workers.”

Starting a small business alone can be an additional challenge, even after spending time as a worker-owner. Applying for loans, building a business plan, drumming up seed funds, and navigating the commercial landscape are all tough, and all impossible to avoid. 

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As a developing worker co-op, the women who run Roots4Change frequently bump up against people who don’t understand their work or their structure. More than that, potential clients don’t always understand why they should pay for services like doula work, health education, and consultation on community health projects.

Cachiguango and Quesada Centeno said as a result of their outsider status, a lot of the daily work at Roots4Change involves education. They have to explain the worker co-op model to business partners in their field and to potential clients, who Quesada Centeno said often have trouble differentiating Roots4Change from a non-profit. In doing so, they learn more about what their business needs are, and the structures they need to build in order to become profitable.

“We’re the only co-op run by Latinas and indigenous women in our area,” Quesada Centeno said. “We need to know more about the struggles they face and the opportunities out there—right now, in Dane County, we’re a little bit isolated.

Since Khatib helped found Red Emma’s in 2003, she said worker owners have taken inspiration from its business model, branching out to start endeavors of their own—including four new worker co-ops. “All of those [new worker co-op] projects were founded by Red Emma’s worker owners who went out and said, ‘I want to start a coffee roasting business,’ and then Red Emma’s incubated it,” she said. “Over the years, we’ve used our extra energy and extra money to proliferate, rather than just continuing to grow our one cooperative into something giant.” 

Khatib’s fellow worker owners aren’t the only ones who’ve built success with their fellow co-op members. Cachiguango and Quesada Centeno sought out co-ops with similar structures, run by women with similar backgrounds, and finally connected with Latinx worker owners in Chicago. Now, Quesada Centeno said they’re shooting for bimonthly meetings where they can commiserate and collaborate across state lines.

Cachiguango and Quesada Centeno said the ability to navigate things like childcare and maternity leave as a group is an essential benefit—within the co-op structure, their needs are considered a priority and they’re able to work together to meet them. Then there’s the totemic power a co-op, and the ability to vote, holds: “For us to be able to set the rules and to able to be able to vote is also highly important, when for many of our families, the right vote is not given to them today in this country, thanks to discrimination,” Quesada Centeno said. “The kids on DACA, the Dreamers, this country is their country and they’re not able to vote. So, to be able to be in a co-op where you have that power is extremely symbolic.” 

Cachiguango said the freedom and agency she has as a part of her worker co-op is an empowerment that would be unattainable for someone like her at any other workplace in the U.S. While it may be an intangible benefit, to underplay the impact of that empowerment would be a total misunderstanding of what leads people, even people who work hard, to live happy, fulfilling lives. 

“I’m Latina, I’m indigenous, and in this co-op I can think like me,” Cachiguango said. “Not like the rules tell me to think. I have my value, and they let me fly.”

Follow Katie Way on Twitter.