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Case Study

What Works: Using A Cooperative Model to Increase Latina Wages

Objective: To highlight how a series of worker-owned cooperatives, all coordinated through a central nonprofit agency, is helping to train low-income, immigrant women for well-paying job opportunities in the Oakland area.

Major Participants: Mission Economic Development Agency, Mujeres Unidas y Activias, Rainbow Grocery, Arizmendi Association of Cooperatives, Sustainable Economies Law Center, U.S. Federation of Worker Cooperatives, Cutting Edge Capita, La Cocina; funders include FHL Bank San Francisco, Tipping Point Community, Wells Fargo, Chevron, and the May and Stanley Smith Charitable Trust

Background: In the San Francisco Bay Area, roughly 37% of Latino households are barely able to meet their basic needs. Many are poor even though they work—typically for low pay and often in hazardous conditions. Two women, both social workers, came together in 1994 (officially incorporated in 1995) to form Prospera (formally known as Women’s Action to Gain Economic Security or WAGES). Both of the founders had some background working with immigrant Latina women, and a common trend emerged: across groups, the women all sought economic stability.

Initially, Prospera worked with one English-speaking and two Spanish-speaking groups. Of the three groups, only the two Spanish-speaking decided to move forward with founding a co-op. The first group formed a nontoxic housecleaning co-op, and the second a party store. The party store opened in Redwood City but lasted only 18 months before closing its doors. Meanwhile, the cleaning company emerged as a viable co-op. This set the direction for the Prospera model.  Now, Prospera supports five eco-friendly cleaning cooperatives in the Oakland area.

How it Works: Prospera offers a variety of services, from formation of cooperatives to ongoing support after the co-ops become financially independent. At the outset, Prospera helps to identify a group of women interested in joining a new co-op. Prospera then provides training for the founding members and helps with the legal formation of the co-op. From there, co-ops move into a 3-4 year incubation phase. At this time, Prospera provides technical assistance, particularly around business development and access to capital. Prospera provides three weeks of vocational training for co-op members, ranging from skill-building to customer service before women can become members. Ongoing management education includes marketing and quality control. Prospera also teaches life skills, such as vocational ESL, computer programs and financial literacy to ensure that members are able to excel once in their new careers.

There is a $400 membership fee to join the co-op, of which $150 must be paid up front. The other $250 is paid over a six-month period through payroll deduction. There are training stipends available to women who can put this money towards the initial payment. Membership is granted on a 6-month provisional basis before securing full membership, which includes voting rights, an increase in hourly pay and access to benefits like health insurance.

Once co-ops reach maturity, they spin out of the incubation phase and become an independent worker-owned cooperative. Prospera continues to provide technical assistance and management training, such as assistance with product purchasing and creating economies of scale. Through the Prospera network, co-ops are able to learn from and support one another, all of which operate in the eco-friendly cleaning industry.

Results for the Local Economy: Since the first co-op was founded, Prospera has helped to create more than 95 jobs across five co-ops that serve more than 2,000 Bay Area households. In 2013, these co-ops had a combined total of $3.3 million in revenue.

  • Emma’s Eco-Clean, the first of the Prospera cooperatives, was founded in 1999 and has generated more than $6 million in sales. Located in Redwood City, Emma’s provides its 30 member-owners with averages wages of $15/hour plus health, dental, and vacation benefits.
  • Eco-Care Professional Housecleaning was established in 2001 and has since generated over $2.5 million in sales. Its 15 member-owners earn an average of $13/hour plus benefits.
  • Natural Home Cleaning Professional (NHC) was launched in 2003 and now has 36 worker-owners. At this certified “green business,” members earn an average of $14/hour. NHC is considered the most successful of the co-ops to date, generating $1.3 million in 2010 alone.
  • In 2009, Home Green Homes teamed up with natural products company Seventh Generation, and now has 10 members.
  • Green & Clean (formerly Natural Home Cleaning Contra Costa) opened in August 2011 and just recently moved out of its incubation phase. Green & Clean has four members already.

Beyond sheer job growth, Prospera is focused on job quality. The jobs created through the co-op model offer healthy work environments, good pay, a voice and vote in key decisions, and equitable share of profits. Women came to Prospera with an average median income of $24,000; after owning the co-op their median income has increased to over $40,000. Soon, Prospera will be moving into another industry (food!) and hopes to launch its sixth co-op in the very near future.

Remaining Challenges: Since the outset, Prospera has had to balance the very real business imperatives with its social mission of training and employing lower-income residents. On the one hand, there’s the natural desire to invest heavily in the capacity building of members, and to make sure that members have the support needed to be successful co-owners of the business. This requires extensive coaching. On the other hand, Prospera is trying to launch successful businesses. Business owners have demanding schedules and must meet specific revenue targets in order to become profitable.

This enduring challenge has led Prospera to pilot a new model in its upcoming food co-op. Rather than having one general manager who makes decisions on behalf of the members in order to develop the business and increase sales, the position has been split into two key roles: a business developer and a co-op developer. This should help achieve greater balance in building the business and building the capacity of the members to successfully run a cooperative in parallel.

Lessons Learned:  It can take a long time for cooperatives to become viable businesses and the predevelopment stage should not be rushed. In the early days, Prospera had a top-down model whereby a group was preselected and moved swiftly to launch. In the case of the party retail supply store, Prospera left out critical steps around conducting market research and business planning. As a result, the co-op failed within 18 months. Now, Prospera spends significant time with co-ops during the predevelopment stage in order to assess market feasibility and create a solid foundation for the business.

At the same time, it has been critical to clearly define the relationship between Prospera and the co-ops, and establish how each will take on various roles and responsibilities. This helps to limit friction and ensure that when the cooperatives move out of the predevelopment stage, they are able to successfully stand on their own.

Learn more about Prospera.

 

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