Written by Kim Zeuli, ICIC
Above: Upholstery training underway at Wellspring Collaborative
Today, with the effects of a sluggish economy still being felt in cities across the U.S., especially in inner cities, many state and local governments are desperate to find the right mix of incentives to attract companies that bring much needed jobs to their region. But new jobs are also being created and filled by local workers in a unique business structure—worker-owned cooperatives. The popularity and success of these cooperatives suggest that city leaders need to consider alternative models to job creation.
What exactly is a worker-owned cooperative? This is an old business model that pre-dates the founding of our country, but it has gained increasing attention as a potential solution for persistent local unemployment. They are for profit businesses that are collectively owned and democratically managed by their employees. Each employee is a member and therefore owns a share of the company. This might sound like a typical, publically-traded company in which the shareholders are technically the “owners” of the company and receive a commensurate share of profits. But employees at worker-owned cooperatives receive a share of profits through higher wages as well as through the distribution of profits at the end of the year.
“By creating a worker cooperative, you are creating a company where every worker is as invested in the success of the company as the owners, because they are the owners,” says Alison Ewing, co-founder of BreadHive Bakery in Buffalo, New York. “You have better employee retention and dedication from the people working alongside of you.”
The U.S. Federation of Worker Cooperatives estimates that there are 300-400 worker-owned cooperatives that collectively employ 2,500-3,500 workers. But these numbers are increasing in part because of new organizations created to educate and train low-income residents to become worker-owners in various co-operatives models, across a range of industries. Some co-ops focus, for instance, solely on women. Others, only on a given industry like home healthcare or locally-produced food. The common theme through each of these co-op models is that lower-skilled residents are being retrained for better-paying jobs—jobs in which they have a vested interest and voice in operational and administrative decisions.
In the San Francisco Bay Area, one organization – Women’s Action to Gain Economic Security (WAGES) – uses an incubation model to prepare women for jobs in the eco-friendly cleaning industry. WAGES helps to identify candidates and then provides training for the founding members; from there, co-ops move into a 3-4 year incubation phase. At that stage, WAGES really works with business owners to create a solid business plan and marketing strategy so that once in full operation, the company will be sustainable. Since 1995, WAGES has launched five green cleaning cooperatives with almost 100 members, each of whom averages $15 per hour and has ownership in the business. Women came to WAGES with an average median income of $24,000; after ownership in the co-op, this increased to over $40,000.
Wellspring Collaborative, based out of Springfield, Massachusetts, is focused on the upholstery industry. The collaborative has a relationship with the Hampden County Sherriff’s Department, which has a program to train inmates in upholstery skills. Thus, once released from jail, they can move into long-term employment at the worker cooperative to hone skills and earn a living—thereby reducing the rates of recidivism. The upholstery skill-set is particularly of value in Springfield, a longtime immigrant community in which many of the older upholstery professionals are beginning to retire, providing job vacancies for many of Springfield’s more recent immigrants.
Even with the growth of cooperatives such as these, it requires significant community education and organizing in order to build a healthy, inclusive cooperative ecosystem. “The idea is to start planting seeds in the community about cooperatives, and why they’re actually a great way to pool assets,” says Nicole Marin Baena, co-director of the Austin-based Cooperation Texas.
Worker cooperatives can be tricky; setting up a new small businesses is a challenge in and of itself—but when you mix in the training of hard-to-hire residents and incorporate a democratic decision making structure, it becomes even more complex. Yet with the increasing diversity of practitioners and some highly successful cooperative models, there is an opportunity to replicate these models to create well-paying, meaningful jobs in inner cities across the country.
Read the What Works for Cities case study on WAGES
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