The State of the U.S. Worker Cooperative Movement

By Abby Scher, Research|Action member.

In mid-October, we got a preview of Democracy at Work’s (DAWI) latest census of worker cooperatives and democratic workplaces (think collectively run nonprofits) at the U.S. Federation of Worker Cooperative’s annual meeting in Baltimore. There were 414 of these workplaces in the United States in 2018, reported Tim Palmer, DAWI’s outgoing research director, with another 50 in Puerto Rico, an island hugely motivated to cooperate following the devastation of Hurricane Maria in 2017.

Drawing on a survey with 106 respondents, Palmer found an average hourly wage of $19.67 – kind of underwhelming – but also a surprising proportion of cooperatives distributing “patronage” payments at the end of the year. One third did, with the average payment about $8,241. The membership is heavily female (62%) and heavily Latinx (37%), no doubt due to the huge impact of Cooperative Home Care Associates in the Bronx, the nation’s largest worker cooperative with 2,200 workers (not all owners).

And that gets me to a number I didn’t catch in his presentation, which is the miserable number of total worker cooperators in the country, which is probably still hovering around 6,700 workers.

This is a tiny movement that Research|Action is part of. At least, we are part of the tiny worker cooperative wing of the cooperative movement, since credit unions and producer cooperatives seem to be operating at scale. Why this is the case was sprinkled throughout the topics of some of the sessions at the Eastern Conference for Workplace Democracy, where USFWC’s annual meeting was held. Two sessions dealt with conflict resolution. Another was on “preventing burnout and power dynamics in worker cooperatives.” Then there were the sessions on accessing loans and capital, a common logjam. I chatted with one Bronx cooperator who said if she were to do it over again, she would have gone on a tight savings plan with her future partners and have $10,000 in the bank each before launching their business.  Shouldering the worry of maintaining a business in capitalism is not easy.

People are hoping our movement will get less tiny since last year’s bipartisan Main Street Employee Ownership Act directed the U.S. Small Business Administration (SBA) to update its guidelines so that its loan program no longer discriminates against employee-owned businesses. Business conversions to cooperatives in particular could be helped, hugely motivating for Congress with the “silver tsunami” of retirements coming our country’s way: the law provides for faster disbursement of loans financing the conversion of traditional companies to employee ownership. That is, if we learn to talk the language of retiring business owners, who are interested in money, not social experiments in cooperation, as Matthew Cropp of the Vermont Employee Ownership Center and Rob Brown of Cooperative Development Institute explained. The business owners are trying to fund their retirements after all.

The SBA guidelines shape lending throughout the financial system, so updating them could be a big help in tackling the financing and cash flow drought worker cooperatives face. But while SBA offices in New York State, for instance, have jumped on board to implement the act, word is that other SBAs are dragging their feet, requiring more lobbying. Kate LaTour, government relations manager of the National Cooperative Business Association, told the group that we’ve got to keep working, “hiking the hill,” talking to legislators, and inviting them to join the bipartisan cooperative business caucus to show support and do any other action needed for this law to really take hold.

If it does take hold, we still need to consider the other dynamics limiting the scale of the movement, and what they might mean.

(photo from DAWI)