cooperative
What is a Worker Cooperative?
A Business Owned And Controlled by its workers
Worker cooperatives are values-driven businesses that put worker and community benefit at the core of their purpose. In contrast to traditional companies, worker members at worker cooperatives participate in the profits, oversight, and often management of the enterprise using democratic practices.
The two central characteristics of worker cooperatives are:
- Worker members own the business and they participate in its financial success on the basis of their labor contribution to the cooperative.
- Worker members have representation on and vote for the board of directors or governing body, adhering to the principle of one worker, one vote.
To be a worker cooperative, the entity must be one where:
- Business entity has one or more classes of members
- Workers have a path to ownership
- Earnings and losses are allocated on basis of patronage
- Worker members have controlling ownership interest
- Governing body is elected by worker members on basis of one member, one vote
- Decisions about return on capital investment are made by worker members or governing body
From Humble Beginning To Big Deams
The origins of cooperatives can be traced back to 19th century Europe, where they emerged as a response to the harsh conditions of the Industrial Revolution. Workers and consumers formed cooperatives to protect their interests, pooling resources to achieve common economic goals. These early cooperatives laid the foundation for the principles of shared ownership and democratic governance that define the cooperative model today.
In the United States, cooperatives have been particularly significant within African American communities. As detailed in Jessica Gordon-Nembhard’s “Collective Courage: A History of African American Cooperative Economic Thought and Practice,” Black cooperatives have a long-standing tradition of mutual aid and economic solidarity. From mutual aid societies and agricultural cooperatives to credit unions and worker-owned businesses, African Americans have used cooperative economics to combat economic disenfranchisement and build community wealth.
20th Century Developments
The 20th century saw the expansion of cooperatives across various sectors, including housing, agriculture, retail, and finance. During the Civil Rights Movement, cooperatives played a crucial role in advancing economic equality and civil rights. Organizations like the Federation of Southern Cooperatives worked to support Black farmers and promote economic development through cooperative models.
Worker Power On The Rise
Worker cooperatives are gaining serious momentum. They’re appearing in more and more industries, and there’s a growing network of support groups, lenders, advisors, and industry associations to help them thrive.
By the 2000s, worker cooperatives were being seen as a powerful tool for creating good jobs, especially for low- and moderate-income workers. This led to a rise in worker cooperatives in areas like home care and cleaning services.
The year 2004 saw the founding of the U.S. Federation of Worker Cooperatives (USFWC), a national organization that supports worker cooperatives across the country. They even launched the Democracy at Work Institute in 2013 to help even more communities discover the potential of worker cooperatives.
Worker Co-ops By The Numbers (US)
- Number of worker cooperatives: estimated between 900 and 1,000
- Total worker-owners: estimated between 8,000 and 10,000
- Median revenue: $298,016 per cooperative
- Median size: 6 worker-owners
- Largest co-op: Cooperative Home Care Associates (CHCA)
- Worker cooperatives started as regular businesses: 12%
- Average age of a worker cooperative: 5 years old
FURTHER READING
U.S. FEDERATION OF WORKER COOPERATIVES – What Is A Worker Cooperative?
NCBA CLUSA – 7 Cooperative Principles
DEMOCRACY AT WORK INSTITUTE – What Is a Worker Cooperative?
