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Catalyzing worker co-ops & the solidarity economy

A Very Funny Co-op Bill in California

May 26, 2021
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(The views expressed here are my own, and do not represent an official stance of GEO. Complaints, concerns, and general ire about what you are about to read should be directed to josh[at]geo[dot]coop. Thank you.)


This last fall, voters in California voted to allow Uber, Lyft, DoorDash and other platform companies to continue (mis)classifying their employees as independent contractors. This was a major set back not only for the workers on these platforms, but also for the unions who would like to represent these workers, as federal law prohibits independent contractors from bargaining for a traditional labor contract. Now the unions (or at least one of them) are trying a different tactic, this time one involving “worker co-ops.”

On its face, Assembly Bill 1319 is a very strange creature. The bill would create a “Federation of California Worker Cooperatives” that would not operate like any other co-op federation I have ever heard of. The member co-ops of this state-created federation would not be allowed to determine their own policies for hiring, firing, compensation, or any other fundamental business decision. These policies would all be set by the federation, and would be implemented in the individual co-ops by management employed by - and answerable to - the federation. Member co-ops would not be allowed to select or hire their own management.

Sounds bizarre, right? The second cooperative principle requires that “members control their business by deciding how it’s run and who leads it,” while principle four states that cooperatives must maintain their “autonomy and independence.” How can either of those things hold if worker-owners are prohibited from hiring their own managers, or determining the most basic aspects of their business? The short answer is that they can’t. AB 1319 would, so far as I can tell, create co-ops that are not actually co-ops.

Of course, no existing worker co-op would ever agree to become a member of such a federation. How could they? What worker-owners would agree turn over their decision making to the three person board of a statewide federation? But AB 1319 - despite it’s pretensions to creating a federation for California worker co-ops - is not actually geared towards any of the currently existing worker co-ops, and it seems doubtful that the bill’s authors (mainly the SEIU, from what I can tell) expect any of them to join. Instead, this federation’s member co-ops are intended to be “cooperative labor contractors” (CLCs). These CLCs would be composed of platform workers and would negotiate with platform companies on their behalf...or rather, the federation of CLCs would negotiate on their behalf, as member CLCs would be prohibited from setting their own policies.

I have a number of problems with this proposal. The first is the one I’ve already mentioned: a “worker co-op” wherein the members do not control the the conditions of their labor, or the policies of their enterprise cannot rightfully be called a worker co-op.

A second point of contention is that, if enacted, this bill would seem to cement the existing investor-owned platforms in place, providing them with a veneer of legitimacy, rather than seeking to replace them with worker-owned platforms. As a courier for Caviar put it in a report on gig-worker reactions to the bill, “Why not just have the workers own the actual platform?” Why not, indeed? Furthermore, if successful, this CLC system would make the creation of platform co-ops (and taxi co-ops and the like) even more difficult than it is now, by placing workers seeking to create their own co-op platforms in direct competition with the CLCs and their investor-owned clients.

Thirdly, the system contemplated by AB 1319 would remove liability for paying wages from the platform companies and instead place it on the CLCs and the federation. The question this raises for me is why the responsibility for paying wages should be moved from the platforms, who are the actual employers, and placed instead on worker-owned businesses? Why take on a legal obligation that rightfully belongs to the platforms? The answer would appear to be so that CLCs can use this release of liability as a bargaining chip in attempting to obtain other concessions from the platforms. This seems like a large and risky obligation for workers to take on, without any up-front guarantee of receiving off-setting benefits.

Fourthly, there is the issue that practically no one ever talks about in discussions of Uber and their ilk: that they are not profitable businesses and have no reasonable plan for becoming such. Uber has lost billions of dollars every year since its founding. DoorDash lost $149 million in the first nine months of 2020, despite a pandemic that saw the market for its services greatly expand. Instacart finally managed to turn its first profit during 2020, netting around $50 million...but that came after losing $300 million the year previously. If only we have 6 more years of pandemic, they may be able to make up their loses of 2019! As for all the previous years’ losses, well…

All of these businesses have been dependent on endless amounts of investor cash (i.e. dumb money) and media hype (i.e. dumb journalism) to maintain themselves as long as they have. None of them has presented any reasonable way to become profitable that stands up to the least bit of critical scrutiny. To put it bluntly, these are not the companies that workers should be hitching their hopes to. It’s only a matter of time before even the dumbest of the dumb money figures out that you can’t make a loss on every transaction and somehow make it up on volume.

Finally, I’ll add what is perhaps my biggest critique of AB 1319, "The Cooperative Economy Act": it appears to have been drawn up by people who are not themselves cooperators. While the SELC, DAWI, Project Equity, and A Slice of New York were apparently brought in to provide feedback after the bill had already been drafted, it does appear that the bill was conceived of and written by people outside of the cooperative movement. Being asked for feedback after the fact is far different from being involved in the genesis of a policy; and as the saying goes, “nothing about us, without us, is for us.” This bill, well intended though it may be, is not by cooperatives, and not for cooperatives, at least in my humble opinion. It uses our name, while discarding our values, and that’s not something I think our movement should support. If the SEIU, is serious about working in solidarity with the cooperative movement, and wants to advocate for government policies that affect co-ops, they need to involve us from the beginning, and on a much broader scale than they have here.

Believe it or not, I have other critiques of this bill as well (an initial board appointed by the Governor, a strange dual-employment status for worker-owners), but I’ll leave those for later. For now, I just hope that this post can serve as a jumping-off point for further conversations about this piece of legislation and others like it that I think we’re likely to see in the future. You may not agree with my take on this. You may think I’m confused, or overly critical, or failing to show adequate support for the SEIU. That’s all fine by me, just so long as we actually have a conversation about it – because failing to talk openly about these issues will not serve us or anybody else in the long term, even if the discussion results in some short-term discomfort.




is this to allow groups such as Obran and Phoenix Main Street to operate in CA with a co-op designation? Both of these models have an idea of the workers (they use the term employees) to be members of the holding company which means that they can move around between the various companies. I agree with your analysis and I think that certain sectors drive to "scale up" is misguided as there is already a proven way to achieve scale without diminishing worker power in the workplace.

Nathan Schneider

A confession: I tend to give the benefit of the doubt to creative rethinkings of the cooperative model, because I think we need them. The current forms aren't working at the level we need them to—not even close. Of course, when we explore new avenues to cooperative power and scale, we should always be asking, "Is this building or reducing members' power?" I also have written some about this proposal, so I have a slight incentive to see it succeed, although I have a bigger desire to see the radical core of the cooperative movement succeed. To do that, I think we need ambitious policy strategies like this, and I would like to see us focus on improving such proposals rather than torpedoing them or dismissing them as "funny."

First, the workers do have control here. It is just somewhat indirect, but workers are still essentially electing the board of the organization. This is similar to other large co-ops that have multiple lines of operation under the control of a single board. A bit of restructuring the nomenclature would be helpful. I agree with @Anonymous that this is actually quite similar to the Obran/Main Street Phoenix models—the idea of worker control being at the level of the umbrella organization, not at the level of the individual business. I think one proposal for improving this legislation could be to simply call the federation the co-op, and then have the individual lines of business operate as wholly owned subsidiaries. That seems to better reflect the reality.

Second, I don't think this necessarily cements the incumbent platforms. In fact, I think it could facilitate the development of cooperative competitors. One of the major barriers to standing up an alternative labor platform is building a base of workers. But if workers were already gathered through a cooperative structure, it would simply be a matter of startups going to that co-op and paying accordingly. It could lower barriers much as cloud computing has eased the costs of scaling for startups from a technical perspective. This could facilitate the transition between the failing VC-backed model of gig platforms and a sustainable co-op model like the ones being pioneered by Eva, Drivers Co-op, and

Finally, on the "biggest critique": Unions are in the lead here, yes. But for years, many of us have been involved in trying to get them to do just that, encouraging new models for union/co-op collaboration. And the main person behind this initiative, Ra Criscitiello, has been involved in the platform co-op movement since she spoke at the first platform co-op conference (which I co-organized) and had a piece in our book, "Ours to Hack and to Own." Also involved has been Upside Down Consulting, the practice of Camille Kerr, a highly respected (rightly so) worker co-op developer. This is not a foreign intrusion. Not that current cooperators should have a monopoly of access to the co-op model anyway.

I agree with the need for a conversation on this, but it's a conversation that I think should begin from a posture of constructive critique, not dismissive ridicule.

Nathan Schneider

Addendum/correction: I just saw an email from a bit ago from Criscitiello indicating that the proposal is really not aimed at drivers and delivery workers, who are part of the Prop 22 exemption, but other kinds of workers who are still covered under AB5.

In reply to by Nathan Schneider

Josh Davis

Now I'm even more confused. Why are they forming co-ops if they are classified as employees (if I understand what AB5 did correctly)? The paper by the SEIU-UHW and UC Labor Center mentions "the Cooperative Economy" act by name, and focuses specifically on Uber, Doordash and Instacart workers.

Christopher Preciado

If the names of all the de facto authors of the bill are public, where are they? Who are they?

Lloyd Kinder

I only read the first few sentences and got the impression it's a scheme by the exploitive class, possibly trying to pre-emptively sabotage any real potential for worker cooperatives to gain significant widespread success.

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