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Catalyzing worker co-ops & the solidarity economy

A Call to Develop a Worker Cooperative Sector in New York City

How the City Can Create Jobs and Address Inequality at Its Roots

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February 13, 2014
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On Thursday, January 30, 2014, the Federation of Protestant Welfare Agencies (FPWA), a 90 year old nonprofit with the mission to “strengthen human service organizations and advocate for just public policies,” hosted a standing-room only conference entitled “Worker Cooperatives: Jobs for New York City’s Future.” The conference brought together leaders of New York City’s nascent worker cooperative movement to discuss how to grow the worker cooperative sector in NYC. The conference also celebrated the release of a report entitled Worker Cooperatives for New York City: A Vision for Addressing Income Inequality authored by FPWA’s Senior Policy Analyst, Noah Franklin, which is a blueprint for developing a strong worker co-op sector in NYC.

Worker cooperatives are democratic, worker-owned, worker-managed businesses. Worker co-ops have the potential to address many of the immoral and inefficient shortcomings of capitalist workplaces. In worker cooperatives, democratic worker-owners own and manage their own enterprises so they are highly motivated to create successful businesses in which the work is fulfilling, sustainable and meets the economic needs of both the worker-owners and their community. Jobs in worker co-ops are usually higher paying, more stable and have better benefits than comparable jobs in traditional businesses. Worker co-ops tend to be both good stewards of the environment and vested in their community. Moreover, though challenging, workers like to be their own boss.

Steven Greenhouse, the New York Times labor and workplace reporter and author of The Big Squeeze: Tough Times for American Workers opened the conference with an overview of the current precarious predicament of the U.S. working class. He stated, “There is a growing realization that something is seriously broken in the economy. Prosperity is not flowing to the nation’s workers.” Median household income in the U.S. has fallen 11% since 2000. Successful companies such Boeing and Caterpillar are not sharing their prosperity with workers. In fact, they are demanding concessions from workers under the threat of plant closings. The most common jobs in the U.S. are now service sector jobs at companies like Walmart and McDonalds. Service sector jobs tend to be poorly paid, part-time, and have no health or retirement benefits. In addition, a worker’s schedule and the number of hours she works often changes from week to week. Thus, for many service workers, both their family’s finances and schedule are unstable and unpredictable. In NYC, the gap between rich and poor is tremendous. According to recent Census data, the mean annual income of the bottom fifth of households is $8,993 and the highest fifth make on average $222,871 a year.

Conference participants described concrete examples of worker cooperatives creating stable, relatively high paying jobs with benefits in which workers control the implementation of work. Greenhouse described Cooperative Home Care Associates (CHCA), the largest worker cooperative in the U.S. located in the South Bronx. CHCA has over 2000 home healthcare workers, two-thirds of whom are worker-owners. CHCA home health workers have salaries 20% higher than the industry average, retirement benefits and health insurance. Moreover, the standard in the industry is to require workers to pay for their own training. CHCA provides a four week training course for free and guarantees certification and employment upon completion of the course.

Yadira Fragoso, of the Si Se Puede! (Yes We Can!) Women’s Cooperative, described how being a worker-owner of a worker cooperative transformed her life. Si Se Puede! is a “women-run, women-owned, eco-friendly housecleaning business” in Sunset Park, Brooklyn. Yadira stated that she had spent her working career going from one low wage job with no benefits to the next with no opportunity to advance. Since joining with her coworkers to create the Si Se Puede! business, Yadira’s hourly salary has gone from $10 to $25. She said that this has helped create an economic foundation for her family. Moreover, she described how being a worker-owner and entrepreneur has taught her new business and cooperative skills. She also noted the importance of the Si Se Puede! community in her life. The co-op is now in the process of developing environmentally friendly cleaning products.

The heart of the conference was a discussion about how to grow the worker cooperative sector in NYC. At present there are 22 worker cooperatives across NYC. Greenhouse mused, “If worker cooperatives are so great, why aren’t there more of them?” Panelist discussed four necessary components for growing the worker cooperative economy: increasing technical and legal expertise available to start-up co-ops, better access to capital to start and grow businesses, a legal framework that encourages co-op development and the development of a culture of support for democratic workplaces.

There are currently three worker co-op incubators in the NYC area: the Center for Family Life, Green Worker Cooperatives and The Working World. These organizations provide training and technical support to help workers organize and start new worker co-ops. Vanessa Bransburg of the Center for Family Life stated that the Center has helped organize four worker co-ops in Sunset Park, Brooklyn which have earned over $5,000,000, including Si Se Puede! The Center for Family Life, a neighborhood-based family and social services organization, started co-op development with the goal of partnering with the immigrant workers they serve to create stable quality jobs. Green Worker Cooperatives, located in the Bronx, not only provides technical support for worker co-ops but also runs a Co-op Academy, “a 16-week training and support program for teams of entrepreneurs seeking to establish worker-owned green businesses.”

Brandan Martin, founder of the The Working World, describes the organization as a “solidary financial organization.” The Working World has a revolving loan fund in which they provide start-up capital for new and expanding worker cooperatives. In addition, they provide technical support for the co-ops they work with. The Working World is currently assisting Si Se Puede! in their new product development. Perhaps, most famously, The Working World helped workers from the former Republic Windows and Doors, who captivated the nation in 2008 when they occupied their factory, convert their workplace into a new worker co-op, New Era Windows Cooperative.

Omar Freilla, founder of Green Worker Cooperative, stated that there is a need for more professional co-op developers to mentor new worker-owners on how to start and run their businesses. One possibility to meet this need is for co-op developers to start their own businesses to cater to worker co-ops. However, the co-op sector is currently not big enough to sustain cooperative business developers in their own businesses. Consequently, financial support from the nonprofit and government sectors is needed to expand the availability of worker co-op technical and legal support.

Two nonprofit organizations provide legal support for worker co-ops in NYC, the Urban Justice Center and the Community & Economic Development Clinic at CUNY School of Law. These institutions work with legal partners in the community to provide pro-bono (free) legal services for start-up co-ops. Developing sustainable, full-time co-op incubators is a priority for building a worker co-op sector.

Co-ops need access to capital to start and maintain business. Banks and other financial institutions such as insurance companies are reluctant to do business with worker co-ops. Linda Levy, CEO of the Lower East Side People’s Federal Credit Union (LESPFCU) explained that credit unions are financial co-operatives and have a natural inclination to lend to worker co-ops. However, current regulations make lending to work co-ops difficult. She stated the regulator of the LESPFCU is reluctant to approve loans to worker co-ops because in worker co-ops there is not one specific person who is responsible for the loan. The Workers World has created a unique revolving credit line for worker co-ops, however, they are limited in their ability to pay interest to depositors. The co-op sector needs banking institutions, such as credit unions, with the mission of lending to worker co-ops.

At the conference, the excitement about the potential of a cooperative sector was palpable. In a previous interview with Grassroots Economic Organizing Newsletter, The Working World’s Brendan Martin and Ethan Earle stated that what is needed is the development of “a culture of belief” in worker cooperatives. The co-op development pioneers at the conference are building the institutional infrastructure and planting the seeds of a democratic work movement. As co-op successes multiply, more people will want to replicate those successes in their own new worker-owned businesses. The co-op developers’ shared dream is at some point the process of co-op development can become dynamic and self-expanding. This is not a pipe dream. There are examples of vibrant worker co-op sectors in Basque Regions of Spain (Mondragon Corporation), Bologna, Italy (Legacoop) and Quebec, Canada (Canadian Work Co-op Federation).

How do we get to this take-off point? In the FPWA Report on Worker Co-ops, Noah Franklin discusses the importance of the continued development of worker cooperative and solidary economy associations such as NYC Network of Worker Cooperatives and Solidary NYC. However, these grassroots organizations are volunteer-lead and do not have the financial resources to jump start co-op development.

Franklin calls on the governments of New York City and New York State to play a proactive role in worker co-op finance and development. Franklin made specific recommendations. First, he points out that agencies such as the New York City Economic Development Corporation and the Department of Small Business Services already aid traditional businesses. He argues that that the mission of these agencies should include growing the worker co-op sector. Second, New York City and State Governments could directly fund co-op incubators. Franklin points out that much of the success of the worker co-op sector in Quebec is attributable to government funding of co-op technical support. Third, the government could provide grants and low interest financing for worker co-ops. Fourth, New York City already provides funds for workforce development. In this context, some work force development programs could be turned into co-op incubators, helping the unemployed form worker co-ops. Fifth, Franklin notes “The city could make worker co-ops into a preferred contractor of city agencies.” Thus, city contracts could provide a base of demand with which a co-op could grow a business. This is a common model in corporate world. For example, steady military contracts enabled the civilian airplane business to get off the ground. Sixth, the state and city can also change laws to facilitate the growth of a cooperative financial industry which can cater worker co-ops. Seventh, government should also fund training for the legal and business community to work with worker co-ops. Finally, government can promote the worker co-op model through promotional activities such as Worker Co-op Week.

We are living in a time of grotesque inequality and environment degradation. However, real examples of a “better world” exist. One of those, democratic worker co-ops, is an important puzzle piece in creating a more just and sustainable society. The worker co-op pioneers at the FPWA conference have laid out a next-step to-do list for growing workplace democracy in NYC and the U.S. Now, we need to organize to realize these goals.

John W. Lawrence is a psychology professor at the College of Staten Island, City University of New York. He is a member of the editorial collective of Grassroots Economic Organizing (GEO) Newsletter. There are many articles on worker cooperatives at the GEO website.

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