Worker Cooperatives Can Revitalize Our Economy

Tompkins Weekly 10/3/11
by Joe Marraffino and Gay Nicholson

Leaders in the sustainability movement believe that the most promising economic development strategy available may be a focus on economic justice. This would reduce poverty and increase tax revenues, strengthen democracy and the sense of a shared future, reduce the tax burden for social services, and increase support for investments in education and public infrastructure. All of these are part of a viable and sustainable local economy.

Worker cooperatives can be an important tool in this strategy. According to the Democracy Collaborative at the University of Maryland, cooperatives can create a green and just economy by building community wealth “in which ownership is broadly shared, locally rooted, and directed toward the common good. Worker cooperatives are businesses owned and democratically controlled by their workers. They have been organized since the dawn of the industrial revolution and have been successful in virtually every industry – from mining companies, to robotics firms, taxi drivers, health care providers, food processors, to creative and technology firms – anywhere where the workers and their community would benefit from having a stake in their workplace and the incentive of receiving an equitable share of the fruits of their labor.
While worker cooperatives have been a steady presence in modern history, they have surged during times of economic dislocation, and rapid cultural and technological change. During the massive movement of capital and jobs out of the upstate region in the 1970s and 1980s, a wave of efforts to create and save jobs through cooperatives and employee ownership rose up in Jamestown, Herkimer, Saratoga, the Mohawk Valley, Ithaca and elsewhere.

The wave was given technical assistance by the NYS School of Industrial and Labor Relations and supported by government loans. State workers, researchers and organizers in Central New York were considered authorities throughout the country, structuring buyouts and training workers. In the mid-1980s the New York State Legislature formalized their support by writing a new article into State Corporations law recognizing the benefits of the worker cooperative model.

Worker cooperatives can have profound social benefits in terms of job satisfaction and empowerment of citizens through the everyday practice of democratic participation. They have also been shown to have significant economic benefits, both at an individual and regional level. Participation in decision-making and an equitable share of profits increases worker productivity and creativity, and decreases the need for supervision. A broad base of employee ownership increases economic stability by increasing the incentive for firms and workers to stay in the region and via the multiplier effect of worker/resident’s local spending. Worker cooperatives also build and retain locally-rooted assets for workers who may have no other path to wealth creation or entry to the middle class.

In our current economic climate, worker cooperatives are increasingly being seen by governments, community groups, and workers as a valuable tactic to stabilize regional economies, create and retain local jobs, and create assets for residents, including those that may have no other path to enter the middle class. For example, Cooperative Home Care Associates, a NYC home health care business, has over 1,500 worker-owners and annual income of over $40 million. The cooperative has helped raise the base pay for the entire sector of workers in the region, and has created full-time work and career paths in an industry notorious for its instability and low pay. South of Rochester, one of the oldest worker cooperatives in the country, the 35-year-old, and $18 million per year food processor Once Again Nut Butter has grown and created jobs despite regional closures and layoffs.

The Finger Lakes and Southern Tier regions need a program to mobilize the creation of regional worker cooperatives. Worker cooperatives need technical assistance to get started. They need incubation services, connections with investments, and organizational development that is not available through existing business development agencies. This need exists in part because of the relative lack of familiarity that banks, attorneys, and workers have with the model, and also because of some unique aspects of the model itself.

Sustainable Tompkins is proposing a pilot project of an incubator and technical assistance center for worker coops. Let’s make sure that economic justice is at the heart of our economic development strategy. It’s good for business. Contact us at info@sustainabletompkins.org to learn more and get involved.

Joe Marraffino is a Cooperative Organizer with Democracy at Work Network
Gay Nicholson is President of Sustainable Tompkins