From the iVLG blog:
Today’s post is going to digress from discussing the standard business model and introduce you to a different form of running a business: the worker cooperative. These organizations come in a variety of shapes and sizes. Below you’ll learn what a worker cooperative is, their existence in the US, how they are different than conventional businesses, and the benefits of this form of business.
What is a Worker Cooperative?
A worker cooperative is an organization that is owned and managed by its worker-owners. There are two important characteristics of worker cooperatives: the workers invest in and own the business, and the decision-making is democratic, generally adhering to the principle of “one worker-one vote” since all shares of the cooperative are held by the workers, each owning one voting share.
To become an owner, the workers usually invest with a buy-in amount of money when they begin working for the cooperative. At the end of each year, the worker-owners are paid their portion of money the business makes after expenses. In most businesses this is considered profit, in cooperatives it is called surplus. Generally the surplus is distributed according to hours worked, seniority, or other criteria.
Are There Worker Cooperatives in the US?
Historically, cooperatives have a stronger and, in many cases, more developed presence in foreign countries, specifically Italy and Spain. Researchers and practitioners at the United States Federation of Worker Cooperatives (USFWC) conservatively estimate that there are over 300 worker cooperatives (or democratic workplaces) in the US, employing over 3,500 workers and generating around $400 million in annual revenues.
The greatest concentration of worker-owned businesses is in the Northeast, the West Coast and the Upper Midwest. The vast majority of these worker cooperatives are small businesses, although there are some notable larger cooperatives. Cooperatives range across a variety of industries in the US, including retail and service sectors, and manufacturing and the skilled trades. Historically, there has been a strong existence of cooperatives in the natural foods industry. More recently, there has been an increase of worker cooperatives in the technology sector and home health care.
At this point, the USFWC is the only organization in the US that represents worker cooperatives on a national scale. In addition to the USFWC protecting cooperative interests nationally, there are also local networks and federations scattered throughout the San Francisco Bay area, Minnesota, Wisconsin, Oregon, the Boston area, and in western Massachusetts and southern Vermont. The University of Wisconsin released a study about the economic impact of the entire cooperative sector. You can access the study here.