Worker cooperatives are businesses that are owned and democratically governed by their employees. They operate in numerous industries, including childcare, commercial and residential cleaning, food service, healthcare, technology, consumer retail and services, manufacturing, wholesaling and many others. Some 300 worker co-ops throughout the U.S. provide their employees with both jobs and ownership—allowing them to directly benefit from the financial success of the business. Employee Stock Ownership Plans (ESOPs) are a more common form of worker ownership in manufacture, although they often lack the democracy inherent to co-ops.
Like other cooperatives, the board of directors for a worker co-op is elected by, and from within, its membership-in this case, the workers. The board is always majority controlled by the workers, though some worker co-ops have outside directors and advisors serving on their boards.
Management structures of worker co-ops vary greatly, depending on the desires of the members. Some worker co-ops use a traditional management hierarchy, while others use more flat management systems – often called collectives – that allow employees to be more directly involved in management decisions. Others use a team-based system that employs elements of both traditional and open management systems. Many worker cooperatives use a consensus process that seeks decisions that have the consent of all members, so even a single person can block a proposal.
Profits and Wages
Each year, worker co-ops return profits to their worker-owners in the form of patronage dividends. Dividends are typically distributed based on hours worked, salary and/or seniority.
Pay structures vary greatly. Some worker co-ops use a traditional, position-based pay scale. Others pay strictly on seniority. At the other end of the spectrum are worker co-ops that pay all workers the same wage.
Joining a Worker Co-op
Typically, workers may join their co-op after a probationary period lasting from a few months to more than a year. At that time, workers are accepted as full members, often by vote or consensus, and buy an equity share in the business—the cost of which is usually deducted from their paychecks in small amounts each month. When workers leave the co-op, their equity share is returned to them.
The Arizmendi Association links together a network of independent cooperative bakeries in the San Francisco Bay Area.
Big TimberWorks, based in Gallatin Gateway, constructs high quality, custom timber-frame homes and other structures.
Collective Copies operates two storefronts in Florence and Amherst, Mass.
Cooperative Home Care Associates is the nation’s largest worker co-op, with more than 1,000 members providing home care in the New York metropolitan area.
Evergreen Cooperatives are a new initiative bringing worker-owned green jobs to one of Cleveland’s poorest neighborhoods.
Rainbow Grocery is the nation’s largest retail worker co-op, operating a natural foods supermarket in San Francisco.
Mondragon is the world’s largest example of worker ownership. Based in the Basque Country of Spain, this cooperative conglomerate owns $33.5 billion in assets and employs more than 80,000 workers, many of whom are owners of the group.
Ohio Employee Ownership Center is a non-profit, university-based program, which provides outreach, information, and preliminary technical assistance to Ohio employees and business owners interested in exploring employee ownership.
U.S. Federation of Worker Cooperatives is the national organization representing worker-owned cooperatives in all sectors.