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Table of Content

Why do we need Cooperatives?
What is a Worker Cooperative?
Purpose of Worker Cooperatives
History of Cooperatives
Worker Cooperatives in the United States
Other Types of Cooperatives

Why do we need Cooperatives?

Wealth Inequality

There is more wealth than ever before in the United States. It is also more unevenly distributed than ever before. The economy may have recovered from the last recession, but people do not feel it in their daily lives. For many, it is more difficult than ever to keep up with the bills. The number of people experiencing real poverty is higher than ever and rising. Joining together by forming cooperatives is a way to reverse this cycle of increasing inequality.

Income Inequality

Some workers have good jobs with good benefits, but not all do. Thousands of workers work in jobs at minimum wage and without any benefits at all. Minimum wage is insufficient to sustain basic living conditions, so they resort to having multiple jobs. As a result, families suffer.

Abuses

In these conditions, abuses are rampant. Here are some examples:
  • Wage theft. When employers refuse to pay the agreed wage.
  • Dangerous working conditions. Working without protections or exposure to dangerous chemicals.
  • Classification as independent contractors to avoid paying benefits.
Many workers are reluctant to complain or protest for fear that they will lose even the little they have. For these workers, taking control of their working conditions may be the greatest benefit.

Control

Worker cooperatives are democratically controlled; one person, one vote. Unlike shareholder owned companies, worker owned cooperatives have the ability to focus on values other than profit alone and most importantly, the ability to determine what those values should be without interference from outside forces.

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What is a Worker Cooperative?

A worker cooperative is a company 100% owned and controlled by the people who work there. They share all the profits of the company and collectively govern how it is run.
Most adopt some variation of the set of seven principles first introduced by the Rochdale Cooperatives in mid-19th century England.

Cooperative Principles

  • Voluntary and Open Membership
  • Democratic Member Control
  • Member Economic Participation
  • Autonomy and Independence
  • Education, Training and Information
  • Cooperation among Cooperatives
  • Concern for Community
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Purpose of Worker Cooperatives

Worker cooperatives exist primarily to meet a need for employment and income for their participants. Secondarily, they exist to build wealth to meet their long-term goals such as housing, retirement or education. Third, they ensure that participants are in control of their work environment. Lastly, they also tend to build community wealth. Unlike many traditional companies, especially larger ones, all the owners live in the local community where they also tend to spend most of their income thus helping the local economy.

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History of Cooperatives

The origin of cooperatives is not known, but indigenous peoples have always shared the tasks required to provide for their members. In the mid-19th century, the industrial revolution had resulted in massive inequalities and abuses. In response, a group of weavers formed a worker cooperative in Rochdale, England. It may not have been the origin of cooperatives, but most recognize it as a major milestone. The cooperative principles mentioned above resulted from the movement that followed.

Another major milestone is the beginning of the Mondragon cooperatives in Spain. Following WWII and the Spanish civil war, conditions for workers were desperate. Students, under the leadership of a Catholic priest, Arizmendiarrieta, at a technical college started a production of kerosene stoves. Others followed. Their number began to increase dramatically when participants and cooperatives pooled their funds and started their own credit union, Caja Laboral, in 1959.

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Worker Cooperatives in the United States

Nobody really knows for sure, but it is estimated that there are between 400 and 500 in the United States today. Contrast that with the many thousand cooperatives in operation in Europe employing more than a million workers; 74,000 in Mondragon alone.

Despite the small number of worker cooperatives, cooperatives are not unknown here. There are numerous consumer and producer cooperatives, particularly in rural America. Most urban people know about credit unions, but are largely unaware how they differ from other banks. They are also unaware that the butter and orange juice they buy in the supermarket is coming from farmer owned cooperatives.

However, there has been a significant presence of worker cooperatives in the past. For example, plywood manufacturers flourished with the building boom following WWII. Cooperatives like the Arizmendi Bakeries in the San Francisco Bay area have inspired other cooperatives in that area.

After about a decade of lobbying, a small group of cooperatives finally persuaded the New York City Council to financially support the development of new cooperatives as a way to respond to poverty and abuse within the City.

A slightly different approach has been taken by a coalition of organizations and institutions in Cleveland which resulted in a group of cooperatives, the Evergreen Cooperatives. Again, the purpose is to respond to poverty by providing jobs and building wealth.

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Other Types of Cooperatives

Consumer Cooperatives

Most people are familiar with credit unions or co-op apartments. They are typically unaware how they are different from regular banks or condos and for good reason. They are the same except in the way they are owned. There are no shareholders who skim profits off the top. Everyone who use their services are members, democratically sharing in how they are run and how profits, if any, are being distributed.

The Rochdale pioneers started a grocery store to be able to buy affordable groceries instead of paying the exorbitant prices at the company owned stores.

Producer Cooperatives

Most people are familiar with products like Land-o-Lakes or Florida’s Natural, but are unaware that the companies that sell them are owned collectively by the farmers who produce them.

Similarly, other businesses have also seen the value in operating cooperatively rather than competitively. True Value hardware stores are individually owned, but own the brand cooperatively. Together, they have the same purchasing power as the big box shareholder owned stores. They also get other marketing benefits from the cooperative. This is in contrast to Century 21 which is owned by shareholders for profit.

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