Seize the Moment: Time For Worker Ownership!
Help build a worker co-op or encourage interested businesses to transition to employee ownership and adopt social and environmental standards as part of their missions.
Worker-owned co-ops bring democracy and democratic ownership into the economy and into community life. Several older and newer co-ops show what can be done. Equal Exchange's 100-plus worker-owners, for instance, generate $50 million of annual sales while pursuing an innovative agenda to make international trade in coffee and other food products more ethical. The WAGES-incubated green housecleaning worker cooperatives in the Bay Area provide critical job security for the immigrant women who work in and own them. In Chicago, the New Era Windows Cooperative is saving the jobs of workers who famously occupied their factory on Goose Island. And the United Steelworkers, working with the Mondragón Corporation, has proposed a nationwide effort to create unionized worker-owned co-ops that is beginning to bear fruit in Cincinnati, Pittsburgh and elsewhere.
The most common form of worker ownership is the Employee Stock Ownership Plan (ESOP). Although there have been difficulties with some ESOPs, research has shown that workers in ESOPs are much less likely to be laid off than those who are not. Furthermore, ESOPs tend to be more profitable, more productive and more efficient - especially with training in self-management - than comparable firms.
An ESOP works like this: a company sets up a trust on behalf of the employees, into which it directs a portion of its profits. The trust uses that money to buy the owners' shares for the workers, either all at once or over time. Currently, there are 10,000 ESOP firms successfully operating in virtually every sector - 3 million more individuals are now worker-owners of their own businesses than are members of unions in the private sector.
In the next decade, millions of business owners born during the baby boom will retire. And if they sell more than 30 percent of the company to the employees, the owner may defer capital gains taxes (provided that the proceeds are invested in US companies). This incentive could have an enormous impact on America's business landscape. Advocacy for such conversions could be a powerful strategy for building more stable, vibrant worker-owned businesses and economies.
Consider the case of Fort Collins, Colorado-based New Belgium Brewing Co., America's eighth-largest brewery. When chief executive and co-founder Kim Jordan sold the enterprise to its more than 400 employees in 2012, she considered the conversion to 100 percent worker ownership a rare opportunity to "have multigenerational impact." Soon afterward, the worker-owners met to discuss cutting into the company's near-term profits to power their entire facility with wind energy. "Within a minute or so, we had decided as a group to become the world's largest single user of wind power," said Jeff Lebesch, a co-founder.
New Belgium is committed to open-book management, whereby all employee-owners can review finances and provide feedback. It also became certified as a B Corp, which enshrines in the firm's bylaws both social and environmental goals as well as profits.
Conversions to worker cooperatives also confer tax benefits to business owners who decide to sell to their employees. Among employee-owned institutions, co-ops allow for the most democracy. Namasté Solar in Boulder, Colorado - a $15 million-plus-a-year solar energy services firm - converted to an employee-owned cooperative at the beginning of 2011. Its workers own the firm equally and manage its operations on a one-vote-per-person basis. Having also certified itself as a B Corp, Namasté's mission consists of creating "holistic wealth for ourselves and our community." Its worker-owners in their mission statement declare, "We choose co-ownership over hierarchy, democratic decision-making over centralized leadership, sustainable growth over aggressive expansion, and collaboration over competition." They benefit from transparency of all company information, a 4-to-1 cap on the ratio of highest-to-lowest pay, and six weeks of paid vacation.
If you are in a union, you can encourage your union to promote worker ownership, as some already have done. Within the world of ESOPs and co-ops, the potential for organized labor should not be underestimated.
The Massachusetts-based architectural lighting manufacturer Litecontrol is a 100-percent worker-owned ESOP, and 60 percent of its workforce is unionized through the International Brotherhood of Electrical Workers. Industrial brush manufacturer and supplier Maryland Brush Company, also totally employee-owned, allows United Steelworkers union representatives three seats on its board of directors - the same number of seats as management. Recology of San Francisco, a fully worker-owned business, is the largest ESOP in the solid waste industry and is 80 percent unionized through the International Brotherhood of Teamsters.
Cooperative Home Care Associates (CHCA) of the Bronx, New York, is the country's largest worker co-op (and certified B Corp), consisting of more than 2,000 mainly Latina and black home health care providers. CHCA collaborated with the Service Employees International Union (SEIU) to unionize its workforce, with the broader aim of raising the wages of home-care workers throughout the industry (thereby raising the payroll costs of its competitors to measure up to CHCA's higher wages). The United Steelworkers proposal for "union co-ops," which combine principles of worker ownership and labor solidarity, also represents a major step forward in assembling the building blocks of a new economy.
Worker-owned companies deserve your support; the more commonplace they become, the easier they become to launch. Help stimulate the development of worker-owned co-ops and work to encourage retiring owners to sell their companies to their employees.
Source: Gar Alperovitz & Keane Bhatt, Truthout, 24 Sep 13: http://www.truth-out.org/opinion/item/18908-what-then-can-i-do-ten-steps-toward-transforming-the-system