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A Co-Op Solution: Fighting the ‘New Normal’ with Workplace Democracy

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Union Cab has operated as a worker-owned business in Madison, Wis., for more than thirty years. While worker-owners receive a living wage and complete coverage of health insurance premiums, the more intangible benefits also stand out.

Operations Manager David Lee likes the ability of the worker-owners to set goals, and ideals—and to decide how best to enact their principles.

“We wanted to make sure we were running a safe company, so we made sure our vehicles worked properly, our communications worked well,” Lee told Campus Progress. “At the first [cab] company I worked at, there was a sole owner. He didn’t seem to have as much concern.”

Union Cab also sets a limit on top salary—the highest-compensated employees can make only three times as much as an entry-level employee. This is a far cry from the 325:1 average ratio [PDF] of CEO-to-worker pay at companies in Standard & Poor’s 500 index, all of which use a hierarchy-based organization. By virtue of worker-ownership, cooperatives are freed from the negative wage-pressure exhibited by other businesses in El-Erian and Kelleher’s depressing “new normal.”

“You got plenty of people who roll up their sleeves every day, go to work. But if there’s someone way up there on the chain that collects all the extra money, that’s not fair,” said one worker at Isthmus Engineering in Wisconsin, a worker-owned business featured in Michael Moore’s Capitalism: A Love Story (which some cooperative development networks credit with a surge in interest).

Distribution of wealth among workers through worker-ownership is not only equitable, say cooperative development organizations, but it is also more sustainable—more insulated from the careening market.

The International Organisation of Industrial, Artisanal and Service Producers’ Cooperatives, a European network, found in a report released this summer that worker cooperatives were weathering the financial crisis better than traditional enterprises. Cooperatives reported less volatility in employment than hierarchical organizations, with very few jobs lost in existing cooperatives. In keeping with the principle of inter-cooperative solidarity, signs of recovery were most pronounced in cooperative-heavy countries like Spain (home of the behemoth MONDRAGON Corporation).

Worker cooperatives may even stabilize the overall economy, as they aren’t driven by bankers or trading on derivatives. Instead of emphasizing short-term profit, every worker-owner is invested in the long-term establishment of the organization.

“Worker-ownership just cuts Wall Street out of the loop,” Attorney Thomas Beckett told Campus Progress. Beckett works to develop cooperatives in North Carolina, hoping—among other objectives—to revive the desiccated textile industry. “We have a business, we create value, and we get to decide what to do with the proceeds, and we pay ourselves better, and we take care of our community better, and the stuff we create stays where we live—that’s the basic model.”

But perhaps most importantly, worker cooperatives are part of a push for economic democracy. The particular changes that workers make to their workplace may be less important on the national scale than the power they hold to exert these changes.

As democratic theorist Sheldon Wolin writes, it is impossible to have a democratic political system when no other spheres of society—particularly not the economic—are under democratic control.

“If you have an economic system that is very unequal, you have a lot of income concentrated in one place, your politics are going to reflect that,” Kelleher said. “I think it’s economics that drives everything. … You look at how much time people spend at work. If they work in a place that’s very democratic, I think they’d bring that home, I think they’d bring that back to their community. I think it would actually strengthen democracy, if we had more worker cooperatives.”

In short: A taste of democracy in the workplace enhances one’s appetite for it in civic life, making cooperative workplaces good for politics, for workers, and for economic well-being.

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Photo from eddie.welker via flickr

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31 comments

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5:19AM PST on Jan 25, 2012

Worker owned is a way to save the middle class it will help people of color to be able to give jobs to their own neighborhoods it is a great deal

8:37PM PST on Jan 23, 2012

Thanks for the article.

1:48PM PST on Jan 23, 2012

Mondragon co-operatives work very well. They started in Spain.
The lowest payed person and the highest paid person was only 3 levels apart in wages. the companies that did this type of business,ended up with child care,schools,doctors and bankers all working together to have a nice community. they ended up providing 1/3 of the national gross products.
There are several versions of this type of business structure. It is a win-win situation, and all involved like doing their job; which of course makes for prosperity for all of them.

9:50AM PST on Jan 23, 2012

Thanks

6:49AM PST on Jan 23, 2012

Thanks for putting me in touch with this National Cooperative Development Act. I will contact my representatives. on this issue. It is intolerable that we live in a democratic society but spend most of our working lives in autocracies.

3:16AM PST on Jan 23, 2012

Watch the Government stick its nose in on the pretext of Eminent Domain (for the greater public good). It just can't resist crapping up anything good and working well.

7:20PM PST on Jan 22, 2012

TY

5:51PM PST on Jan 22, 2012

i know where i want to work, and i'm not the working type

5:18PM PST on Jan 22, 2012

ty

5:08PM PST on Jan 22, 2012

Excellent article. I've seen the coop method of ownership work in a couple of very successful businesses here in Idaho. Sure makes for loyal, hardworking employees when they can benefit from the success of the business, too!

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