Worker cooperatives: More resilience, productivity, and equality
Quickly. Can you name five cooperatives? La Siembra Cooperative sells delicious Fair Trade chocolate bars, my bank is the Waterloo Education Credit Union and I buy outdoor equipment at Mountain Equipment Co-op. Over 20 organizations are part of the Haliburton County Community Co-operative and Huntsville recently launched the Muskoka North Good Food Co-op. How did you do with your list?
In Everything for Everyone: The Radical Tradition That Is Shaping the Next Economy, author Nathan Schneider describes a key development in the cooperative movement. In 1843 in Rochdale, England, a group of textile workers established a small store where they could buy groceries, clothing and other goods at reasonable prices.
While progressive ideas had been floating around the area for years, this store was significant because it put the beneficiaries in charge. The member-owners were the customers and as co-owners, they were each entitled to a dividend from the store’s profits, proportional to how much they had spent. The co-op was able to offer quality goods and the access to products at an affordable rate meant that workers were better off.
Canada has a long tradition of cooperatives beginning in the 19th century. This list highlights the diversity of co-ops today:
- Modo is a member-owned car sharing co-op in Vancouver
- Together We’re Bitter is a worker owned craft brewery in Kitchener
- Community Power Northumberland is a renewable energy co-op
- Beetbox is a worker owned farm located within Ottawa city limits
- Kawartha Credit Union began in 1952 by General Electric employees and now has 23 branches across Ontario
Schneider documents the research explaining the advantages of co-op enterprises; including fulfilling needs unmet by the marketplace, leaner startup costs, productivity benefits, greater information sharing, a lower chance of failure and greater resilience in downturns due to risk adversity and shared sacrifice. Worker cooperatives are based on shared equity and worker autonomy. Workers share in the profits and each member has a vote. Workers make decisions such as how funds are reinvested, pay raises, pensions, new hires or investing in new technology.
Worker cooperatives also tend to have a low ratio of lowest to highest pay. Located in the Basque region of Spain, Mondragon is the world’s largest worker owned cooperative. The salary ratio between the lowest and highest paid worker is just 1:9 —compared to a U.S. average of 1:295. Contracts, jobs without benefits, part-time work, a provincial minimum wage that is lower than a living wage; these trends make up precarious employment for an increasing number of people. Worker cooperatives represent a way in which prosperity can be shared; and as Canada’s 1% rises at an unprecedented rate they deserve greater attention.
Coops are no different than regular businesses in that a good idea and a market are essential. Like businesses, co-ops have to manage the risk inherent in starting up something new. Interestingly, co-ops do better during an economic downturn and studies of worker cooperatives in Quebec and Canada found that the five-year survival rate was around 60 percent for cooperatives compared to 40 percent for conventional businesses. Worker owners are more likely to take a pay cut rather than lay off workers.
Another reason to encourage the development of co-ops according to Nathan Schneider is the way in which co-ops can help spread the benefits of automation.
The economy has become more efficient, generating more value but the average person gets a smaller and smaller portion of it.
“The winners will be the owners. Many of the world’s highest valued firms claim the title because they own vast, vast stores of data – data about us, data that can feed their algorithms. Ownership is the ground where the tug-of-war for the next social contracts is being played. Who owns what will determine who really benefits. The owners, also, decide which tasks to invest in automating and what happens to the people who used to do those tasks. In order for the benefits of technology to be shared more widely, the ownership of it must be shared, too. Co-operation is uniquely well suited to do this.”
Encourage the next young person you meet who wants to start a business to consider starting a worker co-op, part of a new economy that serves all of us.