Community-Based Cooperative Businesses Create Assets for Low-Wage Workers

Co-ops combat deteriorating work conditions and low pay for unskilled laborers
Posted by: 
Sarah McKinley

Earlier this month, Meche Sansores of Women’s Action to Gain Economic Security (WAGES) in Oakland, CA, wrote an insightful piece about the economic benefits of cooperatives on the Spotlight on Poverty and Opportunity’s Executive Commentary blog. Focusing specifically on low-skilled, and therefore often low-wage, workers, Sansores argues that co-ops provide increased earnings, better benefits and asset-building opportunities for these individuals. This occurs because co-ops are democratically controlled and owned by their workers who then set company policies — from benefits to salary decisions.  Furthermore, as Sansores points out, co-ops distribute any profit among the workers-owners rather than simply the executives and unknown shareholders. Sharing in ownership of a business is a way for low-wage workers to build wealth and lift themselves out of poverty — when other, more “traditional” pathways out of poverty such as homeownership and investing are not available to them.

Sansores highlights her organization, WAGES, as an example of how cooperatively-owned business create jobs and wealth for low-wage women even during recessions and in California, a state that has recently had the highest business failure rate in the country.  She also mentions Spain’s Mondragón Cooperatives, formed in the 1950s to address mass unemployment and poverty in the country’s Basque region, that is now the world’s largest cooperative — and often credited with aiding the region have the lowest unemployment rate in the country. 

There are numerous other examples of co-operative businesses creating jobs and building wealth for low-skilled and low-wage populations.  In Springfield, Massachusetts, the Alliance to Develop Power has employed 125 people and created $80 million in community-owned enterprises.  In Cleveland, Ohio, the Evergreen Cooperatives are creating jobs in an area where the unemployment rate is 25 percent and providing workers an ownership stake — a combination all too often out of reach for low-income individuals with a history of incarceration or substance abuse.  In Richmond, California, where the unemployment rate is 17 percent, they’re looking to replicate the Mondragón and Evergreen models to build wealth through a network of co-ops that include a worker-owned bike shop, a restaurant, an urban farming enterprise and a bakery.

Co-ops promote local hiring and generate economic activity locally. In the case of the Evergreen cooperatives, for example, products are produced sustainably and services are provided that meet the needs of local anchor institutions. In these challenging economic times, co-ops offer a model of economic resilience, stability and sustainability.