From New York to Oakland, CA, city governments support worker coops

On Thursday, September 24th, the Pope will address the U.S. Congress for the first time in history. Perhaps he will speak about building democracy, growing the economy, or increasing equality— and a mention of worker cooperatives could serve as a unifying theme. Just the other day, Pope Francis urged the Confederation of Italian Cooperatives in Rome to “continue to be a motor for the development of the weakest part of local communities and of civil society, thinking especially of the young unemployed and aiming at the birth of new cooperative enterprises."

If the Pope’s speech is any indication of his perspective on municipal support for broad-based ownership structures like worker cooperatives and credit unions, he will surely find himself in good company in New York City, his next stop after D.C. Just as the Pope encouraged the Cooperative Credit Bank of Rome to "promote a fraternal and social use of money, in the style of the true cooperative, in which people are not guided by capital, but instead capital is guided by people," the municipal government in New York has begun to build an economy guided by the needs of people by taking legislative action to support worker-owned enterprises. The Pope would be pleased to know that in several cities across the United States, new laws are being passed to funnel money towards cooperatives with the end goal of creating what the Pope calls an “economy of honesty.”

How are worker cooperatives contributing to an economy of honesty, and why is it necessary for local government to support them? This question digs deep into the economic system in which worker coops operate. According to According to a comprehensive report by Hilary Abell (Worker Cooperatives: Pathways to Scale published by the Democracy Collaborative), worker cooperatives have been shown to provide invaluable opportunities for marginalized communities and individuals with high barriers to employment. They provide higher wages and benefits to worker-owners, “access to shared business ownership and asset building,” and “a voice in key decisions and enhanced control over working conditions,” to name a few. However, Abell notes that within the current system so focused on profit (e.g. where the people are guided by the capital) the financial and organizational barriers to developing a successful worker cooperative can be great. But, she asserts, investment and involvement from larger institutions and governments can mitigate these obstacles, paving the way for a truly honest and dignified economy by helping incubate worker cooperatives. Our most recent report, Educate, Empower, and Build Community Wealth: A Toolbox for Organizers and Advocates  by Keane Bhatt and Steve Dubb, found technical assistance training to be an essential tool for successful worker cooperatives to solidify their impact on individuals to give them control of the company, and in turn, the economy.

Recognizing these profound needs and potential impacts of government-cooperative partnerships, a national trend of local governments helping to institutionalize support for worker cooperatives has begun to erupt, from Richmond, Virginia (where Mayor Dwight Jones established a local “Office of Community Wealth Building” in 2014) to Richmond, California (where Mayor Gayle McLaughlin brought on staff to support of worker co-ops after visiting the famous model Mondragón Corporation in Spain). In the past several weeks, groundbreaking initiatives in Oakland and New York City, two major co-op hubs, have taken local political involvement in cooperative development to new heights.

The Bay Area’s DIG cooperative, a worker-owned general contracting firm that specializes in water catchment and reuse systems, provides a poignant example of the impact municipal and state-level legislation can have on the success of worker cooperatives. Historically, worker cooperatives have struggled to fit their alternative models into local and state-level business incorporation laws, since their business structures stray from the traditional LLC and non-profit incorporation norms. To address this issue, the California Worker Cooperative Act, signed on August 12 of this year by Governor Brown, “lays out formal requirements for the designation of a corporation as a worker cooperative.” In an interview with the Sustainable Economies Law Center (SELC), DIG Coop co-owner Anya Kamenskaya noted that without this law, “cooperatives would have to incorporative under the [original] consumer cooperative statute. The statute prevents worker-cooperatives from raising both operation and expansion capital.” Now, after the passage of the Act, the law accurately reflects and incorporates the ownership structure of worker-cooperatives. Kamenskaya contends that as a result, DIG and other similar cooperatives will be able to “increase our capacity to employ Oakland residents at a workplace that puts the well-being of our members first."

[Above: Worker-owners Niko Borreg (left) and Javier Oxford (right) install a rain catchment system. Based in Oakland, a hub for cooperative development and public-cooperative partnerships, DIG has been involved in promoting policy that supports alternative business structures like cooperatives. (Image Source: Ingrid Severson at DIG Cooperative)]

Zooming in to the municipal government where DIG Coop is located, Oakland City Councilmember Annie Washington has begun to work in partnership with the local SELC to develop a model piece of city legislation in support worker cooperatives. The bill cites that “worker cooperatives are owned and democratically governed by their members, provide wages and benefits above industry average, develop leadership and management skills, and build wealth for low to moderate income community members.” For this reason, the bill seeks to provide support in the form of “tailored resources,” including technical assistance to new and converted worker cooperatives. Although the law is largely a symbolic step indicating municipal support of cooperative development, the SELC said it remains hopeful that it will “be a precursor to the passage of more concrete reforms that would incentivize the growth of these businesses in the city.”  

New York City has raised the bar for municipal involvement in worker cooperative development beyond mere symbolic support by allocating specific funds towards worker cooperative initiatives. Back in June of 2014, the City Council of New York gave a major nod to the worker cooperative movement by allocating $1.2 million towards establishing a “Worker Cooperative Business Development Initiative.” As the impact of this funding has begun to pour in, the New York government upped the ante in June of this year by nearly doubling its contributions to the initiative, announcing that it would “invest an additional $2.1 million to expand the Council’s successful Worker Cooperative Business Development Initiative and create 22 new worker cooperatives.” This increase in funding took into account immensely positive results highlighted in the initiative’s first annual review, which found that in the first year the initiative helped to collaborative and improve upward social mobility in 11 existing organizations, extended training opportunities to 1,282 entrepreneurs, and aided in the establishment 21 new worker co-ops, which in turn have created 141 worker owner positions (see graphic below). As the funding distribution continues to take effect, monitoring these partnerships will shed light on just how far-reaching the initiatives can be.

Understanding the potential impact of this continued dedication to supporting worker cooperatives is key to harnessing the transformative potential that government-cooperative partnerships have in changing the paradigm of traditional business ownership structures. If laws benefiting cooperatives continue to gain traction, we can more solidly visualize a growing mosaic of seemingly disparate initiatives united by a similar goal to change who controls capital in the economy. If, with time, other municipalities can begin to see the New York City and Oakland initiatives as models for uplifting and transforming the economies, implications beyond just individual economic upheaval are apt to emerge. The case for cooperatives has a strong foothold in a rapidly growing number of city governments, advocacy organizations, and businesses alike. Why should we pay attention to it? In the spirit of bringing wealth to the neighborhoods that make up our cities, our states, and our country - we can connect the dots to follow Pope Francis’ sage advice: allowing the people to control the capital, and not the capital to control the people.