On a muggy June day in St. Louis, a group of eager, determined faces filled an aggressively air-conditioned classroom. It was the start of the 2018 CommonBound conference, a gathering of community leaders and activists radically reimagining how we organize ourselves economically. The crowd was a diverse mix from across the country, and they were lured to this all-day workshop by a common purpose: to start a worker-owned coop.
Worker coops—a form of cooperative where workers have a stake in the ownership, profits and management of the enterprise—have long been viewed as a vehicle for countering the exploitation of the working class, beginning with roots in the early labor movement. Two centuries later, worker coops are experiencing a resurgence amid a concentration of corporate power, stagnant wages and wealth inequality.
Worker coops remain “a core part of our vision for what a more democratic economy looks like,” says John Duda, director of communications at Democracy Collaborative, a new economy research institute, and a co-organizer of the workshop.
As the workshop made clear, the individuals creating new worker coops are from far flung backgrounds, locales, ages, gender, ethnicity and race. And they are working in varied industries, from beer to bikes shops and manufacturing to taxi services. But they’re all driven by a similar desire to create more equitable workplaces that offer opportunities to grow and create wealth.
Bad Bosses and ‘Poverty Labor’
It was a fitting day to cap a five-year effort. This past fourth of July, James Razsa and his fellow worker-owners opened the doors of Democracy Brewing. Dedicated to ideas of democracy and business ownership—along with good beer—the Boston-based brewery is one of the few breweries designed from the start to be worker owned and governed.
Razsa’s career, which at 34 has included selling coffee, cleaning swimming pools and a good deal of labor organizing, led him to the worker coop model as a more solutions-based alternative to “fighting problems and bad bosses.”
The restaurant and brewery pays workers an above-minimum $15 an hour, and all of its forty-plus full time employees have a clear path to ownership. After a year of working, they will be eligible to buy a $3,000 Class A share in the coop, granting them rights to share in the business’s profits based on the hours they work. The idea, says Razsa, is to give workers the ability to “profit directly from their own labor.”
Razsa’s vision for the brewery is grounded in countering a status quo of “poverty labor” and expendability in the restaurant industry. “We’re hoping to be an example of something people would want to belong to and be a part of,” he says. “We’re also representing what folks could think of as their dream business.”
Democracy Brewing’s menu reflects that ethos. While the draft beer selection will rotate, the Worker’s Pint, a golden ale at an affordable $5, is standard.
The team plans to set aside 10% of profits to support franchising the Democracy Brewing model, worker ownership and all. In the meantime, the brewery will introduce its patrons to the basics of coops. Razsa notes that “95-99% of people have never heard of a worker cooperative.” He’s hoping to change that.
Fairness and Filling a Void Left by Unions
Further south in Morganton, North Carolina, Molly Hemstreet shared similar motivations as Razsa for founding Opportunity Threads, a cut and sew factory (pictured at top) that is organized as a worker coop. She first learned about cooperatives in her time as an undergraduate at Duke. After spending several years working as a community organizer, she decided to put theory into practice.
Hemstreet’s native Morganton has struggled with a decades-long process of deindustrialization, leaving a manufacturing hub hollowed out and economically distressed. In a state with one of the lowest rates of union membership, offering workers wages and benefits that are above the industry standards “comes down to fairness,” says Hemstreet. “We’re not making everyone rich, but we’re helping people become financially stable.”
The benefits of being a worker-owned coop, Hemstreet says, are powerful. Entry-level employees quickly leave behind generational poverty, become homeowners, save for retirement, and choose to give back to their communities. With a worker base made up of many Guatemalan and Mayan immigrants, Opportunity Threads sets aside some of its profits in a community capital pool to support scholarships and small business development back in Guatemala.
Hemstreet also highlights her role as a board member of the Democracy at Work Institute (DAWI) to support the strategic alignment of the worker coop sector, and a cofounder of The Industrial Commons, a nonprofit that embeds cooperative principles within larger factories throughout the state’s textile district. Her colleagues run workshops and offer technical assistance to spread the practices of worker ownership. The goal, in the end, is to provide better jobs for people in North Carolina’s working-class communities.
The State of the Movement
Despite the promise of worker coops, there are less than 400 such businesses and around 7,000 worker-owners in the United States, according to Democracy Collaborative. When compared to the millions of privately-held businesses, the figures can feel pretty deflating.
Yet as Democracy Collaborative’s Duda points out, there are still plenty of reasons for being optimistic about broader efforts to scale employee ownership. Companies with Employee Stock Ownership Plans (ESOPs) number approximately 12,000, with 11 million active and retired participants. These ESOPs, while not as radically democratic as worker coops, have shown in multiple studies to pay their workers higher wages compared to traditional companies.
And growing support from city governments, regional networks such as the Philadelphia Area Cooperative Alliance (PACA), and groundbreaking federal legislation in the Main Street Employee Ownership Act, are all nudging the movement closer to a tipping point, says Duda. Behind the scenes, the U.S. Federation of Worker Cooperatives (USFWC) played a pivotal role in supporting Senator Kirsten Gillibrand’s office to develop the new nationwide policy.
Perhaps the most critical window of opportunity lies in worker coop conversions. The well-documented “silver tsunami” of retiring baby boomers will entail over 200,000 private companies changing hands every year until 2030.
Balancing Idealism and Profit
In the meantime, in order to realize some of the transcendent purposes of worker coops, worker-owners must remain grounded in the demands of running profitable businesses.
Razsa is deeply practical about the company becoming financially sustainable. For the business to offer all the benefits of worker ownership−from better pay and benefits, to profit sharing and democratic control−it must be profitable. And for Razsa, this means that sometimes they must simply work harder and clock more hours.
“We’re living out an alternative economics with our actions and work,” Molly Hemstreet
In addition, the nature of the restaurant industry makes it difficult to disperse power among all the employees. At this early stage, Razsa says workplace democracy is “almost nonexistent.” Yet as the brewery gains some financial footing, he hopes to embed representation to ensure everyone has their voice heard. At the end of the day, Razsa notes, “those closest to the problems understand them best.”
For now, though, he’s more focused on making sure “the beer is cold, the food is hot, and everyone is having a good time.”
As for Hemstreet and her colleagues at Opportunity Threads, operating within the textile industry poses significant challenges in meeting production deadlines and quality standards. The company cultivates a strong culture of cooperation, but it does not do so at the expense of its bottom line.
On the surface, she and her 24 coworkers at Opportunity Threads do pretty ordinary work—even “hard and monotonous” work for those on the factory floor, she says. But in the context of a struggling community hoping to revitalize, Hemstreet points out, “We’re living out an alternative economics with our actions and work.” She notes the “visceral change” she sees in some of her coworkers’ lives, all of which makes the daily grind of the textile plant all the more meaningful and fulfilling.
“We’re much better in our industry because we’re worker owned,” Hemstreet says. “It makes us much more competitive.”
Randy Mueller is an undergraduate student at Fordham University who is interested in localism, worker ownership, and impact investing.