Grassroots Movement Promotes Adoption of “Union-Co-op” Model

Earlier this month in Cincinnati, Ohio, roughly 150 worker co-op and union activists came together for the Third Biennial Union Co-op Symposium. This conference marked a watershed of sorts, as the union co-op idea is increasingly seen by both union and co-opactivists as a vehicle for community transformation. At the conference, leaders announced their intent to form a national network organization in the coming year. Participants also explored developing new debt and equity investment vehicles to expand the pace of development nationwide.

The idea of a unionized worker co-op may seem odd. By definition, worker co-op members own the company for which they work. You can’t really go on strike against yourself, for example. But unionized worker co-ops in the US have a proud history. In the 1880s, the Knights of Labor, then the leading US trade union with over one million members, not only had members in traditional companies but its members operated over 200 worker co-ops. In Minneapolis-St. Paul alone, according to historian Steve Leiken, there were 32 worker co-ops. In Leiken’s account, a combination of insufficient solidarity within the co-op sector and opposition from outside the sector ultimately led to the sector’s demise, but “for a few years in the 1880s, the cooperative coopers of Minneapolis dominated an entire industry.” Some of the worker co-ops formed remained in business for decades, but the links with the labor movement weakened over time.

The unionized worker co-ops of the latest nineteenth century in the US were motivated by a producer ethos, or what Leiken has called the citizen producer. The reasons why worker co-op members unionize today are different. One is to secure better group benefits, which a larger organization that represents workers at multiple businesses can provide. Another is to have more of a political voice. For example, the Bronx-based Cooperative Home Care Associates (CHCA), the largest worker cooperative in the US with over 2,000 workers, affiliated with the Service Employees International Union (SEIU) in 2003 because, as the New York Times reported, “they were impressed by the union’s success in lobbying Albany for more home care dollars.”

A third, and perhaps most fundamental reason why workers at some co-ops choose to unionize is to help them balance their interests of workers-owners qua workers (e.g., benefit policies) with their interests of worker-owners qua owners (e.g., generate profit payments for the worker-owners). As Rob Witherell, who works for the United Steelworkers union and has helped popularize the union-co-op concept, explained in an interview I conducted four years ago:

If we are talking about scaling up and applying this to a larger workplace, say, of 100 people, how does a cooperative maintain the accountability that is intended? Because voting for directors and having an annual meeting is a good step, but that only happens once a year. How do you maintain that accountability on a day-to-day basis? This is where we see the union structure and collective bargaining making a lot of sense.

Some unionized worker co-ops have been around for a while. This includes CHCA, mentioned above, but also includes, as co-op developer Hilary Abell explains, some thatrose out of labor struggles, in which workers who had fought employers ultimately took over the companies. Such is the case with a small western Massachusetts copy store chain (Collective Copies) and a cab company that employs over 200 drivers in Madison, Wisconsin (Union Cab). Printing co-ops have also often unionized, since the union label makes it possible for the businesses to obtain printing contracts from union buyers. A partial list of union co-ops is available here.

The current attempt to build union co-ops to scale, however, really developed as a response to the economic dislocations of the Great Recession. Initially, in 2009, the United Steelworkers union formed an alliance with the Mondragón Cooperative Corporation. Based in the Basque Country region of Spain, Mondragón is the world’s largest worker cooperative organization. According to the co-op’s website, Mondragón presently employs over 73,000 workers at 268 businesses with gross sales in excess of €12 billion (over $14 billion US at current exchange rates).

Mondragón is famous in the international cooperative movement not only for its size, but for its role in rebuilding the Basque economy that had been destroyed in the Spanish civil war and for its highly egalitarian work culture, which includes policies that say that top-level management shall earn no more than nine times what the lowest paid worker earns.

Mondragón itself is not unionized, but member co-ops have “social councils” which “offer a formal structure that allows shop floor worker-owners more input and dialogue on a day-to-day basis on issues including wages, benefits and working conditions.” In 2012, Mondragón, the Steelworkers, and the Ohio Employee Ownership Center published a paper that proposed that the union local would serve as the US equivalent of the Mondragón “social council.”

In the five years since that paper was published, a number of union worker co-ops have been formed. In Chicago, some of the workers who had been laid off by Republic Windows and Door formed the New Era Windows Cooperative. In Cincinnati, which hosted the conference, this includes Our Harvest, which operates two farms; Sustainergy, a renewable energy installer and construction company; and a grocery store in development called Apple Street Market. All of these co-ops are linked in a network called the Cincinnati Union Co-op Initiative. In Los Angeles, there is a worker-owned car wash that has 17 worker-owners: it forms part of a larger initiative, known as the Los Angeles Union Co-op Initiative. In Denver, an estimated third of all city taxi drivers (between 700 and 800 people) have joined the worker-owned Green Taxi Cooperative. In Dayton, Ohio the Greater Dayton Union Co-op Initiative is one of the more recent efforts to launch; the Dayton group intends to launch a union-worker food co-op in northwest Dayton as its first business.

Isabel Uribe, a scholar who wrote her PhD thesis on Mondragón’s research and development arm, Saiolan—“lan” is Basque for “work”—led off the conference with her keynote address, which centered on a discussion of Mondragón and what might be learned from the model in Spain that could be applied in the United States. Uribe in her address emphasized that building strong community culture and principles is critical to successful long-term co-op development.

David Levine, speaking on behalf of the American Sustainable Business Council (ASBC)—a group that is set up as a progressive alternative to the US Chamber of Commerce and which represents 250,000 “values-based businesses”—discussed both efforts at the federal level to get equal treatment for worker cooperatives within the federal Small Business Administration support system, as well as efforts to promote worker ownership at the state and local level.

The conference also included presentations on new developments in education and training infrastructure, such as a 200-page-plus manual for worker-owners and a prototype community college curriculum being designed by the community development law faculty at the City University of New York.

The union-co-op model has also been applied in places where one might not expect it, such as organizing lobster trappers in Maine. According to Neil Gladstein of the International Brotherhood of Electrical Workers (IBEW), there are 6,000 such “lobstermen” in Maine. “Women refer to themselves as ‘lobstermen,’ too,” Gladstein said, “To operate in Maine, you have to own and operate the boat. It is a very rural and autonomous industry.” Gladstein acknowledged that a machinists’ union might not seem the natural home of lobstermen, but they came to the IBEW in 2012 because the prices they were getting for lobster were in free-fall and IBEW was one of the larger unions in the state; the union helped them organize to get higher prices for the lobsters caught.

A traditional union agreement was out of the question because the workers are self-employed. “What the union could do,” Gladstein said, is help the lobstermen “strategize, communicate. They know how to fish and fix their boats. They have no clue about the overall market or regulatory bodies. We as a union know how to do politics.” Today, the Maine Lobstering Union (IAM Local 207) is a voluntary, dues–based association that is also a cooperative. In March 2017, Local 207 acquired a lobster wholesale business so that its members can share in the profits once the lobsters they caught move beyond the docks.

Finance and capital was also a major theme at the conference. Brendan Martin, who heads The Working World, a community development financial institution (CDFI) based in New York City that lends to worker cooperatives, talked about efforts to build a national financing infrastructure based on principles of shared capital, shared services, and shared learning. In essence, Martin’s organization assists with underwriting and loan management while local groups raise local funds and help bring deals to the national fund. This structure aims to diversify the lending over more communities, thereby both making more funds available and reducing risk.

Martin explained how The Working World’s approach differs from traditional lenders: While a traditional lender looks to past credit history and collateral, The Working World approach is more like an equity investor. “We ask,” Martin said, “‘What is your plan? How much do you show up to deliver on the plan?’” Payment also differs from a traditional lender, in that the borrower only starts to repay the loan once the project is generating income to repay it.

Another approach being explored is the gradual conversion of existing businesses to employee ownership. As NPQ has noted, converting to employee ownership can be an effective tool to keep small businesses from shutting down by having the employees buy them. The typical tool for these conversions is an ESOP—an employee stock ownership plan. Such conversions are often done in stages so the exiting owner’s equity can help secure the loan. But what if you need to buy the business all at once? Currently, the Cincinnati group is developing a vehicle in which a limited liability company (LLC) that combines a worker trust and private equity would own the business for roughly a five-year period, with workers gaining full ownership at the end of the transition period after the equity investors exit.

The conference closed with a report on efforts to develop a national federation of union-worker co-ops that could serve to incubate start-up efforts in new cities, provide training and support for existing efforts, advocate for policy, and help develop sources for capital investment. A steering committee, coordinated by members largely drawn from the advocacy group 1worker1vote.org, has been established, and a national organization, it is hoped, will be launched in the next six to nine months.

Meanwhile, there is still plenty of nuts-and-bolts work to be done. Earlier in the conference, Melissa Hoover, executive director of the Democracy at Work Institute, noted, “We are running businesses. So, we have to develop [business] fundamentals. We are developing leaders that understand their business. That is the foundation of their leadership and ultimately the transformation of our economy. We can’t transform our economy if we don’t understand that.”

Non-Profit Quarterly

By STEVE DUBB | Dec 15, 2017

Steve Dubb is a senior editor at NPQ. Steve has worked with cooperatives and nonprofits for over two decades, including twelve years at The Democracy Collaborative and three years as executive director of NASCO (North American Students of Cooperation). In his work, Steve has authored, co-authored and edited numerous reports; participated in and facilitated learning cohorts; designed community building strategies; and helped build the field of community wealth building. Steve is the lead author of Building Wealth: The Asset-Based Approach to Solving Social and Economic Problems (Aspen 2005) and coauthor (with Rita Hodges) of The Road Half Traveled: University Engagement at a Crossroads, published by MSU Press in 2012. In 2016, Steve curated and authored Conversations on Community Wealth Building, a collection of interviews of community builders that Steve had conducted over the previous decade.