Worker co-ops: business without bosses

Worker-owned co-ops are a mainstay of crappy economies, and are thriving around the world. Worker-owned co-ops have better productivity than regular businesses, pay higher wages, and offer better benefits packages. As Shaila Dewan points out in the NYT, they're also easier to accomplish than hikes in the minimum wage or fairer tax-codes. On the other hand, this may be an argument against them, since they may diffuse energy that could make a bigger impact on ordinary workers' lives if it were devoted to systemic fixes.

Still, the worker-owned co-op movement is doing very well, and some co-ops are even using their profits to kickstart other co-ops around the world -- helping fund the worker buyout of a profitable Chicago window-factory that was suddenly closed by its investors because it wasn't profitable enough. The workers took in money from the Latinamerican Working World fund, bought the factory's equipment, and moved it themselves into a new facility. Now they're their own bosses, running a worker-owned window company called New Era Windows.

It's unimaginable heresy in today's world to suggest that doing things is as important as owning things, and that this entitles the people who do stuff to a say in the disposition of the businesses they make possible. But there was a time, not so long ago, when this was a mainstream idea.

Another persistent critique is that workers don’t have enough experience to make good management decisions. Some co-ops solve this problem just as other businesses do, by buying expertise they don’t already have. In 2008, the owners of a Chicago window factory decided to close it with little notice, and the workers staged a six-day sit-in that made them celebrities overnight. Another owner took over but closed the factory again. The workers bought the equipment and moved it to a new factory, saving hundreds of thousands of dollars with sweat equity. The new company, called New Era Windows, opened last year. Though the workers are still paying themselves minimum wage, they elected to hire a high-priced, experienced salesman to drum up business.

New Era was lucky to find financing, borrowing $600,000 from a nonprofit called the Working World, which started lending to co-ops in Latin America and has branched out to the U.S. The biggest challenge co-ops face is lack of capital, which is why they are often labor-intensive businesses with low start-up costs. Banks can be hesitant to lend to co-ops, perhaps because they aren’t familiar with the model. Meanwhile, credit unions — another form of cooperative — face stringent regulations on business lending.

Who Needs a Boss? [Shaila Dewan/NYT]

(via Mefi)

(Image: IWW Printing Co-op, IU 450, Detroit Universal Label, Wikimedia Commons/Public Domain)