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A Co-Op Solution: Fighting the ‘New Normal’ with Workplace Democracy

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Judy Davis, a worker-owner at Glut Food Co-Op in Mt. Rainier, Maryland, jots down notes at the checkout counter. She has worked at (and owned) Glut for 30 years.

CREDIT: Campus Progress / Shay O’Reilly

On 34th Street in Mount Rainier, Md.—just over the state’s border with DC—Glut Food Co-Op’s windows advertise an array of natural foods. Shelves cast dingy shadows in the clouded glass, belying the interior’s warm yellow glow. Inside, a tribute to the late Gil Scott-Heron hangs over an entrance to the bulk spice room; customers peruse fresh produce or scoop seeds and nuts out of bins, carefully labeling the bags with a unit price (as per the hand-written signs).

Minus the Scott-Heron poster, this is a scene that has been enacted for 40 years in this same spot.

Judy Davis has worked here for 30 of those 40 years. “Too long,” she laughs. Davis has lasted this long ringing up groceries and doing inventory, she says, because of the nature of Glut: It’s a worker-owned enterprise in which all decisions are made horizontally, through the democratic process.

Her coworker Ziah Ayubu leans over. “The schedule is flexible,” he says, and that’s why he likes it. When Ayubu wants a day off, he doesn’t have to approach a manager; the 13 staffers, plus more volunteers, collaborate on the schedules—just like they do on everything.

Glut Food Co-Op represents a massive reversal of the usual paradigm, in which overseers, managers, and bosses set the working conditions for all lower-level employees. And that current paradigm, and its illusory benefits for average Americans, is crumbling.

At times, the future of the American worker seems relentlessly dystopian; as wages languish at sub-living levels, productivity, corporate profits, and executive pay have been increasing steadily. A “jobless recovery” has further concentrated wealth in the hands of those bankers and lenders responsible for the initial crash.

But some workers, activists, academics and lawmakers are touting alternatives to the relentless privileging of capital over labor. The most vigorous of these alternatives is worker cooperatives like Glut, in which workers own their shops and factories, collectively, and make decisions through the democratic process. 

While such ventures have always existed, worker cooperatives have drawn more attention in recent months due to the impending kickoff of the United Nations’ International Year of the Cooperative, a trenchant opinion piece in the New York Times, and a congressional push for a cooperative development office. All of these focus on the ability of cooperatives to transform the current economic model into something more just, more equitable, and more sustainable—something far from the present wholesale ransacking of working and middle classes alike.

And it is a ransacking, what Pimco CEO Mohamed El-Erian calls “the new normal.”

In a prominent piece for Foreign Policy magazine, El-Erian argues that the economic collapse is not a one-time plunge but a reduction of the baseline. The hallmarks of the coming years will be slow growth and high unemployment. El-Erian’s piece focuses on the downsides for investors, but cooperative advocate Dennis Kelleher points out the missing component of this economic analysis: What it means for workers.

“Where I find it to be particularly negative, is that [the new normal] will put continuing downward pressure on wages,” Kelleher told Campus Progress. “This ‘new normal’ of low economic growth is going to continue helping corporate profits … if your wages are low, then you can continue to squeeze your employees, forcing them to work harder but not paying as much.”

Kelleher, a former City of Chicago Deputy Treasurer, runs the site RebelCapitalist.com. His awakening to economic democracy came with the crash of 2008, which confirmed his skepticism toward Chicago-school economics.

“In a way, the old normal is no different than the new normal,” Kelleher said. “The only thing that's different now than pre-2008, or pre-Lehman Brothers, is that there’s no debt.”

It’s a grim picture: An economy in which debt for years substituted for stagnant wages, now in a crisis that will slow that same debt. The illusion of a thriving middle class is crumbling; massive debt and high unemployment means a disparity in power that equals the disparity in income.

It is this disparity in power, manifested in workers’ lack of control over the circumstances of their labor, which cooperatives confront. All cooperatives follow the Rochdale Principles, seven guidelines that serve as the praxis for cooperative theory:

1. Voluntary and open membership

2. Democratic member control

3. Member economic participation

4. Autonomy and independence

5. Education, training, and information

6. Cooperation among cooperatives

7. Concern for community

Organizing around these principles provides a glimmer of hope in the form of an alternative economic model.

Union Cab has operated as a worker-owned business in Madison, Wis., for more than thirty years. While worker-owners receive a living wage and complete coverage of health insurance premiums, the more intangible benefits also stand out.

Operations Manager David Lee likes the ability of the worker-owners to set goals, and ideals—and to decide how best to enact their principles.

“We wanted to make sure we were running a safe company, so we made sure our vehicles worked properly, our communications worked well,” Lee told Campus Progress. “At the first [cab] company I worked at, there was a sole owner. He didn't seem to have as much concern.”

Union Cab also sets a limit on top salary—the highest-compensated employees can make only three times as much as an entry-level employee. This is a far cry from the 325:1 average ratio [PDF] of CEO-to-worker pay at companies in Standard & Poor’s 500 index, all of which use a hierarchy-based organization. By virtue of worker-ownership, cooperatives are freed from the negative wage-pressure exhibited by other businesses in El-Erian and Kelleher’s depressing “new normal.”

“You got plenty of people who roll up their sleeves every day, go to work. But if there’s someone way up there on the chain that collects all the extra money, that’s not fair,” said one worker at Isthmus Engineering in Wisconsin, a worker-owned business featured in Michael Moore’s Capitalism: A Love Story (which some cooperative development networks credit with a surge in interest).

Distribution of wealth among workers through worker-ownership is not only equitable, say cooperative development organizations, but it is also more sustainable—more insulated from the careening market. 

The International Organisation of Industrial, Artisanal and Service Producers' Cooperatives, a European network, found in a report released this summer that worker cooperatives were weathering the financial crisis better than traditional enterprises. Cooperatives reported less volatility in employment than hierarchical organizations, with very few jobs lost in existing cooperatives. In keeping with the principle of inter-cooperative solidarity, signs of recovery were most pronounced in cooperative-heavy countries like Spain (home of the behemoth MONDRAGON Corporation).

Worker cooperatives may even stabilize the overall economy, as they aren’t driven by bankers or trading on derivatives. Instead of emphasizing short-term profit, every worker-owner is invested in the long-term establishment of the organization.

“Worker-ownership just cuts Wall Street out of the loop,” Attorney Thomas Beckett told Campus Progress. Beckett works to develop cooperatives in North Carolina, hoping—among other objectives—to revive the desiccated textile industry. “We have a business, we create value, and we get to decide what to do with the proceeds, and we pay ourselves better, and we take care of our community better, and the stuff we create stays where we live—that’s the basic model.”

But perhaps most importantly, worker cooperatives are part of a push for economic democracy. The particular changes that workers make to their workplace may be less important on the national scale than the power they hold to exert these changes.

As democratic theorist Sheldon Wolin writes, it is impossible to have a democratic political system when no other spheres of society—particularly not the economic—are under democratic control.

“If you have an economic system that is very unequal, you have a lot of income concentrated in one place, your politics are going to reflect that,” Kelleher said. “I think it’s economics that drives everything. … You look at how much time people spend at work. If they work in a place that's very democratic, I think they'd bring that home, I think they'd bring that back to their community. I think it would actually strengthen democracy, if we had more worker cooperatives.”

In short: A taste of democracy in the workplace enhances one’s appetite for it in civic life, making cooperative workplaces good for politics, for workers, and for economic well-being.

Academics and politicians are catching on. The mayor of Richmond, Calif., a town with a 16 percent unemployment rate, recently unveiled a renewal project that centers cooperatives as engines of economic growth and empowerment. Gayle McLaughlin’s initiative takes cues from both Spain and Cleveland, Ohio, whose Cleveland Foundation distributes grants to cooperatives like the Evergreen network.

In Congress, Rep. Chaka Fattah (D-Penn.) has proposed the National Cooperative Development Act. The bill establishes a federal organization—the National Cooperative Development Center—that would provide start-up capital for worker-owned enterprises, training for development organizations, and grants to cooperatives around the country. The act allocates a modest $25 million to the center, but advocates say every little bit helps.

Federally-funded loans would help a common problem of worker cooperatives: Acquiring start-up money.

“A typical bank doesn't even understand cooperatives, the concept,” Beckett said. “They're not dealing with one person who will put their house up as collateral.”

More disquieting is the bill’s lack of support among members of Congress more interested in quibbling over other matters.

“It perturbs me that we could only get three cosponsors for this bill,” Kelleher said. “I'm hoping that they'll come around to this very modest, job-creating proposal. [The act] can be effective—it can certainly be effective.”

The National Cooperative Development Act was introduced just in time for the United Nations’ International Year of Cooperatives, which urges governments worldwide to sponsor cooperative development and kicked off earlier this week. The U.N. declaration specifically recognizes the benefits that cooperatives offer for marginalized people and their massive potential for ameliorating poverty.

This consciousness-raising has found yet another loud voice in the U.S. in recent months: University of Maryland Professor Gar Alperovitz, whose op-ed in the New York Times, “Worker-Owners of America, Unite!,”was followed shortly by an article for Occupy Boston’s newspaper. In the latter piece, Alperovitz calls for a democratizing of ownership, and expresses hope for a cooperative future. Constituencies, he writes, must “come to understand why these new economic models are important to a democratic future.”

That democratic future, if cooperative advocates are right, would have none of the booms and busts that have rocked the world economy. It would involve, Kelleher said, people being “active participants in the political system regardless of their socioeconomic status.”

Asked to dream big, Kelleher does: “The purpose in a cooperative economy would be to serve people. To serve needs, economic needs, social needs, the physical needs of people, and profit would not be the primary motive.”

But for now, worker-owners and advocates are enjoying the immediate perks of cooperatives: control over their own working conditions, greater pay, economic security, and a good level of empowerment. There’s a human benefit, too: Cooperatives are local businesses that bolster community and, through their emphasis on worker dignity, encourage good relationships between worker-owners and customers. Personal attachments are common.

Nisey Baylor, the eponymous owner of Nisey’s Boutique, credits Glut for the location of her business: She saw the neighboring space for rent after shopping at the co-op for years.

“Co-ops like Glut have customers that have been coming for 40 years straight,” Baylor told Campus Progress. “They’ve got loyalty on their side.”

Back inside Glut, Abuyu says he drove a rig cross-country before he started working at the store 11 years ago. His tenure means he knows all the regulars, and as Abuyu rings up the last customers of the night under the watchful eye of Gil Scott-Heron (“Rest in Power”), one man is eager to share his feelings toward the place.

“It’s like family here,” the customer says.

Shay O'Reilly is a reporter with Campus Progress. Follow him on Twitter @shaygabriel.

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