Worker Cooperatives Build a Strong Local Economy

Economic Democracy in Dane County, Part One:
Worker Cooperatives Build a Strong Local Economy, Prioritizing People over Profit

By Greg Brown — In November 2015, Kraft Heinz announced the closing of Oscar Mayer’s Madison plant. It was devastating news for more than 1000 workers. One of Madison’s largest employers since 1919, Oscar Mayer has long been a Madison institution, but parent company Kraft Heinz is a large multinational corporation more concerned with the profits of faceless shareholders than the well-being of workers in our community.

It’s doubtful our city government could have done anything to keep Oscar Mayer in town. When a company puts shareholders first, workers are at best a distant second. When Kraft Heinz shareholders decided it was time to pack up local jobs and go, there was nothing the workers (and those in our community who care about them) could do to stop them.But what if all of Oscar Mayer’s shareholders lived in Madison? What if the shareholders were the same people who worked at the plant? What if the decision to move had been put to those 1000 workers for a vote? What if, that is to ask, Oscar Mayer had been organized as a worker cooperative? It’s safe to say that 1000 good jobs wouldn’t be leaving Madison for Illinois and Iowa anytime soon.

This is coop country
Many Dane County residents are members of the more than 80 cooperatives in Madison, which include housing cooperatives, consumer cooperatives, credit unions, producer cooperatives, insurance cooperatives, a healthcare cooperative, community service cooperatives, and worker cooperatives.

All cooperatives are by definition owned, controlled, and operated by a group of users for their own benefit, but only in a worker cooperative is that group the workers themselves. Crucially, in a worker cooperative decision-making is democratic, adhering to the general principle of “one member, one vote.” This distinguishes worker cooperatives from other “employee owned” businesses that are not democratic workplaces, but rather offer an employee stock ownership plan (ESOP).
When you think of an ESOP, you might think of Woodman’s, locally, or in Colorado, the “100% employee owned” New Belgium Brewery, whose Board of Directors won’t deny they’re presently looking into selling the company right out from under their workers.

Thoroughly rooted in the Madison area, worker–owners at a local worker cooperative won’t tolerate the outsourcing of jobs to faraway places. Rather than being siphoned away by “the 1%,” any profit stays in the hands of worker–owners, and can be reinvested in our own communities, if not in the cooperative itself. Profits are distributed equitably among workers. This money stays in the county where it can be fairly taxed.

The next time you wonder why local, state, and school budgets are so tight, think about where the corporate profits produced by our hard-working labor force are being taken. Chances are it’s to Wall Street or Silicon Valley.

Dane County is a hotbed for collective entrepreneurship. There are more worker cooperatives in Madison than in many U.S. cities several times our size. Over 600 people are employed by local worker cooperatives, including: Codeversant (a software developing cooperative), Community Pharmacy, Four Star Video, Interpreters’ Cooperative of Madison, Isthmus Engineering and Manufacturing Cooperative, Just Coffee Cooperative, Lakeside Printing Cooperative, Madison Martial Arts Cooperative, Nature’s Bakery Cooperative, Union Cab of Madison Cooperative, Union Technology Cooperative, Wisconsin Citizens Media Cooperative, and Wisconsin Natural Heritage Cooperative.

Cooperative values in motion
Because the workers at a worker-owned cooperative are also the shareholders, they are beholden to no one but themselves. This autonomy allows workers the freedom to temper the pursuit of higher profits with a desire to be a good neighbor.
Take, for example, Union Cab of Madison Cooperative, founded in 1979 and currently employing over 200 worker–owners (including me, since 2001). The cab drivers, mechanics, dispatchers, and other support staff — all of them stockholders — live in your communities, including neighborhoods underserved by buses, where one’s residence might be a hazardous long walk from the polling place.

Five years ago, Union Cab started a “Democracy in Motion” program, which on all election days offers free cab rides for area residents to and from the polls. Individual drivers do not pay for these rides, but rather all Union Cab worker–owners share the cost, paying for them out of the annual budget.

Union Cab is also Madison’s only taxi company to offer wheelchair-accessible service. Although wheelchair-accessible vans cost the cooperative twice as much as a non-converted cab, this cost is not passed along to customers who use wheelchairs. To the worker–owners of Union Cab, this is simply part of the cost of ethically running a business. It’s no coincidence that a worker-owned cooperative provides the only on-demand wheelchair-accessible taxi service available to Madison residents. It’s a direct result of cooperative values.

As it stands, Madison’s economy is in no way immune from the worldwide trend of income inequality that grows starker every year. For many low-income residents, the capital required to start up a solo business venture is an insurmountable barrier. The misnamed “sharing economy” only adds to this disparity (try driving for Uber if you don’t already own a newer-model car).
Worker cooperatives not only can provide entry-level work for the people who need it most, but they also offer a meaningful opportunity to buy into the company. People who otherwise might be frozen out of the entrepreneurial landscape thus become first-time business owners, sharing in the inherent risks and rewards of its operation.

At our December 16 General Membership Meeting, Progressive Dane members unanimously passed a county platform that calls on our elected officials to “ensure that all economic development decisions are made through an equity lens,” and encourages them to “target economic development subsidies to projects and small, locally-owned and start-up business/worker-owned cooperatives that offer family-supporting jobs, affordable health care, respect for workers’ rights, equal opportunity and environmental soundness.”

When it comes to equity, many of us have learned to talk the talk. But how do we craft and implement policies that will actually begin to address economic disparities? How can we in Madison learn from the closing of Oscar Mayer and create a plan to keep this all-too-familiar scenario from playing out again and again?

Worker cooperatives are a great place to start, and now is the time to build this movement into an economy of scale far beyond the 600 workers currently employed by cooperatives locally.

In Progressive Dane’s February newsletter we’ll take a look at what some in our community are doing to democratize and strengthen Madison’s economy through one particular item in the city’s 2016 budget: “Cooperative Enterprises for Job Creation and Business Development.”