The cooperative movement has a long history, but what is needed most
is a system of loan guarantees that encourages their establishment as
even a first choice. In this way local people employ local people
and provide real income stability and even a potential support net
for job seekers.
It is also obvious that this form of structure is able to service the
lower third of the economy in particular far better than any other
system and should be encouraged. It can internally grow its own
equity for expansion as well.
The system should also be linked directly to microfinance as well.
Thus it can multiply its impact in the community.
Workers in Maine
Buy Out Their Jobs, Set an Example for the Nation
Saturday, 13 September
2014 10:25
On remote Deer Isle,
Maine, the movement for a more just and democratic economy won a
major victory this summer. More than 60 employees of three retail
businesses - Burnt Cove Market, V&S Variety and Pharmacy, and The
Galley - banded together to buy the stores and create the largest
worker cooperative in Maine and the second largest in New England.
Now the workers own and
run the businesses together under one banner, known as the Island
Employee Cooperative(IEC). This is the first time that multiple
businesses of this size and scope have been merged and converted into
one worker cooperative - making this a particularly groundbreaking
achievement in advancing economic democracy.
Getting There: What It
Took
When the local couple
that had owned the three businesses for 43 years began to think about
selling their stores and retiring, the workers became concerned. The
stores were one of the island's biggest employers and a potential
buyer probably would not have come from within the community or
maintained the same level of jobs and services. Only a worker buy-out
could achieve stability.
Because these workers
were trying to accomplish something historic, it took more than a
year - and it wasn't always an easy road. But the workers' strength
lay in their own determination, and in the ability to rely on a group
of allies dedicated to growing the cooperative movement. The
Independent Retailers Shared Services Cooperative (IRSSC) and
the Cooperative Development Institute, helped them develop their
management, governance, legal and financial structures. They were
also able to secure financing from Maine-based Coastal
Enterprises and the Cooperative Fund of New England, both
Community Development Finance Institutions (CDFIs). Without that
dedicated technical assistance and available capital, it is doubtful
the IEC would be here today.
More Is Needed
While the creation of the
IEC maintained dozens of decent paying jobs and a remote community's
only nearby access to essentials such as groceries and prescription
medications, it also points to a successful model that could be used
across the country to expand ownership and wealth to regular working
people. This experience shows that if only we had more resources to
experiment with grounded, practical economic policies, we could
create many more of the living-wage jobs and community-sustaining
businesses we desperately need.
The Great Recession has
led many to consider better ways to organize our economy, as always
happens during economic downturns. But the reality is that our
economy, even during the "good times," has always been
failing working people. So we need to think long term and change our
strategies in order to build a durable, democratic, equitable and
just economy.
The Great Recession in
Maine: A Bad Situation Gets Worse
In the aftermath of the
Great Recession, Maine has won back less than half of the jobs we
lost (ranking us 46th among the states): We are second from the
bottom for total job growth, and we have one of the highest numbers
of part-time workers who want more employment but can't find it.
Nearly one-third of unemployed Mainers have been looking for work for
more than six months, which is more than twice the national
average. And what little growth there has been has occurred
almost exclusively in the Portland metro region, in far southern
Maine.
But it's not as if our
workers were prospering before the Great Recession.
Over the last 30 years,
the incomes of the poorest Maine workers grew by only 27 percent,
while incomes for the wealthiest Mainers jumped by 67 percent.
Starting in the late '90s, Maine lost more manufacturing jobs per
capita than any other state. Maine workers also have the lowest
average incomes of all the New England states and, of Maine's 16
counties, 14 of them are among the poorest in the region. As a
result, one in seven Mainers overall and more than one in five
children live in poverty. Most shamefully, poverty characterizes more
than one in four young children, and one in three in our poorest
counties.
In short, Maine's low
wages, limited job prospects, deepening poverty and growing
inequality are not just the result of the Great Recession; it is
structural and long-standing. We've needed to change the way the
economy works for quite a while. And that's exactly why strategies to
create sustainable, democratic businesses like the Island Employee
Cooperative are so critical.
The Island Employee
Cooperative: A Model for Maine and the Nation
Worker cooperatives hold
the promise of fundamentally addressing our longstanding economic
woes. Because they give members an equal voice in the co-op's
governance, a worker co-op will almost never pick up and leave its
community. Those jobs are democratically owned by the people who work
and live there.
In addition, in worker
co-ops, employees have an incentive to work harder and smarter,
because they benefit from an equitable share of the profits. And when
a worker co-op is facing financial difficulty, the first response
isn't to lay people off. That's because the worker-owners are sharing
the risks and burdens of the business as well. Instead, members often
come together to find democratic solutions to their problems, such as
temporarily lowering wages or cutting hours for all workers, so that
no one person has to lose their job. This is one of the major factors
that also make worker co-ops more economically sustainable in
low-income communities.
For the new worker-owners
of the Island Employee Cooperative, the transformation into a co-op
will, over time, create profound changes in their lives as they begin
investing some of the business' profits into better wages and
benefits - something that is extremely uncommon for those in the
retail business. The co-op is also already collaborating with the
Maine Community College System to deliver education programs on-site
so that the workers can improve their knowledge and skills. While
retail jobs are often depicted as low-wage and dead-end, these retail
workers are now business owners who will learn to make many hard
decisions together. And because IEC is one of the island's largest
employers, the cooperative ownership model will make a tremendous
impact on the community as many more families build wealth through
democratic ownership.
That's a model we can and
should scale up.
A New Approach to
Economic Development
Unfortunately, successful
examples like the IEC are rare in the United States because worker
cooperative development gets little to no support from city, state
and federal governments. Instead, these institutions spend a fortune
on economic development programs that create windfall profits for
corporations, but very few sustainable, living-wage jobs.
The way states have
traditionally pursued economic development relies primarily on
"chasing smokestacks" and dreaming up new tax giveaways for
out-of-state corporations. That serves to benefit the 1% while
leaving workers in the dust.
A less costly, more
effective and more equitable strategy of focusing on worker co-op
development would drive investments into grassroots initiatives for
economic sustainability. Some support already exists: For example,
New York City just passed its 2015 budget and is investing over
$1 million in a comprehensive program to support the development of
worker cooperatives, including directing existing
business-development resources to be more supportive of worker
co-ops. Ohio has provided small grants for feasibility studies and
technical assistance to employees considering a cooperative buyout of
their workplace, using federal funds that are available in every
state (but utilized by only a half-dozen or so). Rural Cooperative
Development Grants from the US Department of Agriculture support
state and regional groups that provide cooperative development
services in rural areas (though not just to worker co-ops).
There are more examples
of supportive policies, but they all amount to a tiny drop in the
bucket compared to what is spent on typical economic development
approaches that do little for working people.
In order to begin scaling
up worker co-op development, we need to provide technical assistance
and small pre-development grants to people starting co-ops within
their own communities, make available better education on how to
operate a cooperative, provide loan guarantees for groups who would
otherwise struggle to access credit, and offer targeted, accountable
tax incentives.
Communities across the
country would benefit from more initiatives that support development
of new co-ops, as well as converting existing businesses into
worker-owned ones like the Island Employee Cooperative.
This approach would allow
many more communities to sustain themselves, cultivate jobs with
dignity, improve wages and help more people build wealth through
democratic ownership. And then we might see a transformation into an
economy that truly and sustainably serves the needs of all.
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