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An Inclusive Prosperity Strategy

 

Worker cooperatives provide an inclusive, place-based community economic development strategy that improves job quality and wealth-building opportunities for low- and moderate-income workers. Cooperative business forms have long been key to community economic development in other parts of the world and have been used as a self-help strategy in communities going back centuries in the United States. In recent decades, worker co-op development has emerged as a strategy to leverage the well-known benefits of local business ownership for a broader and deeper impact in U.S. communities.

 

Impact
As businesses centered on member and community benefit, worker cooperatives, when thoughtfully structured and well-implemented, can offer three distinct advantages:

 

(1) They can create and retain high-quality locally rooted jobs in multiple bottom-line business entities;

(2) They can democratize wealth and address inequality at its root in the ownership of productive assets;

(3) They can build skills and leadership among workers who traditionally have limited access to these opportunities.

 

Moreover, because they are market-based business entities that generate profits, they can be a self-sustaining strategy for economic development.  The positive impacts of worker ownership at the individual, enterprise, and industry levels are documented in specific cases, though there are few large-scale formal studies in the U.S. For low-wage service workers, worker cooperatives can boost incomes substantially and stabilize volatile jobs in high-turnover industries. A growing body of international research and experience also points to the powerful impact of worker ownership in improving company performance, raising industry standards in low-wage work, and even positively affecting public health.

 

Approaches to Cooperative Development and Growth

There are multiple pathways to increasing worker ownership: creating new cooperatives, growing existing cooperatives, and converting conventionally owned businesses to worker-owned structures. Cooperative worker-owners can undertake these processes independently or in partnership with a co-op developer, usually a nonprofit organization but in some cases a secondary co-op.[i]  The term “worker cooperative development” encompasses a range of activities, from general support for shared entrepreneurship to incubation of new businesses and support for businesses that are converting to worker cooperatives. The development approach may be determined by who initiates the endeavor and what impact they are aiming for, as well as by the experience, resources, and needs of the cooperative’s eventual members.

 

At one end of the spectrum of co-op development models, a group of entrepreneurs comes together to start a cooperative business, often as a self-help strategy. At the other end of the spectrum, the entrepreneurial actor is the co-op developer itself. The developer provides more in-depth and comprehensive services over a longer period of time and often has substantial control over the process and outcomes. This approach, also called incubation or a “high-touch” approach, generally aims for community economic development impacts: to create quality jobs for low-wage workers, to build assets, and ultimately to reduce poverty. When these initiatives are designed for scale and co-op developers have critical assets, such as business expertise, entrepreneurial leadership, an industry- or sector-specific growth strategy, and access to growth capital, co-op development can achieve deep impact on workers, families, and communities

 

As with other community economic development efforts, deeper investment in cooperative development can create deeper impacts for people who lack access to investment capital, advanced education, or the social capital that creates connections to business opportunities. The Cooperative Growth Ecosystem focuses on those growth-oriented cooperative development activities we believe are most likely to achieve community economic development impacts: incubated and high-touch/high-investment models.

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[i] A secondary cooperative is a cooperative of cooperatives, generally formed for the purpose of supporting or supplying goods or services to the primary cooperatives that constitute it.
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