Worker cooperatives can sometimes sound too good to be true: a business owned and controlled by its workers, who each usually get an equal share of the profits. Compensation for some has gone from $6.25 an hour to $25 an hour. Flexible schedules. Worker majorities on the boards of directors interviewing CEO candidates. Dignity at work and wealth at home for some of the most marginalized — a group of Filipina women, many of them survivors of human trafficking, launched a cleaning worker cooperative in New York City last September.
For many reasons, worker cooperatives have had difficulty growing in number and size. Comprehensive data on worker cooperatives are hard to find, but the U.S. Federation of Worker Cooperatives (USFWC) currently estimates there are around 350 in the U.S., employing about 5,000 people. That’s an average co-op size of 15 or so. They do seem to get a good amount of business, cumulatively earning around $500 million in annual revenues.
Seeing the promise of the worker cooperative model to address inequality of income and opportunity, the city of New York announced a $1.2 million Worker Cooperative Business Development Initiative (WCBDI) over a year ago — and initial results from that effort are in.
According to the new report, during the first year of the initiative, the city and its partners have supported the creation of 21 new worker cooperatives. That alone nearly doubles the number of worker cooperatives in NYC, not counting any that may have gotten started without the city’s support. Just 23 worker cooperatives existed in New York City as of January 2014.
The WCBDI, which NYC’s Small Business Services (SBS) administers, was reportedly the largest investment to date in worker cooperatives by a city government in the U.S. The lion’s share of the money went to 10 implementing partners, located throughout the city. A small portion also went to the CUNY Law School’s Community and Economic Development Clinic, which provided legal assistance across the portfolio.
Early on, SBS and its partners established four metrics to track: worker cooperatives created, worker cooperatives assisted, entrepreneurs reached and worker-owners created.
The report finds that six of the new worker cooperatives got started with support from Green Worker Cooperatives, an organization dedicated to incubating worker-owned green businesses. They’re located in the South Bronx, for many years the nation’s poorest congressional district, and also home to Cooperative Home Care Associates, the nation’s largest cooperative, with more than 2,000 members.
Green Worker Cooperatives got a $156,750 WCBDI grant that went to support a range of initiatives, including their existing Co-Op Academy, a 16-week intensive workshop focusing on the principles and basics of starting and running a worker cooperative. With the extra support from the WCBDI, they provided additional individualized support to participants throughout the course. The extra resources also allowed them to teach a course at Bronx Compass High School, as a result of which, students launched Syllable Cooperative, a silk-screening business. Other cooperatives launched include a travel planning service, two cleaning services and an arts education service.
The WCBDI also reported providing 84 services to 24 existing worker cooperatives. The New York Network of Worker Cooperatives (NYC NOWC, pronounced “nick nock”), which got the smallest WCBDI grant of $15,000, accounted for 30 of them. Based in Manhattan, NYC NOWC is the local affiliate of the USFWC. Since their founding in 2009, they’ve primarily served as a co-marketing service for NYC’s worker cooperative businesses, while also promoting visibility and understanding of the worker cooperative model. They also engage in advocacy work at the city and state level to drive more investment into worker cooperatives. NYC NOWC was an all-volunteer organization until recently, when WCBDI allowed them resources to pay for providing business, legal, marketing and financial services to 30 worker-owned businesses and startups. Some of the resources also went to support additional specialized workshops at their annual NYC Worker Cooperative Conference. The workshops focused on business networking, financial assistance and electing a board of directors.
More than 900 existing entrepreneurs received some form of support from WCBDI to convert or consider converting their businesses into worker cooperatives. These activities included support for conferences, lectures, group training sessions and one-on-one assistance. Democracy at Work Institute (DAWI), which got a $104,500 grant, holds regular training sessions on converting businesses to cooperatives throughout the year, and reported reaching 300 entrepreneurs with its grant from WCBDI. NYC NOWC reported reaching 200 entrepreneurs, through their attendance at the NYC Worker Cooperative Conference.
Creating worker-owners is of course a key bottom line goal, but also probably the most difficult. It took Cooperative Home Care Associates 30 years (they were founded in 1985) to get where they are today. NYC reports creating 141 worker-owners as a result of WCBDI activities. The Center for Family Life (CFL), in Brooklyn’s Sunset Park neighborhood, reported creating 48 of them. They got a $139,650 grant. CFL’s worker cooperative training program has a focus on hiring and training new worker-owners. (Those survivors of Filipina human trafficking got their worker cooperative started with CFL’s support.)
The biggest single grant went to The Working World (TWW), for $218,500. Based in Manhattan, TWW mainly provides loans, financial education and other assistance specifically tailored to the unique needs of worker cooperatives due to their organizational structure. TWW’s loan portfolio has included investments in Argentina and Nicaragua, as well as other U.S. cities such as Chicago and Baltimore. Some of their loans have been as small as $400 for Occupy Wall Street t-shirt screen printing, and as large as $645,000 to launch the New Era Windows cooperative from the remains of Serious Energy’s Chicago windows business.
In NYC, WCBDI funding helped support a $60,000 TWW loan to help buy out a grocery store in Brooklyn’s Bed-Stuy neighborhood and convert it into a worker cooperative. TWW reported only creating two new worker cooperatives so far as a direct result of TWW’s WCBDI grant. The Bed-Stuy grocery store would represent a third. The city also reports that TWW also frequently provides business training and technical assistance in partnership with the other WCBDI grantees.
Also worth noting, the 21 newly created worker cooperatives are distributed across 11 different industries, from manufacturing to education to a yoga studio. As of June 2015, WCBDI reported to NYC City Council that another 19 new worker cooperatives were in the pipeline. That would nearly triple the number of worker cooperatives in the city since January 2014.
The Equity Factor is made possible with the support of the Surdna Foundation.
Oscar is a Next City 2015-2016 equitable cities fellow. A New York City-based journalist with a background in global development and social enterprise, he has written about impact investing, microfinance, fair trade, entrepreneurship and more for publications such as Fast Company and NextBillion.net. He has a B.A. in Economics from Villanova University.