We’re in the midst of something of a national renaissance of worker cooperatives. They’re being established in droves since the Great Recession, and cities are increasingly catching on to their potential as a way to combat poverty and inequality. New York City, Madison, Wisconsin, and Austin, Texas, have all made moves to provide technical assistance or monetary incentives for nascent cooperatives.
Yet, until recently, Oakland — the de facto U.S. capital of worker co-ops — had not stepped up to bat. The Bay Area has the highest concentration of such organizations in the country, and a slew of nonprofits devoted to them are headquartered in Oakland. But on September 8th, the City Council made good with a ceremonious resolution “supporting the development of worker cooperatives in Oakland.”
Among other items, the move recognized that these sorts of businesses — estimated to number between 300 and 400 nationally — offer wages and benefits above industry averages. The resolution, too, was a tacit acknowledgement from Council that the city will look for ways to support co-ops down the road, especially given Oakland’s unenviable reputation for extreme income inequality. (Brookings ranked Oakland as having the seventh-most unequal income distribution out of the nation’s 50 largest metros in 2014, although that improved slightly this year.)
What that municipal support might look like is to be determined. But in a draft ordinance authored by the Sustainable Economies Law Center (SELC), one of the organizing forces behind the referendum, the wish list for worker co-ops includes: getting the city to offer low-interest loans for converting traditional businesses into worker co-ops; preferential status to co-ops in the city contract procurement process; and waiving taxes and permit fees in the initial year of existence.
As a matter of practicality, SELC attorney Sara Stephens says that the easiest route to actualizing worker co-op incentives might be adding on these provisions to existing legislation for minority-owned businesses — rather than writing an entirely new section of business ordinances.
“I anticipate that these policies and ordinances will not be enacted all at once,” says Stephens. But getting the referendum passed was crucial, Stephens insists, if only to have a starting point on the books now. “This was kind of a first step for the city to show support and build momentum.”
That momentum can now also be found at the state level. Last month, Governor Jerry Brown signed the California Worker Cooperative Act, which cleared barriers to incorporation and relaxed rules on raising equity. It also changed the state legislature to explicitly acknowledge worker co-ops as distinct from other types, like consumer co-ops. State Assemblyman Rob Bonta, who introduced the bill, noted the potential for worker co-ops to combat urban poverty and inequality: “Worker-owned businesses are central to a full economic recovery and to closing the income inequality gap.”
Worker co-ops are typically small businesses, but with an ownership structure that includes workers who can democratically make decisions about the company (each owner holding one equal vote) and share in the profits. According to a “State of the Sector” report by the Oakland-based Democracy at Work Institute, more than 60 percent of people working at new cooperatives in 2012 and 2013 were people of color.
“These are people who are building businesses more as an entry into a mainstream economy than an alienation from the mainstream economy,” says Amy Johnson, co-executive director of the U.S. Federation of Worker Cooperatives, which is also based in Oakland.
Adrionna Fike is one of them. She’s one of four worker-owners at Mandela Foods Cooperative in West Oakland, a grocery store with just seven employees in total. Everyone there is a first-time business owner, Fike says, and they’re each realizing a rare opportunity to acquire a degree of empowerment in the rapidly gentrifying neighborhood.
“Lots of people are losing their housing, losing their rental opportunities in places where they grew up and their parents grew up,” says Fike. “This is kind of the only way I see us — especially people of color — being able to have some kind of ownership stake in the community.”
That being said, the difficult calculus of any small business is apparent at Mandela, which has been hit with minimum wage increases, unemployment insurance hikes and nasty utility bills of late. It recently had to let a few employees go. The City of Oakland’s support could be critical in sustaining worker co-ops — whether that’s with grant money or tax breaks or business consulting advice. “We don’t have the rich uncle or the traditional lending streams to give us $75,000,” says Fike.
Malcolm was a Next City 2015 equitable cities fellow, and is a contributing writer for the Fuller Project for International Reporting, a nonprofit journalism outlet that reports on issues affecting women. He’s also a contributing writer to POLITICO magazine, Philadelphia magazine, WHYY and other publications. He reports primarily on criminal injustice, urban solution and politics from his home city of Philadelphia.