Growing levels of inequality and job insecurity – and the social and political instability these are fuelling – have for several years been prompting discussion about ways to build a better future of work, with co-ops and other worker-owned models often touted as a solution. But how can these models be deployed to bring quality work to traditionally insecure, low-wage sectors?
In California, policymakers with an eye on this question asked academics and sector experts for ways to promote worker ownership in order to drive economic recovery.
The resulting paper was presented at a webinar in December. The report was based on a study led by Professor David I. Levine from the University of California Berkeley Haas School of Business in partnership with the Rutgers Institute for the Study of Employee Ownership and Profit Sharing. Its main editor was Danny Spitzberg, a sociologist at the University of California, Berkeley, who has conducted extensive research into co-operatives and also contributed original analysis on staffing to the larger study. Other researchers on the team included Adria Scharf, K. MacKenzie Scott, William Foley, Minsun Ji, and Gonçalo Costa, and advisors included Doug Kruse, Ed Carberry, and Jungook Kim.
It presents comparative research on home care co-ops, with analysis conducted during 2023 and 2024 in “high-road” worker-owned firms (HRWOs) – that is, co-ops and other democratic, worker-owned firms with above-average labour practice.
The research found these businesses were faced with a raft of market barriers and regulatory challenges, particularly in sectors where people from historically disadvantaged communities tend to work.
The report says state legislators can tackle this with policies to promote Associations of Co-operatives (ACs) – secondary co-ops or umbrella groups that provide shared services to multiple HRWOs, or even federations along the lines of Mondragon in Spain and Sewa in India.
“We suggest that the state consider a grant programme for ACs with proven capabilities to assist co-ops with startup and operations,” the report says.
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The study also recommends policies to promote HRWOs. “We suggest that the state consider certifying HRWOs and related advisors,” it adds, “targeting procurement for HRWOs; organising appropriate training, advising, and financing for HRWOs; and adjusting regulations to improve lending, purchasing, and labour standards.”
During the webinar, discussion looked at how the advantages of HRWOs play out in the job market. K. MacKenzie Scott, a PhD candidate at MIT Sloan School, presented research on home care co-ops in California, and the benefits brought by membership of co-op association Elevate. The co-op offers better job quality, with members earning nearly 50% more than typical cleaners, said Scott – but managing business performance and workplace democracy within the co-op are difficult because workers juggle multiple jobs, family responsibilities and busy schedules.
In particular, it was sometimes hard to match a worker’s schedule to a client’s needs.
“Out of 17 members that were there during this study, only six workers were working full time for the co-operative, and they mentioned that they were actually sometimes turning down clients because of this matching problem,” said Scott. “That said, people are consistently showing up for regular meetings.”
Danny Spitzberg shed more light on how secondary co-ops can help resolve such issues. He highlighted the example of Up & Go (main picture), a co-op of co-ops which started in 2017 with three cleaning co-ops in New York City, mostly composed of immigrant women.
Incubated by the Center for Family Life in Brooklyn, the co-op provides fair wages and flexible schedules, allowing workers to balance their work with other responsibilities, such as childcare and other jobs, said Spitzberg. And despite financial challenges, it managed to been set safety protocols and other policies during the Covid-19 pandemic.
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It is now spreading the model to other cities, like Philadelphia and Detroit, and has helped the development of other co-ops by providing back-office services and support.
“These clusters of support organisations – co-ops, non-profits and so on, have been critical enablers for a lot of development,” said Spitzberg. “The gains and the speeds and the outcomes are all quite impressive.”
Prof Levine, who hosted the webinar, said such umbrella groups were so pivotal, the state could consider giving them funds to assist co-ops – whether they are established ones looking to grow, or new startups.
A level playing field is also important if worker co-ops are to compete with conventional businesses, said Levine. “Any high road workplace is going to have an easier time if there’s enforcement of labour laws,” he added. “Lots of conventional workplaces aren’t breaking a bunch of laws. But the policy perspective I take is, if there’s a positive externality – improving skills, helping improve the macro economy, and providing a minimum level of dignity to go with the minimum wage … then these are things the government should be supporting, to create a playing field that’s tilted towards whatever social benefits.”
Policies the state could put in place include providing support for the Employee Ownership Hub, which currently needing funding and staffing by the state; this is complementary to a more important initiative by the state or by private philanthropy – funding ACs. The state could also offer a certification system for HRWOs and related advisors. Funding is also needed for outreach and education, said Levine.
The need for better education in schools and universities on co-ops and worker ownerships – commonly identified as a barrier to growing the sector around the world – was discussed, the state to fund outreach and information dissemination. And Levine said there is also need for training in skills like budgeting, negotiation, and open book management if worker-owned businesses are to succeed.
Toolkits for worker-owned businesses – such as templates for legal documents and training materials – are also needed, added Levine, who thinks AI could be brought to bear, with the use of chatbots to screen potential candidates for employee ownership and provide initial assessments. And barriers need to be removed against business owners looking to sell to their workers, he said.
The research also calls on policymakers to consider flexible forms of worker ownership. “A new wave of experimentation is under way across the country utilising a variety of forms of shared ownership structures to empower immigrant workers, build economic security, and improve low-wage jobs,” says the report. “Rather than defining a specific form, the legislation might expand to encompass a variety of shared ownership organisational types that give workers governance rights and voice and rights to profit sharing and meet certain labour standards requirements.”
And it warns that action is urgently needed. “Given the fissured economy and the increasing trend of employers shifting employment responsibilities to labour suppliers and subcontractors, identifying democratic solutions to build worker power across supply chains, within labour market intermediaries and among outsourced labour has become an increasingly critical challenge.”
