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Posted by on Aug 27, 2015 in Economy, Featured, Politics | 1 comment

Why America Needs Worker Co-Ops More Than Ever

America is no longer a representative democracy—a fact underscored by decades of grotesque and steadily worsening economic inequality and an election process that depends more on wealthy donors than on an informed electorate.

Case in point: the middle class has been shrinking for decades and is now in the process of disappearing altogether. Since 1979, 90 percent of the economically-challenged have lost money each year, while the wealthiest 10 percent have posted huge gains, according to Forbes (and any reputable economist). The American dream is all but dead for the vast majority of us, with 1% of the population controlling 43% of the nation’s wealth.

Self-determination in the workplace could be one of the keys we need to empower and grow the working class in our nation and re-igniting the American dream. And worker-owned cooperatives could be the match that lights that flame.

The average annual income of the top 1 percent of Americans is $717,000, while the average income of the rest of us is $51,000 annually. That 1 percent of the population has a net worth that averages around 70 times the net worth of the other 99 percent of us. Americans used to believe that anyone could become part of the wealthy 1 percent simply by working harder and longer (some misguided souls still believe this in the year 2015). Increasingly, most realize that notion is no longer a reality in the United States of America.

The unequal distribution of wealth is at the core of many of our Nation’s social issues. We cannot survive as a democratic union if the majority of our citizens have become disenfranchised and disengaged from society. With more people voting for American Idols than American Presidents these days, it looks like we’re already headed down that road, our dreams of upward mobility and class-equality out the window along the way.

America was meant to be a land of endless possibilities and self-determination. This country was established to give religious and economic freedom to its citizenry. Adams, Jefferson, Franklin, and other signers of the Declaration of Independence knew their proclamations would mean very little without economic freedom. Money is and always has been a major part of the “life, liberty, and the pursuit of happiness” that was promised to Americans. Worker-owned companies can fulfil that promise.

Rather than waiting for wealth to “trickle down” to 99 percent of our citizens, we need to generate greater income for everyone willing to work reasonable hours to attain it. This can be accomplished through worker ownership. When companies are run by the people that work there, wealth is automatically re-distributed to those that earn it. Worker-owned companies have an incentive to succeed in the long-term rather than just profit in the short-term, as the business model of today demands. And this is just the time to do it, too; the middle class seems to be rallying slightly, with foreclosures in 2014 hitting the lowest levels since 2006, despite some horror stories from certain parts of the country. It’s time to harness the momentum of our economy’s modest but encouraging growth and help the middle class rise to their potential.

Even Ronald Reagan, renowned conservative and hero to the Republican right, believed in the power of worker-owned companies. In 1987 Reagan said:

“I can’t help but believe that in the future we will see in the United States and throughout the Western world an increasing trend toward the next logical step, employee ownership. It is a path that befits a free people.”

When short-term return on investment is a business’s only goal, the rich become richer and the poor become poorer, which is exactly what’s been happening in America for half a century. The business model of 2015 calls for wealthy investors to become even wealthier by buying successful companies, pillaging their assets, and promptly closing them to realize huge profits. This is bad for workers, bad for communities, and it contributes to economic inequality by concentrating wealth in the hands of just a few. In America today, you can’t borrow money unless you don’t need it and you can’t make money if you don’t have it to invest. It’s the very worst example of a Catch-22, and we’ve decided to let it dictate how our economy and government operate.

So maybe it’s time to take a look at the alternative.

Worker co-ops are businesses that are owned and operated by the people who work there, and they’re an important step in bridging the gap between the rich and poor in the America of today. Rather than squeezing a business dry to benefit a few wealthy investors, worker-owned businesses benefit the many by focusing on long-term growth and stability, in the same way that real estate investors position themselves to realize growth long-term. The workers/owners are invested in the local community where they work and live and are financially rewarded when the business succeeds and survives. That is good for workers and businesses and it benefits Main Street over Wall Street.

Last year Senator Bernie Sanders wrote “An Agenda for America” that included a proposal for worker cooperatives to increase job creation and productivity. “Instead of giving huge tax breaks to corporations which ship our jobs to China,” Sanders proposes to instead “provide assistance to workers who want to purchase their own businesses by establishing worker-owned cooperatives.” This is an idea that could change the world for 99 percent of America’s population and one that Bernie Sanders hopes to sell to American voters in 2015.

Distribution of wealth must be addressed for our nation to survive the future. Worker-owned cooperatives are an important step in healing the great economic divide that is killing America. Most companies today pay their CEO more than 300 times what they pay their workers. This disparity lays the foundation for economic inequality. The Worker Cooperative business model calls for executives to be paid no more than 3-6 times what the workers are paid, paving the way for a fairer and more level playing field for the American working class. This is the road to survival for America and economic freedom for its citizens.

The future is already looking brighter with politicians like Sanders calling for change and building grassroots movements to wrest the economy out of the hands of the wealthiest 1 percent and back into the hands of working Americans. In addition, the United States Federation of Worker’s Cooperatives was established to empower our nation’s workers, offering guidance in creating democratic worker-ownership. The USFWC hopes to advance worker-owned and governed businesses through advocacy, development, and education with the goal of bettering the lives of working Americans. They represent over 100 worker-owned businesses and could even help you and your co-workers affect change where you work and live.

With national elections looming, it’s time for Americans to address the future and embrace a much needed change to the American business model. And make no mistake; this is a moral issue, plain and simple, wherein the central question is this: “Is it okay that our economy is rigged to benefit just a tiny few?” Excuses like “Life isn’t fair” and “That’s just the way it’s always been” will continue to ring false until we address these issues in responsible ways.

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  • Rambie

    Nice article, something needs to be done to break the income inequality we find ourselves in.

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