American Worker-Owned Co-ops = Good Business

The Democracy at Work Institute, a sister organization of US Federation of Worker Cooperatives (USFWC), released a report this year called US Worker Cooperatives: State of the Sector that gives an overview of US worker-owned co-ops. The report observes that much has been said about worker co-ops internationally, but that US worker co-ops as a whole have lacked analysis. The report tallies 256 worker co-ops in the US. A small number, likely an underestimate due to lack of data, but the report concludes US worker co-ops — known for delivering social, democratic, and community benefits — deliver impressive profits and growth.

It’s important to remember this report is interested in only worker-owned co-ops. There are other types of co-ops including customer and producer co-ops. Massachusetts alone, for example, has 254 registered co-ops of all types (as of last year when I asked the Office of the Secretary of Massachusetts).

Nationally, worker co-ops exist across “five key sectors – manufacturing, retail, food, administration/waste management and professional services.” Total revenue of the worker co-ops studied is $367 million.

Worker co-ops, governed by workers, are great indicators of wealth distribution in the US. But what the report makes clear is that worker co-ops can successfully compete with traditional firms using standard capitalistic measures. In fact, evidence shows that co-ops slightly outperform their peers. When comparing worker co-ops to the US Profit Margin in three categories: Overall, Manufacturing, and Retail Trade, the study shows a better profit margin in all three categories. In the sampling for Manufacturing and Retail trade it’s more than double.

There is also proof that co-ops succeed over time. The study included data from  97 surveyed worker-owned co-ops. As the report states: “the survey data shows a clear trend toward larger annual revenue as worker cooperative firms gain experience in the market. Like many other business forms, it appears that financial stability and, in some cases, significant expansion can occur once the initial start-up or post-conversion period is over.” A chart in the report shows larger annual revenue for older worker co-ops ranging from $0-10K for co-ops under 5-years old to co-ops 25-years and older making between $5M-100M.

Worker-owned co-ops appear to perform well financially in addition to what co-ops are known to accomplish such as distribution of wealth and community building. In communities that have a concentration of co-ops, business and social success is even stronger. And developing new co-ops doesn’t have to necessarily be from scratch. The report says that 42% of the worker co-ops studied converted from traditional businesses.

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