Worker Cooperatives

A worker cooperative is a business owned and controlled by the workers. The cooperative form of organization allows ordinary people to combine their energy, capital, and skills to gain steady employment and income, participate in the ownership and management of their business, and share the profits made from their investment and labor.

Worker cooperatives date back to 1790 in the U.S. and the 1760s in England. They are found all over the world. The cooperative form of organization can be applied to any business area including manufacturing, services, shipbuilding, food products, restaurants, computer software, engineering, manufacturing, and construction.

As cooperative members, workers can participate in decisions that affect the way their work is organized, performed, and managed. Workers also determine the growth and success of the business. Typically workers receive wages established by the cooperative and then share in the year-end profits (or losses) according to their participation in the business (for example, hours worked or wages earned).

Worker cooperatives characteristically expect members to:

• Accept the full risks and benefits of working in, owning, and operating their cooperative business.
• Equitably contribute to and benefit from the capital of their cooperative.
• Decide how the net income, or net losses, are allocated.
• Govern and control the enterprise on the basis of one vote per member, decision-making by consensus, or an alternative democratic structure.
• Work together, instead of as independent contractors, in a commonly owned business.

By utilizing consensus decision-making, decisions are approved by unanimous support. Some collectives do allow a two-thirds or other super-majority vote under certain conditions.

Similarity of members in pay and authority are additional characteristics of the worker collective.

Some businesses offer an ESOP (Employee Stock Ownership Plan). Employees are allocated company stock, usually according to wages or length of service. Voting rights, when they exist, are usually based on shares owned, rather than the cooperative standard of one vote per member. Although “democratic ESOPs” operate like cooperatives, most ESOPs don’t meet the definition of a worker cooperative. 

Link to information about starting and operating a Worker Cooperative.