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Tackling Economic Inequality in the U.S. Through Worker Co-ops


In June, the New York City Council voted to approve a historic $1.2 million initiative to fund the development of worker co-ops as a way for low-income and minority New Yorkers to become business owners. Co-operative News reporter Anca Voinea explores the impact of worker co-ops in economic inequality in this story:

While there are many forms of inequality, gender inequality remains a concerning issue in modern society. In the U.S., female workers are still paid only 77 cents for every dollar their male colleagues make. For immigrant workers, finding decent employment is even a greater challenge.

In January 2014 the Federation of Protestant Welfare Agencies (FPWA) published the report, “Worker Cooperatives for New York City: A Vision for Addressing Income Inequality,” in which it highlighted the important role played by cooperative enterprises in empowering women. FPWA urged city officials to provide customized support services for worker cooperatives and to make worker cooperatives a preferred contractor for city agencies.

The report described worker cooperatives as a tool that can assist marginalized populations, such as women and immigrants, in not only gaining employment, but also securing decent wages.

Co-ops can promote gender equality within enterprise and also within the wider society. Moreover, by providing quality jobs for women, worker cooperatives are also contributing to the local economy.

According to the report by FPWA, the pay ratio within worker co-ops between the highest and the lowest paid employee is generally 3:1 to 5:1 before taxes, and the minimum pay is generally higher than the local equivalent for similar work. In the U.S., the average chief executive to lowest-paid worker wage difference is 600:1.27.

“The development of worker co-operatives in New York City should be included as part of a long-term strategy to address income inequality,” reads the report.

Chris Michael of the New York City Network of Worker Cooperatives thinks worker co-ops are a natural enemy to economic inequality. “Before we even talk about real world examples, all worker co-ops address inequality,” Michael said. “You can almost say that all worker co-op by their very nature tackle inequality.”

Michael explained how New York City currently has 40 worker co-operatives, including the nation’s largest worker co-operative, Cooperative Home Care Associates (CHCA).

Created in 1985, CHCA is a worker-owned cooperative based in South Bronx. It currently employs more than 2,000 staff, nearly all Latina and African-American women, a large share of whom previously received public assistance.

At CHCA, 82 percent of every dollar received as revenue goes back to its home health aids, as wages or benefits, as opposed to 60 percent in the case of other home care agencies. Moreover, 95- to 97 percent of worker-members are employed full time, have 401(k) retirement plans and access to affordable health insurance.

Wages for CHCA’s health care workers stand at USD $16 an hour including benefits, twice the market’s rate. They work around 36 hours per week, as opposed to 25-30 hours in the rest of the industry.

Recognizing the important contribution of co-ops to job creation, the New York City Council allocated $1.2 million to an initiative designed to fund the development of worker co-operatives.

“This budget invests in our city’s future and begins to address inequality, all while strengthening our long-term fiscal health,” said New York City Mayor Bill de Blasio following the announcement of the budget.

Administered by FPWA, the $1.2 million will go to 10 organizations, including Green Worker Cooperatives and the Center for Family Life. These non-profits must create 234 jobs in worker cooperative businesses and reach 920 cooperative entrepreneurs. They will help support 28 new worker cooperatives and assist another 20 existing cooperatives.

The Center for Family Life, a neighbourhood-based family and social services organization, helps vulnerable New Yorkers build a better future for themselves and their families by setting up worker cooperatives.

One of these co-operatives is called Si Se Puede (“We Can Do It”), a women-owned and run business designed to create living wage jobs and educational opportunities for its members.

Employers of domestic workers are excluded from the Fair Labor Standards Act, which means that they are not required to pay a minimum wage or overtime. In September 2013, the Department of Labor announced the FLSA would finally extend minimum wage and overtime protections to domestic workers, but the changes will not take effect until January 2015.

Si Se Puede was set up in 2006 by 19 worker-owners, but it now has 51 members, all women immigrants. Four years later its worker owners had tripled their wages to as much as $25 per hour.

“Setting up co-ops and working together is more accessible than starting their very own business because they are able to pull resources and skills,” said Katie Harrison, cooperative developer at the Center for Family Life.

Building on the success of Si Se Puede, the Center for Family Life helped another 16 immigrant women to launch Beyond Care Childcare Cooperative, an enterprise designed to provide excellent childcare services.

They chose a cooperative because they believed that when workers receive 100 percent of the fee charged they would give 110 percent of themselves to the job at hand. Members are driven not only by their love of children and need to earn a living, but also by a commitment to fairness in wages and treatment.

The women not only earn more, but they are also able to set their own schedule, which enables them to spend more time with their own families.

Since its creation in 2008, the co-op has attracted more members and now includes 30 women ages 25 to 50, all mothers themselves. In addition to raising their own children, most have worked as babysitters, after-school program employees or nannies.

Those who were not English-proficient were enrolled in ESL classes. Beyond Care members have completed training courses.

Being part of a cooperative empowers women, who are more informed about their rights, more motivated and are also able to assert themselves, Harrison said.

Another example is the Arizmendi Bakery on 9th Ave. in San Francisco, where Sue Lopez works as a baker. Set up in 2000 as a worker cooperative, the enterprise now employs 21 bakers—13 women and eight men—all earning the same amount.

“All workers are required to learn all shifts, then they eventually settle into the shifts that work for them, considering other jobs, school, children, etc. Most of the 9th Avenue workers work approximately 25-35 hours a week, very few fulltime. It’s hard work, but the bakery is doing well and we are also well compensated and get full benefits (for our children, too) and up to six weeks vacation annually (though not all paid),” Lopez said. This is just one of the Arizmendi bakeries in the area. Employees contribute some of their profits to a common pot to help get the next business started.

“This unique business model has so impressed me from day one. I never thought I’d still be here, but I’m feeling like a lifer now,” Lopez said.

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