Many wonks and opinion writers will, once again, look for “new” ideas that avoid difficult conversations, poll well with “the majority of Americans” and for which there is reasonable hope that (enough) policymakers will cross the aisle. That’s a good process, but we should also promote ideas that already have bipartisan support and a proven track record. Ideas that transcend politics. Cooperatives are not just a Democratic or a Republican opportunity, but an opportunity for all Americans.
People use cooperatives to respond to a changing economy. Cooperatives are owned by their members, who are either the people who use the business as consumers, producers or workers, or as businesses themselves. Today, more than 65,000 U.S. co-op establishments with over 100 million members market agricultural products, provide high quality financial services, power millions of homes and businesses, and innovate to fulfill needs like data security and healthcare. These millions of members are Republicans, Democrats and Independents. Most often, they own their businesses and work alongside folks with whom they might disagree. This works because a co-op’s focus is on uniting to solve common problems and a commitment to resolving disagreements through discussion and participation in the democratic process.
The cooperative business model has always been about solving problems, increasing economic participation and improving the lives of members and the communities around them, even in the hardest conditions. That’s critical today, with most Americans concerned about their economic future despite a growing economy and relatively tight labor market. Luckily, more and more policymakers and thought leaders are recognizing the co-op solution.
The 2018 passage of the bipartisan Main Street Employee Ownership Act marked both the biggest co-op-related legislation in years and a congressional shift toward greater recognition of the benefits of the cooperative business model. The act opens historically unavailable funds and technical assistance from the Small Business Administration (SBA) to co-ops.
This new law recognizes a transformational opportunity. The SBA estimates that there are 30.2 million small business in the U.S.1 A recent study by Forbes shows that baby boomers own the majority of those businesses, and most boomers plan to retire within the next few years. Most have no plans to continue their profitable local businesses, putting tens of millions of jobs at risk. Worker co-op conversion—which SBA funds can now support—is an effective strategy to prevent these job losses, facilitating succession planning by handing the management of a business over to the workers that know its operations most intimately.
In the major media outlets, cooperatives are gaining notice. For example, Oren Cass, former campaign advisor to Mitt Romney, and David Brooks of the New York Times have called for increased development of worker cooperatives to provide employment, train workers in new skills and represent workers during negotiations with other firms contracting their services. All of this attention suggests that a new “cooperative moment” is here.
Proof of concept that co-ops work is all around. In the U.S., co-ops are virtually everywhere. Credit unions are the most widespread cooperatives, with over 100 million Americans as members—about one third of the total population. Credit unions thrive by operating primarily for their members. As with all cooperatives, they are member-centered businesses that pass on profits and efficiencies to their members through lower interest rates and lower fees for their customers.
An additional, major benefit is their greater resilience during economic crises. As an example, credit unions saw dramatically lower rates of failure during the 2007-2008 financial crisis when compared to other banks.
Rural electrification is another cooperative success story. In the early 1930s, only about 10 percent of rural homes had electricity Traditional electric providers were either unwilling or unable to extend service. Farmers, already members in agricultural co-ops, knew the cooperative business model could solve this problem. These households came together to form electric co-ops and work with the federal government to create programs to enable cooperatives to provide affordable and reliable access to electricity. By 1953, these efforts were so successful that more than 90 percent of rural homes had electricity.
Rural electric co-ops are still improving the lives of their members by extending broadband service to similarly “unprofitable” places and working with USDA’s Rural Utilities Service to make members’ homes more energy efficient and less expensive to manage, all while paying the government back for its investment. Policymakers should continue to look at similar solutions to help the budgets of struggling Americans while also increasing energy efficiency.
The benefits of cooperation have the potential to impact every American.
Americans need good jobs, and cooperatives allow people to actually own their work.
Americans need to empower themselves in the era of big data, and cooperatives ensure that members—not outside investors—ultimately own and benefit from data collection.
Americans need new avenues to participate in the 21st century energy economy, and cooperatives can provide access to cutting edge technology that people cannot get on their own.
I urge lawmakers and thought leaders to enable more people to capture the potential of this cooperative moment and consider a future that is more stable, sustainable and, most importantly, more equitable.
—Doug O’Brien is president and CEO of NCBA CLUSA, where he works with the cooperative community to deepen its impact on the economy. Greg Irving is a research assistant at NCBA CLUSA.Â
1Â https://www.sba.gov/sites/default/files/advocacy/2018-Small-Business-Profiles-US.pdfÂ