The Worker Co-op Movement in 2040: Revisited

Ten years ago, when I was blogging much more regularly, I wrote a series on envisioning the worker co-op movement in 2040. You can read them here. As the Co-op Decade comes to a conclusion over the next couple of weeks, where should the co-op movement in general and the worker co-op movement in particular set its sights?

There is an effort by the Democracy Collaborative to create 50 million worker-owners by 2050. However, this includes worker co-ops (ownership and control of the means of production) as one of several tools. ESOPs will likely be the major driver. As I mentioned in my initial post on this topic in 2010, I will be 76 years old in 2040 and likely not working (although I hope that I am still engaged and writing about co-ops).

I imagined, in 2010, a goal of tripling the number of worker co-ops each decade (I’m nothing if not an optimist). It is always hard to count the number of co-ops in existence, and I am hopeful to see better statistics in this area soon. Olympia definitely met that goal, but on the whole, I am guessing that worker co-ops increased by 50% over the last 10 years, which is still an achievement. I am hoping that the efforts to secure new generations of ownership through the co-op model increase the rate of worker co-op development, and maybe with some of the new plans for capitalization it will ramp up the pace.

I also suggested this crazy (but I think attainable goal):

  • Worker co-operatives will exist in each of the top 150 MSAs in the United States.
  • Worker Co-operatives will account for between 0.5% and 5% of the GDP for the each MSA
  • Worker Co-operatives will be part of the planning documents for the regional and municipal planning departments in at least 1/2 of the top 150 MSA and in all of the MSA’s in which co-ops already existed in 2010.

Although perhaps it would be smarter (and more attainable) to include the Combined Statistical Area that would include a lot more communities such as Olympia and Port Townsend that otherwise would not register high enough as their own MSA. As you might have guessed, I’m still really into “SMART” goals.

Capturing and reporting this data would be, in my opinion, much more valuable than the annual report trumpeting the top 100 co-ops in the country based on revenue. This data would point directly to local community impact. It would help us learn from successful communities and where to put resources more effectively.

I also argued about making cooperatives part of the electoral discussion and we did that in Madison in 2011. It paid off for co-ops and Madison joined the select cities that see worker co-ops as a pathway towards a resilient local economy.

I am glad to see it happening at the presidential level in 2020 and hope that more local and statewide elections start seeing co-op development as a real (and non-partisan) campaign topic. Building local economies through cooperatives is a efficient use of tax payer dollars compared to corporate tax breaks that create a race to the bottom in the attempt to lure “job creators” to the community. Policy makers should create the jobs that will never leave through a worker co-op.

We should all be working to help 50 by 50 meet its goal and to help as many of those organizations either be worker co-ops or democratically worker-controlled as well as worker-owned organizations.

I close with a quote from Don José María Arizmendiarrieta: “The future is never as uncertain as it is believed to be and is more conditioned than may seem to us, not as much for what we lose our interest in as for what we try to adopt and improve according to our taste.” We build the road as we travel and the first step of achieving our goals is to state them.

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The Quest for Capital

The final goal for the Blueprint for a Co-operative Decade focused on capital (although in a lot of ways, the other goals also touched upon capital as well). The goal states, “Secure reliable co-operative capital while guaranteeing member control”.

Starting a business still tends to draw start-up capital from the the following: friends, family, and credit cards. Although there have been changes to the landscape over the last ten years, most notably investor co-ops, the means of getting start-up capital for co-op ventures remains difficult.

This isn’t to say that there aren’t options and plans for the future. Shared Capital does everything that it can to support the co-op movement and definitely assists in conversions and other co-op development projects. The National Co-op Bank continues its efforts at this as well. But, as with co-op development, the demand for capital far outpaces the supply of capital.

Some exciting projects in the works include Co-op Exchange in the UK that will allow anyone in the world to invest in cooperative projects. The exchange promises to allow microinvesting by people at any economic level and this, in turn, can create a huge fund for co-ops. If the 1.3 billion co-op members each contribute just 1 penny (US), that $130 million for co-op capitalization.

Start.coop has also created a business accelerator model. This takes a cohort of co-ops through a process and helps them message to and find social impact investors. It is still in its infancy with the first cohort, but offers an exciting opportunity.

I believe that there is also an investment co-op program being formed in California, but I cannot remember its name and my attempts at searching on-line have not yielded any information.

Ultimately, though, the existing co-ops need to find a way to divert some of their member equity to funding new co-ops and helping existing co-ops expand. This is difficult, but the infrastructure already exists through the NCB, Shared Capital, and CDFIs. As I mentioned a couple of days ago, the economic power of the existing co-ops could fundamentally change the local economies where they are concentrated and this, in turn, would change the policy maker discussion about sustainable economic development. It is a fundamental part of the value of solidarity and the 6th principle of cooperatives.

I am hopeful that as we turn the page on the Blueprint for a Co-op Decade, the formulating strategies will come to fruition, but we also need to the leadership of existing co-ops to commit to investing in the co-op economy through development and solidarity funds. As has been pointed out a couple of times this week, the aggregate economic power of co-ops and their members could really “move the needle” on co-op development in the US and world-wide.

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The Legal Framework

The 4th goal of the Blueprint for a Cooperative Decade has also showed significant advancement since 2010. This goal states, “ensure supportive legal framework for cooperative growth”.

At the state level, the spread of Limited Cooperative Association (LCA) acts have gained speed. Washington and Illinois just passed versions of it. In Illinois, the law is called “Limited Worker Cooperative Association” (LWCA) and specifically authorizes workers as “patron members”.I haven’t studied the LWCA enough to understand how it compares with LCAs, but it does seem to allow an investor class of membership although much more limited than most LCAs.

In Washington, however, the LCA introduces investor owners into the mix. In Washington, the voting can be weighted based on equity. This seems, to me, a violation of the principle of “one-member, one-vote” and effectively scuttles the basic difference between cooperatives and other corporations. I have been trying to keep an open mind on this model since it might offer some means of raising capital, but any plan that changes governance to appeal to investors should remember the adage, “he who pays the piper, picks the tune.” I am not telling people not to use it, but it seems to me that a social purpose corporation or using preferred stock could achieve the same goals. There is a potential that the LCA can be used for co-ops to access the patient capital of Economic Opportunity Zones and this could be beneficial since selling owners can defer capital gains on the sale of the business and the Zones cancel the tax after 10 years. It will be interesting to see how this develops and if it really helps co-ops.

The major piece of legislation that has moved this goal forward, in the United States at least, is the Main Street Employee Ownership Act. Main Street, for those of you not familiar with it, is the first piece of legislation with regard to employee ownership passed by congress in over 30 years. It provides new mandates to the Small Business Administration to open of guaranteed loans to worker co-ops and support the conversion of existing businesses to employee ownership through either ESOPs or worker co-ops. Further, the law also mandates that Small Business Development Centers (SBDCs) around the country support employee ownership and conversions to worker co-ops. This has potential to be a major catalyst as it comes at a times when business owners are retiring at record rates. The current estimate by Project Equity is that only about 20% of existing businesses will transfer ownership to a new generation.

The hard part, now, is about changing the culture at SBA and helping them engage with this new law. The mandate came without funding as well, despite being part of a 700 billion dollar defense bill. One particular area of difficulty is the requirement for personal guarantees for loans associated through the SBA. This doesn’t have to be the case, especially when their is collateral at hand. Signature loans can create power imbalances within the organization and effect hiring.

This brings up an important area that the ICA is working on and that is in regards to how co-ops in are treated in terms of accounting. Many co-op statutes treat co-ops the same as “for profit” organizations when they are really social purpose organizations. Laws need to change with that regard, but also accounting standards need to reflect that ratios and measurements that show strength in cooperative institutions are not always the same as for-profits (and by for-profit, I mean where the purpose of the organization is to maximize rate-of-return for investors).

The Co-op Decade did bring significant changes to the worker cooperative legal landscape and more needs to be done. The Creating Jobs Through Cooperatives Act of 2013 failed to draw bipartisan support and would have provided support for cooperative development in urban communities (over 50,000 people). I won’t speculate on its demise, but hopefully in the next congress a new attempt can be made after the success of Main Street. At the local level, more city governments have started understanding the co-op model and its ability to build sustainable local economies and this could be an important avenue both as a means of finding immediate support and building future support at the state and local level (as local leaders become State and National leaders).

We have the momentum and need to keep it going!

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Centering the Co-op Identity

The third goal of The Blueprint for a Co-operative Decade engages the Co-op Identity. Specifically, the goal states, “Build the co-operative message and secure the co-operative identity.”

The authors comment, “Co-operatives need a more sharply articulated message so that people are more aware of what they are choosing when faced with the option between a co-operative or an investor or privately-owned business.

Studies routinely show that when consumers understand the values and principles behind cooperation, they would prefer to do business with a cooperative. How well are co-ops doing?

I think that worker co-ops tend to be in the lead in this area. Worker ownership is a key part of any worker co-ops messaging. It immediately lets the consumer know that the store or service operates around human dignity. By creating humane and safe workplaces for its membership, worker co-ops also create humane and safe places for the consumers.

Of course, Grocery Co-ops have focused on the messaging very well and being a co-op is a core part of the store’s identity and has been long before the Year of the Co-op. The bigger hurdle for these co-ops is connecting with values and community instead of organics, now that Amazon is in the whole foods business.

Credit Unions have definitely stepped up their game and out in the west BECU has some excellent message with the slogan “BECU You Own It”. The subtlety that allows the readers to change BECU to “Because” is genius.

REI has also started adding “coop” to its name and even has a “Coop” branded bicycle and has talked about values in its decision to close on “black friday”

The marketing co-ops (Ace Hardware, Best Western, Sunskist, Dairy Queen, and Thriftway to name a few) need to do more. They have a message and a co-op story to tell. People need to see co-ops to understand how much they impact the economy and to also understand that there is almost always a co-operative alternative.

Another part of the suggestions to this goal involve getting co-ops into education. This is a slight overlap with sustainability, but very important. Creating a class curriculum on co-op economics at the high school and college levels is vital. Some groups are working on this. 1Worker:1Vote is developing a Community College curriculum. DAWI has a management training program at Rutgers. The Wisconsin Farmers Union Camp Kenwood has a worker co-op store staffed by campers who are junior high and high school age. I have always thought that it would be great for NCBA/CLUSA to develop a co-op alternative to Junior Achievement in the high schools.

Co-ops Need to Support Co-op Development

The other part of the identity goal that I want to focus on may seem a bit self-serving, but it isn’t. I have thought about this since I visited Móndragon in 2007 and learned how they controlled their capital and created development and solidarity funds. Co-ops need to commit to the development of co-operatives either through supporting financial institutions in the co-op world (National Co-op Bank, Shared Capital Cooperative, and ROC Capital) and development centers. Today, most of the co-op development work is funded through the USDA Rural Development program and provided through a community of co-op development centers. USDA funding is under constant attack regardless of the administration. Ag secretaries rarely come from the co-op community and as a result, the programs continue to be on the chopping block. Further, this funding only allows work in rural areas which is currently defined as under 50,000 and not adjacent to a community of greater than 50,000. There is little to no funding mechanism for urban development of cooperatives.

If every co-op, credit union, and insurance mutual contributed just 1% of sales to co-op development, that would amount to about $6.5 billion dollars a year to help new co-ops and existing co-ops develop. That dwarfs the current $5.8 million dollars of the Rural Cooperative Development Grant. It is a true expression of the co-op value of solidarity and the 6th principle of cooperation. We already have the infrastructure through national organizations to handle processing and distributing development funds.

The Co-op Identity is definitely stronger today than at anytime that I can remember. More people know (or at least kinda know) what a co-op is. Unfortunately, many of them don’t necessarily know that they do business with a co-op. As better as things are, there is a lot of work to be done to make this a success for the co-op decade.

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Sustainability-Coops Leading the Way

In the 2013 Blueprint for a Co-operative Decade, the ICA authors make the following case:

“Quite simply, a co-operative is a collective pursuit of sustainability. Co-operatives seek to ‘optimise’ outcomes for a range of stakeholders, without seeking to ‘maximise’ the benefit for any single stakeholder. Building economic, social and environmental sustainability should therefore be one of the over-arching motivations and justifications for a growing co-operative sector. It offers an answer to the question of why co-operatives are necessary and beneficial, at this historical juncture. Put simply, co-operatives are more efficient than investor-owned businesses, once a more complete range of costs and benefits (present and future) is taken into account.”

The concept of sustainability includes more than being good stewards of the Earth and the life it supports. The blue print specifically calls for action in the co-op community regarding innovations in accounting, promoting distinct management practices, strengthen and integrate the co-op business network, and be leaders in human centric technology advances. The authors also urge evidence gathering and case studies to further promote the co-op difference and advantage in creating true sustainability beyond a marketing message.

Co-ops have definitely led the way on this front over the last 10 years. Even I have played a role in helping to meet this challenge goal.

  • In the worker co-op world, at least three bookkeeping/accounting co-ops have sprung up to provide support for co-operative with co-op knowledgeable bookkeeping. The ICA just recently announced a push for a Co-op version of accounting standards distinct from those designed for capitalist profit centric firms.
  • A number of colleges picked up co-op management classes (Amherst, The Evergreen State College, and most recently Rutgers) as well as a broader offering by my alma mater, St. Mary’s that includes a certificate and diploma option along with its Masters. Some have these efforts include partnerships with development groups such as DAWI and NWCDC. In the Caribbean nation of Trinidad and Tobago, The Cipriani College of Cooperative and Labor Studies has been active in creating a 4 year degree on co-op management. Even Mondragon University moved slightly away from its traditional “Chicago School teaching” and created the Teampreneur model the Mondragon Team Academy.
  • NCBA and others have worked to help create regional and local networks. Locally, through initial leaders of the Olympia Food Co-op, an organization called Co-Sound seeks to promote and network co-ops in the Thurston County community. The recent series of roundtables were part of this effort as well.
  • NCBA/CLUSA also created the annual Co-op Impact Conference held in D.C. with a biannual fair on the Capitol Mall to promote the co-op model to policy makers.
  • The year after the blueprint, Canadian co-ops and universities published a collection of case studies and reports on the community impact of co-ops (which you can download here). I authored one of the case studies based on Union Cab and was also an editor. If I can further toot my own horn (and why not), my dissertation was a comparative case study of three types of worker management in cooperatives (you can access it on the resource page).
  • Cincinnati Union Co-op Initiative and 1Worker:1Vote will be launching a national network of union-coops next year and holds its 4th biannual Symposium in a couple of weeks (I will be there and reporting).
  • CDF started a National Homecare Co-op Conference to specifically assist the home care co-ops (about 15 of them now) in networking and mutual support. I think that they need to move it away from Dulles and not make it an annual event, but it is a very important event.
  • CooperationWorks! celebrates its 20th anniversary and has created a strong network of co-op developers based on a set of ethics known as the Madison Principles and committed to build mutual support within the co-op development community.

I think that the only area that I haven’t really seen the co-op world move forward, in a really focused way, is in creating new technological tools. Of course, this is starting to change. Groups like Clatskanie Co-op offer a model for controlling our internet. There is a new push by Electric Co-ops to offer broadband. Platform co-ops are being talked about and there are some apps such as Resonate which is a multi-stakeholder version of Spotify. Both Resonate and Clatskanie use blockchain technology and digital currency. I’m a member of social.coop which is trying to create a social network to offset Twitter and Facebook (but its functionality is a bit limited). Resonate needs a couple of big names to move from Spotify to its platform. Most of the tech is nibbling around the edges, but I can that they are today’s version of the “buying clubs” that created the consumer food co-op network that we have today.

Could the international co-op community create its own digital currency that would be accepted by every co-op on the globe?

I haven’t talked a lot about carbon sequestration or the more traditional concepts of sustainability with regards to environmentalism. Largely this is because co-ops tend to already be ahead of the curve (although some producer and electric co-ops still cling to carbon fuel). Organic Valley has been a major leader with a pledge to use 100% renewable energy by 2019. Worker co-ops also tend to have a strong environmental focus since they live in the community where they work.

In terms of the Co-op Decade, Co-ops have absolutely led the way in terms of creating sustainable, human centric communities. There is always more to do, of course, and in the US co-ops still largely remain isolated from each other by sector and industry (and even within sectors at times).

There is also a fair amount a territoriality and sectarianism within the development community. Some groups really don’t play well in the sandbox with others (refusing to share resources, operating in territories without giving a heads up to the local developers, refusing to acknowledge other groups in the same development arena). I have gone to conferences where I hear speaker from some groups talk as if they are the only ones doing co-op work in the country or even in State of Washington. It is frustrating and can cause a lot of confusion and distrust.

Nevertheless, the co-op community is growing. Its overall message of sustainability resonates with more and more people everyday. I recently attended a traditional business conference and found a general understanding of co-ops and eagerness to engage with co-ops. That would not have been the case 10 years ago. Co-ops are human centric and non-partisan. That strength provides them with the ability to push this message of sustainability that other business models can’t.

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Participation Reward

In the Blueprint for a Co-op Decade, one of the five pillars is “participation” with the stated goal: ““Elevate participation within membership and governance to a new level”.

I am not sure how this will be measured or even if it realistically can be measured. Of course, participation is really what make a co-op “cooperative”. The word essentially means “work together”. This pillar also attempt to address the rather passive nature of ownership that exists in the consumer sector (food co-ops, credit unions, etc.).

From my experience, a lot of co-ops don’t seem to really want their members that involved except as consumers. The demutualized Group Health Cooperative (PNW) created incredible barriers to voting (members had to opt-in a certain number of days prior to the vote or meeting and figuring out how to do that was almost as complicated as figuring out how much a procedure would cost out of pocket).

Most co-ops, in my opinion, use relatively passive methods: signage in the store and blurb in the newsletter. What should co-ops do to meet this goal?

I’m mainly thinking about consumer co-ops since the worker co-ops tend to have a fairly engaged membership (although I imagine larger worker co-ops might have problems as well). Some things that hinder participation that I see all too often:

  • Nominating committees that screen out potential board candidates instead of inviting people to run for office.
  • A nominating process that privileges connected social groups within the co-op.
  • A committee structure that only includes directors.
  • Not providing childcare for membership meetings
  • Not providing interpretation at meeting or multi-lingual publications.
  • Not enabling direct communication between people running for the board and the membership.

Here is one approach:

Assiniboine Credit Union has a very proactive path for its board nomination. Each year, its nominations committee conducts a gap analysis of the current board to determine areas where the board needs support (this is based on a number of criteria). As they note on their website:

“ACU’s board is committed to strong, responsible and ethical governance of your credit union. Integral to this commitment is ensuring that the composition of the board has an effective and well-rounded mix of skills and experience in the following areas: finance, community development/social inclusion, human resources, co-operatives/credit unions, community involvement and leadership/business acumen.

In addition to the mix of skills and experience noted above, the board wishes to be representative of the members and communities we serve. We strive for gender balance, ethnic and cultural diversity, and diversity of age and life stage.”

The nomination committee will create an “endorsement” for candidates that fill the gap, but that doesn’t preclude other candidates from running. Sometimes, even incumbents don’t receive the endorsement because they don’t meet the gap criteria.

Keeping Participation Centered

There are other things that co-ops can do. A credit union here in Olympia has a monthly social event at all of its branches so that members have a reason to engage with each other and staff outside of the day-to-day business. At Union Cab, we tracked engagement outside of normal operations and considered ways to support that work. Ultimately, it seems that the co-op leaders need to see the co-op as a socio-economic enterprise, not just a business. We are creating a society.

For example, the Williamson Street Grocery Co-op based in Madison, WI is actually the fourth largest democratic organization in the county. Its membership is bigger than every other community in the County of Dane except for the City of Madison. The other two organizations bigger than the co-op are the Madison Metropolitan School District and the County Government. We should definitely start thinking of our consumer co-ops in this light. Likewise, directors at these larger co-ops should also see themselves in a role similar to a city council member.

It would be great to see organizations such as NCG, USFCW, and NCBA develop some methods for tracking aggregate data, create a database of practices used by co-ops to spur participation by sector, and otherwise create a bigger discussion of how to get members to engage as collective owners. What does participation look like in a healthy co-op? I think that for a start it would include competitive elections, a committee structure with members and directors (and staff if not a worker co-op), and ownership activities (such as social events, letter writing campaigns, and other activities aimed to allow people to engage as owners outside of normal operations.

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The Co-op Decade and After

This month, I have posted about different co-ops every day in celebration of National Co-op Month (celebrated in Canada and the United States). I did this in conjunction with NWCDC’s daily Facebook post about the same co-op. Today, on the last day of Co-op Month in the last year of the Co-op Decade, I want to talk about our mutual success and what is next.

In 2012, the International Year of the Co-operative, the General Assembly of the International Co-operative Alliance (ICA) drafted a document known as “The Blueprint for the Co-operative Decade“. The blueprint called for co-ops to work towards the following by 2020:

  • The acknowledged leader in economic, social and environmental sustainability
  • The model preferred by people
  • The fastest growing form of enterprise

Cooperatives, in general, have made great strides in terms of leadership in economic, social, and environmental sustainability. The Blueprint considers five key factors in achieving its Vision 2020:

  • Participation: by members in their co-op governance.
  • Sustainability: co-ops leading the way on reducing C02 and being good stewards of the earth.
  • Identity: promoting the co-op identity as a preferred way of doing business.
  • Legal Framework: expanding the legal protection for co-op businesses to operate.
  • Capital: strengthening the network of capital and building more access to capital within the co-op community.

Overall, I will say, at the outset, the the Blueprint has succeeded. It was approved in late 2013 and launched in 2014.  How much of the success of the plan was due to the ICA catching a wave that started with the 2008 economic crisis and how much was because of the plan’s articulation is debatable. Nevertheless, I think that I can definitely say that the co-op community in 2020 has become remarkably stronger in all aspects that it was in 2010.

My initial idea for today was to talk about how well the blueprint was implemented since 2020 is just 61 days away. I wasn’t able to find much in the way of reporting on it (which is to be expected with strategic plans). I also forget how detailed it was for a single post. As a result, I am going to keep the daily posts going for another 6 days (skipping the weekend) and discuss what I have seen with regards to each of the 5 factors and then a general summary on November 8.  My summary will largely be limited to my area of the world: the Pacific Northwest and worker-coops. However, if you are reading and want to offer your take, please comment!

I hope that people have enjoyed these daily takes. I want to thank GEO for pulling the post and pushing them out to a larger community. They are currently doing their annual fundraiser. Support them (especially if you found your way here through their page). Your comments are always welcome as are guest posts–I never pretend to have either all of the answers or all of the questions. More voices are welcome!

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All Systems Go! Working Systems Co-op

In July of 2018, while the Main Street Employee Ownership Act was working its way into the Omnibus Defense Bill and NWCDC was preparing its Legacy Project aimed at raising the profile of worker ownership, I got a call from a senior worker at Working Systems about the possibility of converting the software company to a cooperative. 12 months later, Working Systems, Inc. became Working Systems Cooperative.

A Gear with the words Working Systems

One of the owners (who continued with the co-op as a worker-owner) told me that his parents were union organizers in New York City and they also helped create housing co-ops. I don’t know if they were part of this cohort, but it is wonderful to see his parent’s legacy transform a new generation of worker-owners.

Working Systems immediately became one of the more unique co-ops in the nation. They are software developers (both for desktop and web based apps). However, they write their software to support the missions of their clients. All of their clients are labor unions. They work with small locals and large internationals. The workers of the company were also unionized with Communications Workers of America.

Working Systems, already something of a unicorn in the tech world as a unionized workplace, is now the State of Washington’s first “union-coop”. There is a national movement channeling the synergy of labor unions and worker cooperatives and the Union-Coop Symposium will be held in Cincinnati in mid-November hosted by the Cincinnati Union Cooperative Initiative. I am glad to see my home state with representation in this community!

This is a great group of people to work with! Without breaking any confidences, it was exciting to see how software developers write bylaws. They also had two members of the former Beluga Software Cooperative (also based in Olympia) and featured in the documentary: Beyond the Bottom Line. This was useful since they had practical experience of how to improve the co-op model. They a very high functioning community, thoughtful, and a strong focus on equality and equity.

It was also my first chance to work with Shared Capital that did an excellent job of working with the crew and being flexible to meet the needs of the membership. I served on Shared Capital’s board for a time (when it was still North Country Development Fund). I look forward to the next project with them.

Today, Working Systems Co-op is holding its first Annual General Meeting. They will be electing their board, amending their bylaws, and celebrating the transition from employees to worker-owners! They asked me to facilitate and I really consider that an honor. Solidarity and Democracy in action!

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My 2nd Birthplace: Union Cab of Madison 40 years on

I am a bit glad that this post came so late in the month. I needed some time to get back in the practice of blogging before taking tackling this–so many thoughts and emotions run though my mind that this cannot be the mid-effort, stream of consciousness post that I tend process. I joined Union Cab when I was 24 and left when I was 50. Including two leaves of absence, I spent 25 years, 11 months, and 13 days as a voting member of Union Cab. I still own non-voting stock worth $25 and have over $9,000 in retained equity. I spent the majority of my adult life as a worker-owner of Union Cab of Madison. It really was the best of times and the worst of times.

I started my career at Union Cab of Madison Cooperative on November 7, 1988. I had graduated from the UW-Madison in the spring and was ready to move on. I was planning to become a professor of English literature. I wanted a year to plan it all out and was looking for something to do. I was bartending at the 602 Club and had just finished my time at the Crystal Corner Bar. I knew many cab drivers and my roommates had started at Union Cab earlier that year, so it seemed like a natural fit.

There are a lot of funny stories about this time. My first attempt at getting hired was in August, but I failed the map test. I didn’t know the names of the streets, so I wrote in the names of the taverns that were on each street. The Operations Manager, Sal DiGosia, later said it was the funniest map test that he ever saw and while he realized that I knew where the bars were, he couldn’t pass me. I retook the test in October with a perfect score and was hired. On my first training night, my trainer, Kate Werner, (who was driving) got lost trying to find the airport! It turned out she was definitely not an “aircab”. . .

But those war stories are for a different outlet. The story that I want to convey about Union Cab on its 40th anniversary is two-fold: the origin myth and the Union Cab experience.

In some ways, I think that this short video produced by Heartland Credit Union ended up capturing a lot of the spirit of Union Cab (I am dressed so casually because I was taking a break from writing my Comp Exam).

The Origin of Union Cab

You can still read the almost complete history of Union Cab’s first 10 years (and beyond) on their website. I changed it to the first 20 years, since the struggle that created Union Cab began in 1969 as part of the general upheaval happening in the country over imperialism, racism, and sexism (sadly, little has changed). The “TL/DR” version:

After ten years of struggling to create safer working conditions with decent pay and benefits through the traditional labor movement, Madison cab drivers, dispatchers and mechanics came together to use the cooperative model to meet their needs of jobs at a living wage in a safe, humane, and democratic environment. The first year was challenging as they were unable to get a yellow page ad into the January 1980 publication (a big deal back then). It was an immense struggle! Even though it was winter, drivers (who worked on commission) made pennies an hour (the minimum wage was $3.10/hour). The non-driving staff took a solidarity pay cut to below minimum wage.

The ghost was almost up on the experiment when something happened. It was a Horatio Alger moment. It was an expression of the American Dream. By pluck and by luck, the workers of Union Cab succeeded. In March of 1980, the other metered cab company closed shop (the remaining company was a “shared ride” service which means that the driver picks up and drops other people on the way to you destination). At the same time, the drivers of the bus company (which had just been taken over by the city) went on strike to get their contract. Madison Metro was on strike for 6 months! The co-op hired striking drivers to meet demand–this helped the drivers stay out on strike until their demands were met and helped Union Cab become profitable at a time of the year when the business dies. By the first anniversary, Union Cab was established. From then on, it was green lights; however, as one of our consultants, and a dear friend of mine, Bobby Morris, commented. “you guys have an amazing ability to run head-on into a brick wall, dust yourselves off, and keep moving forward, but eventually you will hit the Grand Canyon.”

Brick Walls, Grand Canyons, and the Value of the Co-op Identity

There were indeed a lot of brick walls to run into over the years. At the outset, Union Cab was ahead of the times and woefully behind them. Women worked as mechanics and cab drivers and dispatchers, but a Good Ol’ Boys club also existed and more than a few lessons were learned the hard way through legal action. One of the worst legal battles involved UCC’s management trying to control the make-up and jewelry worn by a self-identified male. Shortly before I was hired, I read a newspaper article that quoted the GM as saying “It isn’t so much that he wears make-up, but he looks like a whore.” Ugh. I came into the co-op recognizing that this wasn’t the workers’ paradise.

In my time as a director, I supported that driver and still consider him a friend. It didn’t just cost UCC financially (although we “won” the court case), his attorneys ended up becoming judges, county supervisors, and even the mayor of Madison (who ended up not supporting us during a dispute with the bus company-Madison Metro-in 2000). It really hurt our reputation as a different and better way of treating workers.

The biggest obstacle to Union’s success, in my opinion, was the adoption of an adversarial relationship between drivers and non-drivers. This aspect, of course, was somewhat expected coming out of several unionization drives by drivers; however, it didn’t really serve the purposes of cooperation very well. It wasn’t a conscious decision, but this aspect dominated the co-op (and I imagine that even today it remains an issue). I tell start-up co-op folks today that how they address conflict and make decisions is creating an organizational culture that will outlive their participation and be difficult to change. I ask them to be conscious about this to avoid recreating oppressive structures and mindsets that don’t promote the co-op identity.

Again, without getting into war stories, Union Cab used a trial-and-error approach to both management and conflict resolution during much of its first two and a half decades. This resulted in a boom and bust cycle that brought UCC to the brink of disaster on more than a few occasions. As I said, a lot of lessons were learned through legal actions, which I can tell you is much more expensive than using a Co-op Development Center. . . just sayin’. . .

But the point of worker-ownership and worker-control means having the ability to make mistakes. The workers of Union Cab have always controlled their destiny. There wasn’t a board of social do-gooders who could veto the workers’ decisions. The workers of Union Cab (including me, of course) made some really big mistakes, had some great successes, and always had agency. We always had the choice, it wasn’t ever made for us. We tried to decide based on our values. I have always been amazed and proud that we created our core values in 1995 that mirror the ICA’s Statement on Co-op Identity which was also adopted in 1995. We knew, in our souls, what cooperation should be. This set of values allowed people to base their arguments about the board and management’s short-comings on something tangible (for the record, I was President from 94-97).

Union Cab’s Core Values

  1. The safety and health of our members and the public are of paramount importance.
  2. We are dedicated to the principles of worker rights and membership responsibilities.
  3. Open and honest communication and direct involvement are our rights and responsibility as members.
  4. Managing growth carefully is fundamental to creating quality in our work life and fostering a strong sense of community.
  5. A living wage at a 40-hour work week is a priority.
  6. Customer satisfaction is everyone’s job and is critical for our success.
  7. We are dedicated to operating our business in an environmentally responsible way.

Union Cab provided healthcare for its drivers as long as I can remember. The co-op started paying for a percentage of the healthcare premiums in the mid-90s–and it is great insurance. Most cab drivers in the United States were not even able to get healthcare until the passage of the Affordable Care Act in 2009. For the industry, pretty much everyone except managers were making as much as 30-50% over industry average pay. Union Cab has struggled, but has largely met its mission of providing living wage jobs in a safe, humane, and democratic environment.

Union Cab created the “democra-beep” during the 2011 protests.

Union also inspired a new generation of taxi co-ops: Union Cab PDX, Alexandria Union Taxi Cab and others (although these co-ops are organized much differently). The co-op played a major role in the Madison community as well–helping to start MadWorC, joining the protests against Act 10 in 2011, helping to organize a one-day conference on co-ops in 2012, and providing leadership to the national and international movement on the board of the US Federation of Worker Co-ops and CICOPA North America.

The most amazing embrace of co-op values of worker ownership occurred in 2010 when the co-op removed discipline from management and created a peer-review and support system to not only hold people accountable, but provide a means of mediating conflict and supporting cooperative behavior. It took almost two years of work to learn, educated, and debate how to move to a system that honored due process and break down the adversarial process of holding people to the rules of conduct agreed to by the membership. Following that we embraced a form of team management (it looks a lot like sociocracy), that ended up dealing meaningfully with customer complaints. Complaints dropped by 55% in the first year!

Of course, co-ops are about people and creating new institutions, changing culture, and building new frameworks is horribly difficult (which is why I tell new co-ops to focus on culture). This next video is about our switch to a Prius fleet. I helped push this through over a lot of hand wringing, but it saved 30,000 gallons of gasoline a month. The transition paid for itself.

For forty years, Union Cab has stood as a beacon of a better way to treat drivers and workers in the taxicab industry. At times, the process is messy, atavistic, and at others incredible elegant and forward-thinking. When Uber and Lyft showed up, they claimed to be a different model, but they weren’t. TNCs offer the same extractive and exploitative environment that preys upon both the drivers and the passengers as every other for-profit non-cooperative taxicab company.

Union Cab is hardly perfect and, to be honest, I was happy to leave. I was incredibly burned out and used up. There were times that its culture (adversarial in nature) became toxic and abusive. The culture fostered personality cults and narcissists found it easy to create a flock of followers. The passive-aggressive dynamic of “Wisconsin Nice” made it even more difficult to hold people (and leaders with soft power and hard power) accountable. I still have stress dreams about Union Cab five years after leaving. However, as I mentioned, those are war stories and for a different place. The co-op still provides a place where drivers don’t have to grovel to an owner and for that it is a success. As Allen Ruff once commented, the only people who can truly destroy Union Cab are its members.

It is fitting to end this post with the words that Richard Chamberlin ended his history of Union Cab’s first 10 years of operation:

“But Union Cab is more than just a business; it is an idea and an ideal. It is one of a very small number of worker owned and operated businesses in America. Some consider us the wave of the future, others think we will be relegated to the scrap heap of utopian idealism. Our Membership will determine which it will be.

Long Live Union Cab! Vanguard of the People’s Revolution!!

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Burial Grounds: Rising Up

Burial Grounds Workers Collective

I am currently providing technical assistance for an incredible group of people who work at the Burial Grounds coffee house in Olympia, Washington. The business has been around as Burial Grounds since 2010 with the stated mission: “to provide a welcoming environment to anyone who walks through the door. We strive to remain a safe place for those looking to indulge in a specialty espresso drink or hand crafted coffee house beverage. We focus on customer service, mutual respect and a community mentality. “

Since this is a conversion project in process, I won’t go into a lot of detail. Needless to say, the culture of the community is already based on the co-op values of equality, equity, solidarity, and democracy. The current owner created a participatory process and as the mission states, wants the coffeehouse to be more than a place to get caffeinated. While to some it may seem a typical coffeehouse, it offers more. A small room (the library) that provides meeting space and actually holds a sharing library (I’m not sure how many books, but easily over a 100 including the classic Sand County Almanac by Aldo Leopold).

What I like most about my job is working with people who believe in the future and have the passion to create the future world that they believe in. The organizing committee for the Burial Grounds Workers Collective is full of this energy. Engaged, hopeful, and motivated, I often feel that they don’t really need my help at all!

They hope to be up and running by the New Year and I am sure that they will become a benevolent force in the Olympia co-op community in short order!

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