Darren Dahl recently published an op-ed in Forbes about the prospect of converting small business to worekr co-ops as the owners seek retirement. I have seen similar articles, some publiches by the Democracy at Work Institute as part of their research on the movement. I also use to see this as a potential tsunami of worker co-op development that would catapult the worker co-op movement by adding hundreds if not thousands of worker co-ops into the economy. I have since changed my mind, after a couple years of doing development work. The following are my comments posted previously on LinkedIn:
The issue here, for me, is that people are making a lot of assumptions about this moment (and I used to do so as well). First, there are a reported 10,000 people retiring every day and only a small, small fraction of them are the single owners of businesses. Small business owners (and I have worked with a lot of them), tend to not have the 65 and I’m out mindset. Their business is part of their identity so the stage of selling is much later than normal retirement. That is one difference from the tsunami. Here are some other things that I don’t think that grand poobahs of the co-op movement haven’t truly considered:
- The business, especially those in depopulating rural communities, may only be surviving based on the cheap labor of the owner. If the owner is working 40-80 hours a week to keep the store open, the workers might not be able to afford covering those hours with market-level (or even) minimum wages (let alone if the owners did their own bookkeeping or had other specialized skills that would require a much higher wage).
- The workers might not actually want to own the converted business. The job might be a Plan B job (or even Plan C or D in this economy). Adding the duties of ownership to a low-wage crappy job (in the eye of the beholder of course), doesn’t really create a conversion strategy in my opinion.
- The owner might really have an overinflated view of the value of their business reflecting in an outlandish sale price. In this case, I think that the ethical thing would be for the workers (those who want to become owners) would be to start a competing venture from scratch.
I can think of real-life examples for all three of the scenarios that I put forward. I’m not saying that conversions shouldn’t be explored–of course they should! They should especially be explored if the business has an iconic or social status within the community; however, just because there is a massive aging of the working population at this moment, and an expected transfer of capital as the aging die, doesn’t mean that the opportunity for conversion is necessarily growing with it. I’m basically just saying that conversions are going to happen, but it isn’t going to be a gold rush.