Labor Unions and Worker Co-ops: Today and Yesterday

Note: the post in this series resulted from work towards a larger research project that has since been abandoned. I will be turning two of those chapters into posts that will run on Tuesdays for the next several weeks under the category “American Dream”. It is, in essence, an unfinished work, so keep that in mind as you are reading.

I hope to read your comments!

part 1 of a series

The Development of the Labor Movement in the United States

From the earliest days of the Republic the rights of workers within the work place has been a subject of debate between the Federalist and Jeffersonian wings of the national discourse when efforts to rebuild New England’s shipping and fishing industry after the revolution included consideration for the sailors along with the shipbuilders (Blasi, Freeman, & Kruse, 2013; Nelles, 1932). The debate between the relative rights of capital and labor in a Republic has continued with periodic shifts from one side to the other. The last major shift notably occurred in 1981. US President Ronald Reagan responded to a strike by PATCO, a labour union that represented the nation’s air traffic controllers. Reagan’s response ushered in a new era of labor relations in the United States that ended the “great compromise” between labor and owners that had existed for the previous thirty years (Storch, 2013) . His actions in replacing the strikers were legal under the National Labor Relations Act (as amended by the Taft-Hartley Act); however, it had been a rarely used option. Reagan’s actions were a signal to the nation’s corporation that they would have greater reign to undermine labor unions (Hogler, 2004). Following this action was the liberalization of capital under agreements such as the North American Free Trade Agreement and the World Trade Organization that allowed capital to move operations across national borders rather than negotiate with local workers (Chaison, 2006; Hartmann, 2011; Storch, 2013). This created a downward spiral in the United States labour movement resulting in diminished membership and power regardless of the political party in control (see figures 1-3).




Figure 1: Union Density 1964 source: (B. T. Hirsch, Macpherson, & Vroman, 2003)

Figure 2: Union Density 1984 source: (B. Hirsch & MacPherson, 2012)

Figure 3: Union Density by State 2014 source: (B. Hirsch & MacPherson, 2016)

The “Wagner model” of collective bargaining ushered into law during the Great Depression and America’s “New Deal” represented an industrial environment with large factories employing thousands of workers at a single facility such as Western Electric’s Hawthorne plant, or the “Big Three” automotive plants in the Detroit metropolitan area (Hogler, 2004). By the end of the 1990’s these large factories had become part of America’s industrial history having been replaced by smaller assembly plants, robotics, and computerized operations along with a move of the more labor intensive work to oversees locations that could quickly move based on the value of local labor. As Naomi Klein (2000) documents in No Logo, many US corporations quit manufacturing goods such as shoes and clothing (in the example of Nike and Levi Strauss and Co.) and switched to marketing their brand with all operations sub-contracted to corporations in the developing world where labor costs could be reduced to almost nothing.

The vacuum in the labor movement created by the retreat of organized labor created an opportunity for a different form of labor organization in the form of worker co-operatives. Worker Co-operatives are corporations in which the people who provide labor also own the company. These organizations can be quite small (a three person bike shop) or quite large (a three thousand member home-care co-operative). The defining characteristics that these organizations engage in revolve around the co-operative identity of “one member one vote” (“Statement on the Co-operative Identity,” 1995). Workers generally create a corporation with a board of directors that acts on the mutual interests of the workers as owners and employees.

The publishing of Adam Smith’s Wealth of Nations in 1776 generally marks the beginning of the era of the capitalist economy[1]. The shift in production from cottage industries and the guild system that represented the urban economy of the feudalist period to the centralized production and horizontal organization of the new “for profit” corporations brought with it a fundamental change in the social contract connected to the exchange of wealth. With this change came a new concept of competition and the value of work.

For many, the new world order ushered into being in the late 1700’s was a catastrophe. As the nature of workers transitioned from independent operator to employee, the workers lost their ability to control their lives economically and, quite often, politically. The push back brought the rise of both the Trade Union Movement and the Co-operative Movement, both originating at the central of the new disruptive capitalism: Manchester, United Kingdom (Birchall, 1994; Fairbairn, 1994). This was not an accident. The two movements have been linked for good reason in that they attempt to embrace a market economy in a method that elevates individuals and replaces the profit motive with the concept of human dignity. These attributes have been the core of both movements since their founding.

The industrial revolution in the United Kingdom occurred several decades prior to a similar revolution in North America. That revolution began intellectual movements that would have an echo in the United States as it industrialized and transitioned from an agrarian economy providing raw materials to the manufacturers of Britain into a nation of industrialists and producers[2]. This new world order became, in many ways, a hot war between the industrialists of the north and the Agrarian of the south (who depended upon slave labor), but it also created a discussion about the nature of work in the United States (Jacques, 1996). For many, the Civil War of the United States replaced chattel slavery with wage slavery. It began the industrialization of the workplace that transformed the independent worker into an employee.

While in the UK, those engaging in unionism (and to some extent co-operation) were deemed anti-establishment; the environment in the United States was more open. Unionist in the UK could expect deportation to Australia and banishment (Birchall, 1994; Thompson, 1994), while workers in the United States found inspiration and support through the constitution (Perlman, 1970). Commonwealth vs. Hunt (1842) provided critical legal protection to labor union activity in that it did not presume the collective actions of workers to be a conspiracy (Chaison, 2006). This allowed workers to organize to seek higher wages and better working conditions provided that they did not violate other laws in their pursuit. The ruling was a victory for Jeffersonian ideals in that it allowed workingmen to balance the power of the new capitalists although it did not go so far as to keep government out of the fray (Nelles, 1932).

[1] Of course, 1776 also marks the beginning of the democratic era with the adoption of the Declaration of Independence by the American colonies, which will be explored more thoroughly in Chapter 4.

[2] Adam Smith’s early writing such as the Theory of Moral Sentiments clearly influenced American thinkers such as Thomas Jefferson (Ganter, 1936).


Birchall, J. (1994). Co-op: The People’s Business. Manchester: Manchestur University Press.

Blasi, J. R., Freeman, R. B., & Kruse, D. L. (2013). The Citizen’s Share: Putting Ownership Back Into Democracy. New Haven & London: Yale University Press.

Chaison, G. (2006). Unions in America. Thousand Oaks, London, New Delhi: SAGE Publications.

Fairbairn, B. (1994). The Meaning of Rochdale: The Rochdale Pioneers and the Co-operative Principles. Occassional Paper Series,  (94-02). Centre for the Study of Co-operatives, Saskatoon, SK.

Ganter, H. L. (1936). Jefferson’s “Pursuit of Happiness” and Some Forgotten Men. The Willam and Mary Quarterly, 16(4), 27.

Hartmann, T. (2011). Rebooting the American Dream: 11 Ways to Rebuild our Economy. San Francisco: Berrett-Koehler.

Hirsch, B., & MacPherson, D. (2012). Index of Tables: Union Membership and Coverage. Retrieved from

Hirsch, B., & MacPherson, D. (2016). Union Membership and Coverage Database from the CPS. Retrieved from

Hirsch, B. T., Macpherson, D. A., & Vroman, W. G. (2003). Estimates of Union Density by State.  Retrieved May 21, 2016

Hogler, R. (2004). Employment Relations in the United States. Thousand Oaks, London, New Delhi: SAGE Publications.

Jacques, R. (1996). Manufacturing the Employee. London: Sage Publications.

Klein, N. (2000). No Logo: Taking Aim at the Brand Bullies (Canadian ed.). Toronto: Vintage Random House.

Nelles, W. (1932). Commonwealth v. Hunt. Columbia Law Review, 32(7), 1128-1169. doi:10.2307/1116199

Perlman, S. (1970). A Theory of the Labor Movement. New York: Augustus M. Kelley.

Statement on the Co-operative Identity. (1995). Retrieved from

Storch, R. (2013). Working Hard for the American Dream: Workers and Their Unions: World War I to the Present. Oxford: Wiley-Blackwell.

Thompson, D. (1994). Weavers of dreams : the origins of the modern co-operative movement. Davis CA: Center for Cooperatives University of California %@ 9781885641052 %7 150th anniversary ed.

Next: Early Unionist Movement and Co-operatives

About John McNamara

John spent 26 years with Union Cab of Madison Cooperative and currently helps develop co-ops in the Pacific Northwest. He holds a Ph.D. in Business Administration and Masters in Management: Co-operatives and Credit Unions from Saint Mary's University.
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