Report Urges Funders to Support Worker-Owned Businesses

Supporting worker-owned businesses can help create quality jobs, sustain communities, and address the seemingly inexorable rise in income inequality, a report from the argues.

The report, (50 pages, PDF), examines the role broad-based worker-ownership is playing, and has the potential to play, in the reorganization of firms, improving work-place conditions, and making the U.S. economy more inclusive. According to the study, worker co-ops and firms that offer employee stock ownership plans (ESOP) demonstrate slightly higher worker productivity than traditional firms and are more likely to be sustainable in the event of an economic downturn. ESOP firms also tend to provide more stable employment than traditional firms, while many worker co-ops pay above-market wages and offer more regular schedules. The report also found that while immigrants, women, and people of color were less likely to own shares as ESOP employees than other groups, the formation of worker co-ops has surged since the global financial crisis of 2007-08 among historically disadvantaged groups.

Expanding the co-op movement as a way to create economic development opportunities for disadvantaged communities will require a more robust supporting infrastructure, however, as well as legislation aimed at making it easier to  launch co-ops, scale existing ones, and convert traditional firms to ESOP firms. To help address income and wealth inequality through worker-ownership, the report calls on foundations to invest in "the formation and expansion of worker-owned businesses as one method for closing the income and wealth gaps and increasing economic activity" by committing resources to incubators, educators, and consultants; supporting research; and coordinating efforts among funders.

"The small footprint of co-ops is not for a lack of interest but a lack of resources," the report concludes. "The ones that have succeeded have had to overcome long odds. Providing resources and support to viable co-op ideas — and giving them the chance to work through the inevitable rough patches — is critical."

"Ours to Share: How Worker-Ownership Can Change the American Economy" Surdna Foundation Report 04/20/2016.