Workers of the World – Buy your Own Company!

By Kelly Candaele

Somerset Waters has the passion of a convert. You can hear it in his voice when he outlines why he set up the only worker owned Co-Op business in Los Angeles. “It’s really exciting pushing the boundaries of how a small business can operate here,” he says, standing in front of a bank of solar panels outside a residence in Calabasas. “People want a sense of ownership at work, a feeling of justice, a real stake in their working lives.”

Last year Waters set up a worker owned co-op out of a desire to see if a different kind of business model could thrive in Los Angeles. The four-person electrical firm, which has plans for expansion to 100 owner-members, installs solar and other electrical systems for residential and business customers throughout Los Angeles County.

According to the United States Federation of Worker Cooperatives, there are only 30 or so worker owned businesses in California. While the number is small, other states cities are embracing the trend. There are are good reasons why Los Angeles city officials should encourage the worker owned movement here as well.

Despite it socialistic sounding discourse, the worker ownership movement is not directed by employees determined to “expropriate the expropriators.” Rather, they are enthusiastic about taking on the advantages and burdens of ownership themselves.

In Waters’ and his colleagues electrical firm, workers gain a stake in the business after a trial period of work. They also provide a small amount of equity capital as part of their buy-in and as a demonstration of commitment. Once they are member-owners they receive regular hourly wages and benefits plus a yearly share of the profits. Most importantly, decisions about how the company is run are taken collectively through regular governance meetings of the worker-owners.

Worker cooperatives have a long and dignified history in the United States. In the 19th century, thousands of farmers formed business cooperatives throughout the South and Midwest in response to the economic pressures of banks, railroads and the booms and busts of industrial capitalism.

In the 1950s and 60s, according to Professor Jessica Gordon Nembhard, whose book Collective Courage focuses on cooperative movements in the African American community, organizations like A. Phillip Randolph’s Brotherhood of Sleeping Car Porters and the Freedom Quilting Bee in Alabama were just two of the hundreds of “alternative economies” and mutual aid societies formed throughout the United States to gain access to credit and income while facing bank discrimination or landlord evictions.

Aside from the economic benefits to the worker-owners, there are more profound reasons for encouraging the growth of cooperatives that have implications for our political system. Thomas Jefferson famously connected the conditions under which people worked with the character of our democracy. His “radical moral theory,” historian Joyce Appleby points out, outlined how self-reliant farmers would be free of economic and political dependency, thereby becoming superior citizens.

Los Angeles is behind the curve in supporting the worker-owned model. New York City recently made a $1.2 million allocation to provide educational, legal and governance assistance to worker cooperatives with the goal of helping 30 new start-ups. The City Council and New York Mayor Bill de Blasio are making sure that many of the new businesses will be located in minority communities.

In Stonington, Maine, 45 worker-owners have just finished a year running three grocery stores that they purchased from a family. Alan White, President of the cooperative’s board of directors recently said that the new worker-owners would never have had the opportunity to own part of a business without the use of this model. “It’s the American dream where all of us have a say in what’s going on,” he said.

Vernon Seile, who describes himself as a “conservative republican” and who owned the stores for 40 years, sold to his employees after receiving offers from other storeowners nearby. “It seemed that the business strategy of the other people who wanted to buy my stores was to cut the employees wages or lay them off,” he said. “That’s no way to treat loyal employees so I rejected their offers.”

The way Seile sees it, the idea of worker ownership is not “socialistic” but a way of broadening employees understanding of what it means to run a small business. “I think that when I owned the stores that most of my employees were Democrats,” he said. “But it’s surprising how thinking changes when it’s their own money they are investing.”

There is current legislation in the California Assembly that would make it easier for worker-owned businesses to meet legal requirements in California. Assembly Bill 816, sponsored by Assemblyman Rob Bonta who represents Oakland and Alameda, would also require the Secretary of State to provide information to small business owners who are selling that one viable alternative is to convert their companies into worker-owned enterprises.

The City of Los Angeles can also help by following New York’s lead with financial and technical assistance. Educational programs on democratic and cooperative business governance could also be established at our local community colleges or integrated into business courses and economic development efforts. The city should also consider establishing parity for procurement contracts for worker-owned cooperatives similar to advantages that women and minority owned businesses receive.

Waters has what you might call a Jeffersonian take on what he is doing. “We talk a lot about democracy in the United States but generally democracy stops at the door of the workplace,” he says. He believes that the worker-owner model is deeply democratic, more equal and encourages responsibility in his own and his partner’s personal and political lives.

Pioneers, if they remain singular, are often regarded as mere cranks. A thousand pioneers, on the other hand, is the beginning of a community and a new common sense. Mayor Garcetti and the other city officials can help make a worker-owned cooperative community thrive.

Kelly Candaele is currently directing a film on the workers who are building the Wilshire Grand Hotel. He worked for years at the Los Angeles County Federation of Labor.

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