Troy Pieper, a past participant in City Open’s Large Lots/Vacant Land task force, presented on cooperative business models—also called co-ops. Troy took an interest in co-ops after jumping ship from the corporate sector and landed at a bicycle repair shop in Minneapolis, Minnesota some years back. While working at the co-op, Troy learned about the benefits and struggles of working within a business model that is defined by employee ownership.
Unlike most businesses in America, co-ops are both owned and operated by employees; the company is not controlled by conventional shareholders. According to Pieper, this allowed for shared control over major business decisions regarding how the company should run. It also then provides the company’s growth dividends back to its employees.
Pieper presented several national and international examples of cooperative business models, citing that many major European regional markets are influenced heavily by cooperatively-owned businesses. Places like the Basque region of Spain are home to fairly large corporation of worker-owned co-ops that contribute significantly to the national GDP.
“The model is unique because it gives workers power,” explained Pieper. “But it can also be really difficult to make decisions, and I’ve watched businesses struggle to find the best ways to have their employee owners’ voices heard.” The struggle here, said Pieper, was that companies use mechanisms like one-to-one decision making or consensus voting to make those decisions; however, he continued, the struggle is worth it as companies are less likely to close or outsource their labor in a co-op model.
“The majority of co-ops are startups” stated Pieper, quoting the United States Federation of Worker Cooperatives (USFWC). According to the USFWC’s data, the average profit of a cooperative business is $150,000—which is not a huge gain, certainly, but represents growth possibility.
In Chicago, there are 14 businesses registered as co-ops, of which, said Pieper, many are led by people of color. The Illinois Works Co-op Alliance is working to increase that number by providing training for worker rights. However, barriers still remain: according to Pieper, the lack of access to capital can make it difficult to build a cooperative business. It’s a problem that is fueled by another barrer, the lack of awareness of what co-ops are and their potential benefits to communities. There also exist a lack of training and technical support, and, one of the biggest hurdles: the legal complexity that exists to register these businesses.
The group then went on discuss advocacy groups such as the Cook County Commission on Social Innovation, which can provide some support and assistance with the bureaucratic challenges the creating co-ops can present. We also discussed co-ops as tools for racial equity, challenging generational poverty through business models that encourage employees to own a business’s success. One individual brought up an idea presented at a co-operative housing conference held earlier this year: that co-ops can be most successful when they are supporting each other through partnerships, discounts for allied members, and more, prompting many in the room to wonder how we can use labor and partnership as a form of currency in an uncertain world.
ANJULIE RAO is a journalist focusing on architecture, public spaces, and urban development. She is the editor ofChicago Architect magazine, and her bylines can be found at Chicago Magazine, Curbed Chicago, The Reader, LUXE Magazine, among others.