Since the 2007 financial meltdown, we have seen firsthand the disruptive power of rising inequality and economic volatility. The Great Recession brought to the forefront the need for inclusive, sustainable growth and economic security for all. At the Surdna Foundation, we began thinking deeply about potential ways to reverse rising inequality, as lower- and middle-income workers—those with few opportunities for building wealth and limited job security—were hit hardest by the downturn. We wanted a path to buffer workers from future economic crises while offering them a greater degree of control over their jobs.
A new report, Ours to Share looks at one of those possible solutions: worker-owned firms. We study the role that worker-ownership is playing, and has the potential to play, in building momentum toward a future of economic security and recovery in the U.S. and globally. Can worker- cooperatives (co-ops) compete with other firms on productivity? Do they actually promote greater income equality? Are those jobs more stable and secure?
The report explores questions of efficiency, equity, and inclusion of historically marginalized groups in worker ownership, surveying the current landscape and looking at ways to increase its prevalence. Our key findings include:
- Co-ops hold great potential to make the U.S. economy more inclusive and equal. The rate of growth for co-ops has greatly increased since 2007, particularly within economically disadvantaged communities, such as immigrants and women. With the right supports and resources, employee stock ownership plans (ESOPs) and co-ops can do much to close both the inequality and wealth gap.
- Employee stock ownership plan (ESOP) firms are efficient and stable. The survival rate of ESOP firms is higher through economic downturns than traditionally structured firms. And productivity of ESOPs is as good, if not better, than traditionally structured businesses.
- While worker-ownership is still relatively uncommon in the U.S., the small number of co-ops and ESOP firms is not due to the failure of past worker-owned firms. Contrary to conventional wisdom, co-ops do not go out of business more often than traditional companies. The relative lack of co-ops is due instead to limited access to capital and other support infrastructure.
- There are pathways to growth for worker-ownership. Enabling co-ops through legislation as well as infrastructure support makes a big difference in terms of where co-ops form and thrive. Converting to an ESOP or co-op is an increasingly attractive succession plan, particularly for business-owning Baby Boomers.
Ours to Share expands the conversation around worker-owned firms beyond its limited scope. While radical to some, we ask—and begin to answer— are worker cooperatives a viable business model to build wealth and increase job security? And, is there a place for them in the U.S. economy?
Published By: The Surdna Foundation
Download Related Document(s): Ours to Share: How Worker-Ownership Can Change the American Economy