Where next after Covid-19?A co-operative outlook in the USA

‘If we are gearing up toward a surge in worker ownership in the US, we’ve got to do some internal housecleaning first’

The USA is currently leading all other countries in Covid-19 cases and deaths. With many states and municipalities mandating closures of non-essential businesses, the economy has slowed in ways more extreme than the Great Recession of the late 2000s. During that time, co-ops proved incredibly recession-resistant. For many, Covid-19 is similarly spotlighting democratic workplaces.

Jay Cumberland, Equal Justice Works Fellow sponsored by the eBay Foundation and attorney with the Sustainable Economies Law Center (SELC), says interest in co-ops grew prior to the pandemic. This was in response to concerns about business succession as a ‘silver tsunami’ small business owners near retirement. But this framing of co-op interest is limited because it primarily focuses on positive employee-owner relationships – while, in many ways, worker discontent during the pandemic highlights the pervasiveness of contentious labour-owner relations. 

Jay Cumberland (Photo: Joy Asico / Asico Photo)

But the silver tsunami messaging still has some utility. “It elevated the conversation [about co-ops], but at a certain point you have to push it further,” says Mr Cumberland. “I think this could be a moment to really push that.” 

Domestic economic collapses have a history of guiding labour movements toward greater consideration of the collective wellbeing. The United States Federation of Worker Cooperatives (USFWC) cites the influence of activism that spilled out of the financial crisis of 2008. USFWC’s executive director, Esteban Kelly, views the Occupy Movement, more than the crisis itself, as prompting of the resurgence of American interest in co-operative economics. 

This is largely because the crisis primarily affected large corporations more directly than small businesses and worker co-ops, he says. The fallout from these corporations dissolving had downstream effects on worker-owners. Ironically, this trickle-down fallout spawned dialogue and investigations into the viability of American economy: a boon for the co-operative movement. 

“It wasn’t until the last 10 years that our movement really started growing at an accelerated pace, in part, spurred by that crisis,” Mr Kelly says. “Similarly, people are asking the same types of questions in a different context and are starting to propose solutions around worker ownership.” 

The membership of USFWC has nearly doubled over the past decade, allowing it to amass and vet co-op development and advancement resources from its members – resources which have been vital during the pandemic. USFWC has been able to re-purpose and redeploy materials such as guidelines on reopening business, instructions on applying for relief funding, information on developing mutual aid structures, information for freelancers, and even calls to action. The Federation is also helping co-ops re-fashion and re-emphasise parts of their businesses in order to weather the mandated business closures. 

“[If you’re] a microbrewery that also had a restaurant for dining, now you’re doing none of those things,” adds Mr Kelly. “But maybe you’re upping your canning and processing, and doing delivery of the beer directly to residences.” 

Additionally, USFWC has been advising worker-owners on how, and when, to use some of the relief funding they may have received from the Small Business Administration (SBA). They have also been referring co-ops to Community Development Financial Institutions (CDFIs) when necessary. 

As an affiliate of USFWC, SELC has been pivoting some of its work to not only help existing democratic workplaces, but also to provide interested business owners and workers with legal information regarding potential conversions. It has held multiple webinars on co-op legal entity formation for workers and business owners. These webinars provide information ranging from capital development, to strategies on exerting worker control of businesses to protect existing jobs. Interest in worker control during the pandemic illustrates how Covid-19 has deepened divisions between labour and entrepreneurs.  

“I’ve gotten contact from two businesses where there’s not that good of a relationship between the workers and the owner,” says Jay Cumberland. “[That] tells me there’s potentially something changing, where people are realising that owners are just going to close these businesses.” 

The democratic nature of co-ops also allows sharing of the collective financial burden during recessions. This makes worker-ownership a necessity for those in increasing danger of seeing their places of employment close permanently.  

Covid-19 has prompted strikes for proper PPE around the country. Mr Kelly thinks such concerns mean the US economy will need a slew of changes before work can, or should, safely begin again. 

Esteban Kelly

“There’s a very coherent conversation about what it looks like for worker ownership to be central to the next economy that’s emerging coterminously with the pandemic,” he notes. “If we are gearing up toward a surge in worker ownership in the US, we’ve got to do some internal housecleaning first.” 

Many of the structures co-ops need to emerge as pillars of a post-pandemic economy are legal and financial. Mr Kelly’s recommendations include legal provisions easing the transfer of assets from sole proprietors to workers, better regulations regarding CDFIs, financial business development specifically for co-ops, accommodations for automation-based unemployment, and support for the growing home healthcare sector.  

There’s an aspirational component inherent in a post-pandemic collective economy, as well. On Twitter, the #GreenStimulus movement has been expanding as people push for the growth of solar energy co-ops and green manufacturing. This envisions tangible steps toward a more inclusive American economy, but funding – or lack thereof – is an even more pervasive issue than usual.  

“There’s not enough money to buy all of these businesses,” says Mr Cumberland. “That’s always the limitation on doing this kind of work.” 

In order for co-operatives to ground the post-pandemic economy, conversions of conventional businesses to democratic ones is imperative. As explained in SELC’s Co-op Conversions During Covid-19 for Workers webinar, mutual aid funds and crowdfunding have often been vital for capital generation. Mutual aid funding is still ongoing – even a bit accelerated – throughout the pandemic, but crowdfunding has slowed significantly as loss of work and wages persist.  

Between the funding crisis for workers and the amorphous nature of a post-pandemic recovery, Mr Kelly admits it’s tough to give definitive answers on what will happen in the co-op space over the coming months and years. The diversity of co-operative business sectors makes it difficult to provide a singular answer. There is some optimism that fear during this pandemic will also energise activism. On the back of that, one focus of USFWC’s work is political advocacy to protect current workers. 

“[We’re] just making sure that this infrastructure is there as our movement scales, so that we have a solution for health insurance [for example] for your workforce,” Kelly says. “These are the basic, basic things that right now only USFWC is doing.”