8 ms·
Can worker cooperatives alleviate income inequality?
- falcolas 12y agoTo make this more relevant to our industry: http://techworker.coop/sites/default/files/TechCoopHOWTO.pdf http://techworker.coop/sites/default/files/TechCoopHOWTO.pdf I wish this was easier to set up where I live; too many big companies holding all of the area's mindshare (for instance, our city is less than 50,000 in population, and we have two sizable startups, one incumbant and Oracle commanding the tech staff in the area). I can't imagine any of these companies tolerating hiring out work to a tech co-op.
- spiralpolitik 12y agoI've been looking for a document like that for a while now as I'd been curious why there have been so few Tech Co-ops.
- aetherson 12y agoBecause tech workers are well-compensated, and can pretty easily move themselves around on a risk/reward tradeoff, and also pretty finely tune an effort/payout tradeoff. And because co-ops are probably at least an order of magnitude less likely to produce a $10million+ payout after 5-10 years than a startup is.
- dublinben 12y ago>I can't imagine any of these companies tolerating hiring out work to a tech co-op. Why should the internal structure of a subcontractor matter to the client?
- falcolas 12y agoBecause they would rather hire employees than contractors. Oracle in particular has several miles of red tape just to authorize the use of a particular contractor...
- deleted 12y ago[deleted]
- dreamdu5t 12y agoEnough with the ignorant pop-econ articles laced with subtle political pandering.
- Estragon 12y ago> Enough with the ignorant pop-econ articles laced with > subtle political pandering. Can you please point out the ignorant pandering parts? Are you just referring to the "income inequality" headline? Because the article seems pretty good to me. Lots of well-informed, well sourced information about co-ops.
- jandrewrogers 12y agoOne of the assertions made in the article is obviously wildly incorrect: the ratio between the highest paid and lowest paid workers in traditional corporations is not remotely 600-to-1. In the US, that would mean the top paid people in "traditional corporations" are earning at least $9M/year. Given that the average corporate CEO in the US makes a bit under $200k/year (per the US Federal government), it would require a definition of "traditional corporation" that has been stretched to the point of misleading. Even for multi-billion dollar publicly traded companies, the CEO base pay is frequently <$1M (this is largely public record). With very rare exception, no amount of bonuses or vested stock options will close the gap between that and a minimum of $9M/year at most large corporations. Some people at companies may be overcompensated but let's be honest about what typical figures actually look like.
- njharman 12y ago"In 2010, 85.1 percent of CEOs at S&P 500 companies received an annual bonus payout. The median bonus was $2.15 million". http://en.wikipedia.org/wiki/Executive_compensation_in_the_United_States http://en.wikipedia.org/wiki/Executive_compensation_in_the_U... "Only about 20 percent of a CEO's pay is base salary; the rest is made up of incentives based on the company's performance." http://www.salary.com/executive-compensation-it-starts-with-the-ceo/ http://www.salary.com/executive-compensation-it-starts-with-... Looking at Ratio of average compensation of CEOs and production workers, 1965–2009. Source: Economic Policy Institute. 2011. Based on data from Wall Street Journal/Mercer, Hay Group 2010. Yes, CEO's only make 200-300 times "production" workers (not lowest paid worker). Fucking break out the champagne, we have beat income inequality!!!
- seattlegal 12y agoAverage CEO compensation came in at $15.2 million in 2013 for Fortune 500 companies.
- TulliusCicero 12y agoIt may surprise you to learn that there are many more corporations than the ones in the Fortune 500.
- whiddershins 12y agoI've always wondered why cooperatives assume consensus decision making. Couldn't I be an equal owner of something, but decide to leave the leadership to someone else, at least for a specified time? I feel like the consensus/debate thing often brings down egalitarian organizations. But ownership does not HAVE to equal control.
- deleted 12y ago[deleted]
- bryondowd 12y agoI don't have a source, but I'm sure I've read about coops that hire a CEO. Basically, they offer a CEO enough money to attract a skilled executive, but they still own the company, and can collectively give the CEO the boot if things go sour. So, individually, everyone answers to the boss, but the boss then answers too the collective group.
- nhaehnle 12y agoYou're absolutely right, and I think this is more an assumption about cooperatives rather than how cooperatives actually work. For example, Mondragon is a federation of coops some of which have hundreds of employees; they're not going to have a debate with everybody about everything. Another way to think about it is that cooperatives are the ultimate expression of a democratic workplace. Yet it's not as if every law were discussed by everybody in a democracy. In a way, that shows that we have a lot to learn about how cooperatives can work. The quote of the union representative is very relevant: Cooperatives aren't magic dust, even though I personally believe that they are one of the key tools for dealing with the problems of capitalism. As a society, we simply have too little understanding of how cooperatives work, and until enough experiences is collected and networks exist to advise founders of cooperatives, and all those other little things that help traditional business founders are extended to cooperatives, it's going to be difficult.
- mrxd 12y agoI believe that is how most coops are run. The workers elect the board of directors.
- 12y ago
- Kalium 12y agoShort answer: sometimes, provided they can function and compete effectively as businesses.
- njharman 12y agoOwning means of production is so "few revolutions ago". Extreme income inequality is due to capital ownership.
- mc32 12y agoI'm not sure a cooperative is going to alleviate income inequality. When you form the cooperative, I imagine the first member and subsequent members would filter for ability, qualifications, productivity, etc. So the same "average" and bellow average worker would be left out. How are the passed over want-to-be workers going get in on the cooperative and thus enjoy an income and presumably above average income? Are the cooperatives going to take on slackers or averagely skilled people wanting to join? How would that cooperative compete against more 'competitive' cooperatives?
- bryondowd 12y agoI assume the income inequality here is owner vs worker, rather than above average worker vs below average worker. I expect the gap between workers in most fields is much smaller than the gap between the owner's profits and the salaries of each worker. The idea is that, in a traditional company, the owner (or stockholders) puts up all the investment and risk and in return, get the lion's share of the payoff. In the coop, there is no 'owner' and any profits that aren't reinvested in the company are divvied up by the workers. The trade-off is the difficulty in finding investment capital to get started, which is why many coops are simple businesses like cleaning services that can be started by workers pooling their resources. Also, in regard to below average workers, I suppose that in many fields a coop could use productivity/skill/experience/etc to scale how big a slice of the pie each worker gets. This would allow any reasonable worker to be hired, while encouraging competitive productivity. It would all depend on the coop's rules.
- sanderjd 12y agoYour comment seems to presuppose that income inequality is largely the result of differences in skill and/or work levels, which is a common viewpoint that is not necessarily correct. The alternate viewpoint is that there are a lot of hard-working people with highly valuable skills who are underpaid due to the way corporations are usually structured. In a typical corporate structure, the people closest to the money are the best paid, which doesn't necessarily imply that they are the hardest working or mostly highly skilled.
- 12y ago
- zwieback 12y agoDefinitely works in retail and not just for low-volume specialty markets. I shop at WinCo, which is a great supermarket and successful coop: http://www.forbes.com/sites/maryjosephs/2014/11/05/millionaire-grocery-clerks-the-amazing-winco-foods-story/ http://www.forbes.com/sites/maryjosephs/2014/11/05/millionai... Also Bi-Mart, fantastic coop chain.
- throoooooowaway 12y ago"The various forms of cooperation are incontestably one of the most equitable and rational ways of organizing the future system of production. But before it can realize its aim of emancipating the laboring masses so that they will receive the full product of their labor, the land and all forms of capital must be converted into collective property. As long as this is not accomplished, the cooperatives will be overwhelmed by the all-powerful competition of monopoly capital and vast landed property; ... and even in the unlikely event that a small group of cooperatives should somehow surmount the competition, their success would only beget a new class of prosperous cooperators in the midst of a poverty-stricken mass of proletarians. While cooperatives cannot achieve the emancipation of the laboring masses under the present socioeconomic conditions, it nevertheless has this advantage, that cooperation can habituate the workers to organize themselves to conduct their own affairs..." ~ Bakunin
- TaylorAlexander 12y agoI've been dreaming lately of starting up a worker coop in silicon valley that focuses on consumer robotics. Is anyone interested in something like that? I'm an extremely capable hardware guy with a broad skill set and extensive robotics and manufacturing experience. I'm running my own little start up now that could help fund initial operations, and could use some people who excel at software, mechanical design, or general operations. I am really troubled by the way traditional companies exploit workers, and see that as a major problem of our age. If you could show the world that a worker coop could succeed doing something highly technical like robotics, it would serve as proof that the cooperative model can work for more than just chicken farms. I'd be focused on growth like a silicon valley startup to some extent, but quality of life for everyone in the organization would be a big deal. I'm also kind of curious about B-corporations, which allow a specific public benefit to share standing with profit as a legal goal. This would be more silicon-valley friendly as far as funding, since worker coops don't have the same revenue generating opportunities for investors. Though the coop could agree to some kind of internal "revenue tax" to pay back investors or save money. I'd love to see some wealthy people just give their money away to talented organizations that want to spread public good. What I'd love most would be to just work on open source robotics that help the world. I've been developing a system for 3D printed robotics that use as few non-printed parts as possible, making it easier to collaborate online with hardware designs. I don't typically even use screws, since sourcing them can be expensive and slow - most parts just snap together or interlock. An alternative plan though is for me to get rich the traditional way and then use my own money for good, so I am going to be checking out the new YC RFS for hardware whenever that comes out. I have some good ideas about improving life in the kitchen that might be workable. :)
- poikniok 12y agoJust to make sure, when you say traditional companies exploit workers, I presume that means that your coop would pay more than these "exploitive" companies? Or is this a thing where you use the "coop" selling point to vastly underpay your workers?
- TaylorAlexander 12y ago
- lincolnq 12y agoSo... I've been interested in this model for startups. But it doesn't make sense, right? Because startups already give equity to employees as part of their compensation package. But nobody would call Google a "worker coop" -- but I haven't figured out exactly why not. What's the deal?
- TaylorAlexander 12y agoI think a worker coop is always explicitly owned equally by all workers, which isn't what Google does. The model makes it hard to get investment, since there are no "super owners" like investors typically are. The coop could pay the investment back like a high interest loan with flexible terms, but I haven't seen exactly how that would work. I'm interested in that though - see my other comment here.
- bri3d 12y agoOptions to buy less than .1% (possibly even a non-voting .1%) of a company which is majority-controlled by just a few founders is a far cry from joint-owning a company. Not only are the equity proportions vastly different but so is the management structure.
- jerf 12y agoThis basically sounds like the lean-startup equivalent in the non-tech space. I suspect it's more possible than before because it's easier for the coops to outsource the legal bits than it used to be. It is ironic and perhaps even naive to pitch this as a reaction against capitalism when it is the efficiencies of capitalism making it possible in the first place. And if these people really think this is a reaction against "capitalism", in its capacity as all-powerful bogeyman rather than description of how economic transactions work... "but to Henry Lezama, the goal is to keep growing, to bring more people into the cooperative." ... they're in for a shock because as they bring in more people, in the limit this just becomes another form of business, and as more regulations kick in based on their size they won't be able to help becoming a "business", to say nothing of how "flat management" becomes practically impossible pretty quickly and hierarchy will set in. (It's a human thing, not an ideological thing or a government thing or a "capitalism" thing. We instinctively, and I mean that fully literal, structure ourselves into social hierarchies.) It's fantastic that people are starting to realize this and move the gains of this sort of business structure down the economic ladder. It's a powerful and flexible structure for both the members and society itself.
- dropit_sphere 12y agoRelevant: "Beyond Capitalism: Leland Stanford’s Forgotten Vision" http://dynamics.org/~altenber/PAPERS/BCLSFV/ http://dynamics.org/~altenber/PAPERS/BCLSFV/
- bcheung 12y agoCo-ops seem like they are better suited for a side-hobby rather than your main source of income. Part of the reason for less income inequality is that the types of people who join them aren't primarily concerned with their monetary compensation. They are more concerned about a cause or outcome than earning money. It's selection bias. The majority of people want to get paid the most they can. It seems like a co-op tends to pay the in demand and highly skilled people less, and the less skilled people more. I think it would be hard to attract and retain high-end talent if they can earn more in the standard workplace.
- mercer 12y agoIt's a bit of a chicken and egg situation. I suspect variations on the co-op model, more 'holistically' extended to include more parts of life perhaps, might be preferable to many people over the current approach, whatever it's called. But without experiencing it, and with the mindset that more money = more happiness, most people wouldn't give it a shot. And I understand that.