Worker cooperative

A worker cooperative is a business that its workers both own and manage themselves. The exact meaning of this control can differ: it might describe a company where every worker-owner takes part in democratic decision-making, or one where worker-owners elect management, with each person holding a single vote. These enterprises are also known as labor-managed firms. They emerged as part of the labor movement in response to capitalism and the Industrial Revolution, first appearing in the 1700s and growing further during the 1800s through groups like the Rochdale Society of Equitable Pioneers, which created the Rochdale Principles to guide cooperative management.

Compared to traditional investor-owned companies, worker cooperatives generally last longer, foster more trust, and provide higher job satisfaction. However, they tend to be less competitive and less profitable. Productivity results are mixed and depend on location and industry. Wages in these cooperatives are more volatile, but wage inequality is lower, and employment is typically more stable.

There is no single accepted definition of a workers' cooperative, but they can be seen as businesses that produce goods or services for profit, where the workers are members or worker-owners. These worker-owners work in, govern, and manage the business. Unlike conventional firms, ownership and decision-making power should rest solely with the worker-owners, who hold ultimate authority. They control the cooperative's resources and work processes, including wages and hours. CICOPA, the International Organisation of Industrial, Artisanal and Service Producers' Cooperatives, provides an eight-page definition in its World Declaration on Workers' Cooperatives, approved by the International Co-operative Alliance in September 2005. Its basic characteristics include: creating sustainable jobs and wealth to improve members' quality of life; voluntary membership based on available workplaces; work generally carried out by members, meaning most workers are members and vice versa; a relationship different from conventional wage labor or self-employment; internal rules democratically agreed upon; and autonomy from the state and third parties in labor relations and management. While most workers are worker-owners, some casual or wage workers may be employed without equal profit or decision-making shares. Workers often undergo a trial period, such as three to six months, before gaining full voting rights. Participation follows one vote per worker-owner, regardless of shares or equity owned, and voting rights are not tied to investment or patronage. Only worker-owners vote on decisions affecting them. In practice, cooperatives must balance various interests and have experimented with different voting arrangements to accommodate unions, local authorities, those who invested more labor, or mixed ownership models.

In short, workers' cooperatives are organized to serve worker-owners' needs by generating benefits for them rather than for outside investors. This worker-driven focus makes them fundamentally different from other corporations, and additional cooperative principles further distinguish them. For example, worker-owners may not see profit maximization as the best or only goal, or they may follow the Rochdale Principles. Their flatter management structure and more egalitarian ideology often give workers more options and freedom in solving workplace problems. Profits or losses are shared by worker-owners, and salaries usually have a low ratio difference, ideally guided by proportionality and solidarity. Theorists and practitioners believe capital should be subordinate to labor in these cooperatives. As Adams et al. put it, workers' cooperatives are "labor-ist" rather than "capital-ist": labor is the hiring factor, so voting and property rights go to those who do the work, not to capital, even though members supply capital through fees and retained earnings. Any profit or loss after expenses is assigned based on labor contribution. Recent developments have shifted thinking toward multi-stakeholder perspectives, leading to attempts to create model rules that separate control rights from investment and profit-sharing rights.