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To jumpstart US job market, turn workers into owners

Many Americans build wealth through their home. Why not through work?

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For low-wage workers, owning a business cooperatively can play a particularly important role in helping them climb out of poverty and build savings. Cooperative Home Care Associates in New York’s South Bronx, for instance, lets its 1,600 members save money toward a $1,000 stake in the co-op, entitling them to annual dividends. The business offers them affordable health insurance, retirement plans, and other benefits.

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In America, most families build wealth by buying homes, investing in businesses, or putting money into employer-sponsored retirement accounts. The federal government subsidizes this wealth-building to the tune of $367 billion a year. But most low-income families don’t have the money to buy a house or start a business. And they don’t have jobs that come with 401(k) plans. Many of those who stretched to buy a house this decade have lost their homes or their equity.

It was mass unemployment and widespread poverty in Spain’s Basque region that spurred the creation of the Mondragon co-op in the 1950s. Today it’s the region’s economic engine, with more than 100,000 workers. At Mondragon, workers make the investment and the decisions. They share the profits and the risk. The Steelworkers say the co-op structure empowers workers and makes business more accountable. It envisions converting an existing site or starting new ventures, a natural extension of the union’s role in giving workers a voice with owners. Except this time, the workers would also be the owners.

There is plenty America can do to help cooperative businesses flourish. The Small Business Administration could make clear that it guarantees loans to worker co-ops. Congress could set aside money for an urban co-op development initiative as it does now for rural cooperatives. State and local governments could provide tax breaks and loans to co-ops that create new jobs. They could also fund an employee-ownership bank to support these ventures. Charitable groups, too, could help develop and expand the co-op model as a strategic approach to creating jobs and building assets for working families.

A model based on human values rather than the unbridled pursuit of profit might be just what we need to create jobs, rebuild wealth, and support our communities. Keep your eye on co-ops.

Melissa Hoover is executive director of the US Federation of Worker Cooperatives. Lillian “Beadsie” Woo is a senior associate at the Annie E. Casey Foundation in Baltimore.


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