Pandemic turns heads toward co-op business model

Illustration of a cash register with three raised hand icons in green color

Illustration: Sarah Grillo/Axios

The cooperative has seen a surge in interest during the pandemic.

why it matters: Advocates see the alternative business model of worker ownership as a way out of income inequality, one that returns power to employees and builds community wealth.

  • Those values ​​have become a high priority after COVID-19 escalated conversations about racial inequalities and workplace conditions, Margo Dalal, executive director of cooperative business lender Detroit Community Wealth Fund (DCWF), tells Axios.

By numbers: According to the State of the Sector report, the number of labor cooperatives in the US increased by 30% from 2019 to 2021. The report identified 612 businesses, but estimates the actual number is closer to 1,000.

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big picture: Cooperatives have a long history. There are prime examples such as Ocean Spray, but democratically owned businesses are still few in number. Well-known local businesses include the consumer-owned Detroit People’s Food Co-op and the worker-owned Pingree Detroit.

  • Structures vary. Generally, workers or members have the power to make decisions on the business and personal livelihoods are tied to performance.

What are they saying: Karen Tyler-Ruiz, executive director of the local Center for Community-Based Enterprise (C2BE), tells Axios, “There is a demand for alternatives to what is not working that has grown exponentially during the pandemic and all the racial and civil unrest. Is.” ,

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yes but: The model is unfamiliar to many, and it can be difficult to find startup funding from investors who don’t have as much control over a traditional company.

zoom in: It is difficult to paint a picture of the local cooperative landscape due to the paucity of government data on the subject.

  • A Cooperative Economic Network of Detroit directory lists 28 operations in the area that are cooperative or have similar properties.

Intrigue: Some of the new interest in cooperative ownership hasn’t come from startups, but from existing traditional business owners looking to retire and sell their employees, Melissa Hoover, co-executive director of the National Democracy at Work Institute, tells Axios.

  • Both C2BE and DCWF have focused in recent years on helping traditional businesses make a difference.
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what’s more: Juan Carlos Duveque-Pérez, owner of local marketing agency Featherstone, says he is in talks with employees about becoming employee-owned as part of a long-term succession strategy.

  • It feels like the “right next step” because it skins the staff into the game and reflects Featherstone’s “family style” values, he tells Axios.


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