Written by Rob Brown, Business Ownership Solutions Program Director
The coronavirus pandemic and the ensuing economic collapse has only made a bad situation worse, exacerbating economic inequality, racial disparities in employment, wealth and health, and the precarious livelihoods of poor people. A staggering and unprecedented 41 million workers filed for unemployment in the past few months, and a majority of those newly unemployed are low-moderate income workers in service sector jobs – the very population that our supposedly “healthy” economy had previously left only one paycheck away from economic disaster.
Many workers may never get their job back, as many businesses may not survive. A US Chamber of Commerce survey shows 43% of small business owners say they have less than 6 months before a permanent closure is unavoidable. Business bankruptcies jumped 20% in March, 26% in April, and 48% in May. Older business owners, already thinking about how to retire, are the least likely to be willing to take on debt and put in the work and time required to rebuild and the most likely to “throw in the towel” and close.
Solutions are urgently needed to stem the tide of business closures and job losses. Whether for those that were spared the worst or those on the edge of survival, a plausible option for saving many of these businesses and jobs is to create a worker cooperative and organize an employee buyout. It’s the workers who have the most at stake and are the best positioned to “keep the lights on”.
Worker cooperatives are values-driven enterprises that are locally owned and controlled. A core purpose is worker and community benefit, giving members a voice at work and an opportunity to participate in the profits, oversight, and management of the company. They are a proven, effective tool for creating and maintaining sustainable and dignified jobs, generating wealth, and improving the quality of life of workers.
One recent study showed that worker-owned firms were much more successful at attracting and retaining young workers and greatly improved their incomes, household wealth and job tenure. Another study showed that lower income workers (particularly workers nearing retirement) in worker-owned firms had dramatically higher household wealth, and employee ownership significantly narrowed the gender and racial wealth gap.
Every business will not be saved, let alone every job. But if we think boldly and act quickly we could save many businesses in the short term, and offer those workers an opportunity to improve incomes and build wealth through ownership over the longer term.
Throughout the United States, there are grocery stores, cafes, coffee roasters, construction companies, renewable energy companies, farm businesses, and insurance agencies that are owned by the workers. They are a model for how an economy, even in the face of unprecedented threats, can be made to work for working people and their communities. With support from the public and philanthropic sectors, we can expand the educational, technical and financial resources available to assist workers to buy the businesses they work for and take this socially and economically just model to scale.