Why A Union Co-Op?
Here at Worx, we believe that co-ops not only foster internal democracy—but also increase job security and give all our workers the ability to benefit directly from our work. Having a stake in the company—financially and socially, literally, and metaphysically—fosters a rich ecosystem of mutual interest and deepens our commitment to the Work. (And Worx.)
Nationally, worker co-ops are small but mighty, ethical, and lucrative. Collective revenue exceeds $504 million, and the average wage is $19.67. Too many Americans spend their lives working for someone else and rarely see the fruits of their labor.
It’s a broken system. Union co-ops offer a compelling and long-standing solution often overlooked.
The Potent Power of Collaborative Work
One enduring and central theme in US history is our evolving relationship to the value of labor and our nation’s workers. Just 200 years ago, the vast majority of working Americans were self-employed; they were a mix of farmers, artisans, merchants and makers.
And today? While the majority of workers are employees, the Labor Movement galvanizing employee ownership stock plans (ESOPs), Labor Unions, and Cooperatives is rapidly growing. Currently about 30 million workers fall into one of more of these categories and 1 in 3 Americans are co-op members holding 350 million co-op memberships worldwide.
Worker cooperatives center people over profit, and America was predicated on this notion. Putting cooperation — what else? — above capital is not a new concept, it’s part and parcel of our history.
“Labor is prior to, and independent of, capital, Capital is only the fruit of labor and could never have existed if Labor had not first existed. Labor is superior to capital and deserves much the higher consideration…”
— President Abraham Lincoln in a message to Congress, December 3rd, 1861
While Lincoln’s wisdom can feel antiquated at best and impossible at worst, Capitalism — as illustrated by technocrat billionaires like Jeff Bezos and Elon Musk, corporate overseers who possess personal fortunes north of $100 billion — doesn’t have to be labor’s future.
“There is a direct correlation that when union membership is down, economic inequality is up…there is a growing national consensus that there needs to be dramatic changes to ensure that the economy does indeed work for everybody and not just Wall Street.”
— Kent Wong, executive director of the UCLA Labor Center to CNN
Workers’ rights are gaining momentum, visibility and traction — COVID threw America’s social inequities into sharp relief and the droves of frontline workers that keep our nation running are protesting, striking, and demanding protections and rights. There is a groundswell of efforts to unionize. And union cooperatives are close behind.
WORKER CO-OPS RISE AGAIN
Worx is proud to be one of a growing number of union co-ops in the U.S. Worx was conceived in 2002 and founded in 2014, but we’re part of a much longer history and movement. We’re building on the lessons from an earlier effort by cofounder Kevin O’Brien called SweatX, the first attempt at a modern union co-op in direct response to globalization.
SweatX was based on the thoroughly radical principle that “garment workers don’t have to be exploited in order to operate a financially successful apparel factory.”
The Hot Fudge Social Venture Fund, set up by Ben Cohen — the puckish entrepreneur and social activist of Ben & Jerry’s ice cream fame — invests $2 million in SweatX’s brand-new garment business in Los Angeles.
SweatX had the right idea—namely, that workers should own their companies and earn a living wage for the work they do—but they did not have the benefit of the growing national union-co-op infrastructure that has been built since 2009.
Inspired and informed by Spain’s Mondragon Industrial Cooperatives (a fifty-year-old network of successful employee-owned businesses) SweatX is organized as a worker-owned co-op that:
- is a union shop organized by UNITE
- pays a living wage starting at $8.50 an hour
- provides good healthcare, a pension and a share of profits through co-op ownership
- practices the “solidarity ratio,” in which no executive is paid more than eight times what the lowest-paid worker gets
- intends to make a profit, grow and “spread its progressive seed,” writes The Nation.
2004 also sees the launch of the U.S. Federation of Worker Cooperatives (USFWC), a powerful outgrowth of local organizing across the country. (In 2013, the USFWC launches the Democracy at Work Institute, expanding the vision and promise of worker cooperatives to new industries and communities.)
SweatX shutters in 2004 due to mismanagement and lack of a legitimate Mondragon cooperative structure and a union co-op ecosystem to embrace it through the difficult start-up phase.
Enter Co-op Cincy and 1worker1vote.
In 2009, the United Steelworkers and Mondragon International announce their launch of union co-ops in the United States, leading a small group in Cincinnati to pore over the possibilities. They connect with the Steelworkers and Michael Peck — the North American delegate — and become the first group in the US to bring this agreement to life. Co-op Cincy (formerly Cincinnati Union Co-op Initiative) incorporates in 2011 and launches its first co-op in April 2012 — Our Harvest — the first Mondragon-style union co-op in the United States.
Co-op Cincy believes liberation is bound up with the freedom of everyone and part of that vision is proliferating union co-ops across the US and world. In 2013, Co-op Cincy launches 1worker1vote, a national network group to help share experiments and templates that work.
1worker1vote focuses on policies, practices, and projects to build social enterprise ecosystems with shared ownership models all starting with the union-coop template. 1worker1vote believes that ownership — not employment — is the foundation of a democratic labor system.
The way to rise from paycheck dependency to enterprise equity is to reflect lessons where capital is labor’s instrument, not its master.
So how did we get here and just where are we going? Take a quick historical journey with us.
Revolution to Industrialism: The Early Labor Movement
Workers in the United States have been organizing for their rights since the nation’s founding. The late 18th century in America was rich and rife with tumult and change. Workers found themselves at the nexus of socio-political upheaval as the Revolution raged and Industrialism rose on the horizon.
The sun-to-sun workday model prevailed — meaning there was a 75-hour workweek in the summer — and workers were subjected to low wages, unsafe conditions, and possessed little collective bargaining power.
In 1794, Philadelphia shoemakers organized the first full-fledged trade union in America — boasting a constitution, regular meetings, and dues.
The journeymen were tried for criminal conspiracy after a strike for higher wages; the union was found guilty and fined.
They were rendered bankrupt and the union was forced to disband. (This was the first of many unions to be tried for conspiracy.)
As the 19th century unfolded, the Industrial Revolution brought with it the dawn of the modern capitalist economy. Every facet of American life was fundamentally altered by the switch from hand production to machines, from home to factories. Textiles proved to be the dominant industry of the Industrial Revolution, leading the pack on mechanized labor with power looms, designed by Edmund Cartwright that automated the weaving process. By mid-century the mills of Lowell, Massachusetts alone employed 10,000 workers.
In 1834, The National Trades Union is formed in New York City—marking the first attempt at a national labor federation in the United States and a serious social movement composed of more than 18 production cooperatives.
This movement falls prey to The Panic of 1837 — a financial crisis and major depression with mass unemployment, failed banks, and plummeting profits and wages. In 1840 President Van Buren establishes a 10-hour workday for Federal employees without a reduction in pay.
Labor and The Civil War
The Civil War tore American labor systems asunder, and fundamentally redefined what it meant to be a worker. Prior to the Civil War, four million Black Americans were enslaved — bought and sold on open markets and auctions as “human property.”
Black bodies and their free labor contributed immeasurably to the surging wealth of the country— plantation agriculture being a leading “high tech” industry of its time. It’s estimated that the financial value of enslaved workers in 1860 was worth $3.5 billion — more than all manufacturing and railroads combined.
Famed scholar and NAACP co-founder W.E.B. DuBois wrote extensively on America’s economy near total reliance on slave labor and that the war’s end was not a triumph of good over evil, but the massive rolling strike of enslaved workers in the South, the Confederacy’s loss of labor.
“This control of super-capital and big business was being developed during the 10 years of southern reconstruction and was dependent and consequent upon the failure of democracy in the south, just as it fattened upon the perversion of democracy in the north.
And when once the control of industry by big business was certain through consolidation and manipulation that included both north and south, big business shamelessly deserted not only the Negro, but the cause of democracy, not only in the south, but in the North…
It was not, then, race and culture calling out of the South in 1876; it was property and privilege, shrieking to its own kind, and privilege and property heard and recognized the voice of its own.”
― W.E.B. Du Bois, Black Reconstruction in America 1860-1880
The Civil War ends in 1865, but the subjugation of labor to capital continues.
The National Labor Union emerged in 1866 and seeks to improve working conditions—calling for an 8-hour work day among other demands—through legislative reform rather than collective bargaining. It boasted more than 200,000 workers, but dissolved in 1873.
“The cause of all these evils is the ‘wages’ system. So long as we continue to work for wages, so long will we be subjected to small pay, poverty and all of the evils of which we complain.”
– William H. Sylvis, President, National Labor Union
The Knights of Labor is founded in Philadelphia by Terence Powderly in 1869—first held in secret—and blossomed for nearly 15 years, peaking in 1886 with 334 organized worker cooperatives, and nearly a million members. The Knights remain important for many reasons, including for its help in forming hundreds of worker cooperative businesses nationally.
“The Knights planned that these cooperatives would grow and spread in every industry across America, eventually exerting democratic control over the entire economic system, until they transformed the country into what they came to call a Cooperative Commonwealth. Wage slavery would be abolished and the American promises of equality, freedom, and democracy made a living reality.”
— For All The People, John Curl
The reasons for the Knights of Labor’s demise are complicated. In 1886, a bomb explodes at a workers’ rally in Haymarket Square in 1886 and a mass wave rippled across America condemning labor activism and scapegoating the Knights as the source of the problem, giving the authorities an excuse to crack down.
But there were additional forces at work, including divisions between Black and white workers which The Knights, and the Populist movement of which they were a part, were only sometimes successful in uniting. Nationally, many rights that Black Americans had won were at first gradually and then rapidly rolled back through a combination of Ku Klux Klan violence and Jim Crow legal chicanery.
Labor unions survived the Knights’ decline—but worker cooperatives were largely gone.
The American Federation of Labor emerges from the ashes with Samuel Gompers at the helm—the AFL focused its efforts on supporting white craft workers and largely eschewed organizing women, Black or immigrant workers.
The term “robber Baron” appears as early as 1870 in The Atlantic Monthly magazine, a newly coined, derogatory term for the American industrialists and financiers who made fortunes by monopolizing huge industries like steel, oil, railroads, and banking—Carnegie, Rockefeller, Vanderbilt, and JP Morgan respectively—through relentless exploitation of workers, corrupt dealings, and the formation of trusts.
American capitalism was in full swing and engaging with material wealth at an unprecedented velocity, all the cost of workers’ livelihoods. Known as the Gilded Age, this era was marked by increased subjugation of workers to capital and reinforced white supremacy.
Meanwhile in 1876, the Farmers’ Alliance is established in Texas, aimed at ending the crop-lien system—wherein farmers had mortgaged their land to the aforementioned Robber Barons—and getting agricultural workers out of poverty.
The Farmers’ Alliance boasted more than 3 million members, an extensive network of cooperatives that championed a new economic system that centered workers instead of capitalizing on them. The Farmers’ Alliance was a major part of the People’s Party founded in 1891— also known as the Populists—an agrarian-based political party.
The Birth of the Brand
The turn of the 20th century was also marked by the birth of the brand, and a surge of iconic companies that would radically shift our relationship to consumerism, American identity, and lay the foundation for globalization as we know it today.
Registered trademarks rose to prominence in the 1870s, and the U.S. Congress passes its first Trademark Act in 1881 which marked the first instance of branding as intellectual property, fundamentally disconnecting the worker from the final product; instead of a human making a soda at a foundation, you had Coca-Cola. Procter & Gamble rolls out Ivory Soap in 1879. Kodak is advertising cameras by 1891.
But with all that efficiency came a huge amount of worker exploitation; the majority of the work was unskilled and grueling; the work was tedious and the days long. Ford was renowned for his draconian treatment of his workers—he restricted bathroom breaks, prohibited talking and workers were often fired for complaining of abuse. Turnover was high and workers were quitting in droves.
To combat the fallout, Ford announces he will more than double the assembly workers’ wage—from $2.34 per day to $5 per day and people began showing up in droves.
Still reeling from the 1929 stock market crash and the dawn of the Great Depression, unemployment in Detroit is raging.
Clashes between workers and managers reach a fever pitch in 1932 when thousands gathered at Ford’s River Rouge to shut down the factory completely; five striking workers are shot and killed by the Dearborn police and Ford security guards; 22 more are wounded by gunfire.
The Ford Hunger March — also known as the Battle at River Rouge — took place on March 7th 1932 at the Ford Motor Company River Rouge Plant. 75% of the workforce at this plant had been laid off and without public relief, people were dying of cold and hunger.
In 1936 the sit-down strike in Flint, Michigan broke out and afforded the UAW a long-fought for and landmark win.
The Great Depression and The New Deal
While there certainly were worker victories during the Gilded Age (such as the establishment of compulsory workers’ compensation insurance in New York state in 1914), it was the worker response to the Great Depression of 1929-1939 that fundamentally altered relations of power at the workplace.
In the 1930s, cooperatives offered a powerful counterweight to the Great Depression which continued to ravage America; by 1933—considered the lowest doldrums of the Depression—15 million Americans were unemployed and nearly half the country’s banks had failed.
In 1935, the Congress of Industrial Organizations (CIO) formed with an explicit goal of organizing workers of all races and in manufacturing industries especially.
A year later, a member union of the CIO, the United Auto Workers (UAW) staged a six-week sit-down strike in Flint, Michigan, that led to General Motors signing a collective bargaining agreement.
A vital piece of Roosevelt’s response to the economic downturn was the New Deal, which in turn was hugely bolstered by unions and organized labor. The passage of the National Labor Relations Act (NLRA) in 1935 was a potent new weapon for union organizers, encouraging collective bargaining, and aimed at curtailing private sector labor and management practices; once recognized, an employer was legally bound to bargain with the union, enforceable by government action.
Roosevelt named Francis Perkins his secretary of labor; she was the first woman to serve in a cabinet position and a tenacious supporter of workers’ rights reforms including minimum wage, limiting child employment, unemployment compensation, and a maximum work week of 40 hours.
Under the New Deal we also secured social security, banking reform, the securities and exchange commission and the official right of workers to organize. But the New Deal wasn’t without its complications and rippling effects; with the New Deal came the expansion of the U.S. government’s size and scope—especially its role in the economy—and the fight for worker ownership was largely lost; workers placed their trust in the unions to negotiate and fight for their rights in the workplace.
1n 1941 the Japanese bomb Pearl Harbor and the United States enters World War II; the war effort stimulated American industry to such a sweeping degree it effectively ends the Great Depression. In 1942 The United Steelworkers of America is organized (replacing the Steel Workers Organizing Committee) and it still runs today, boasting more than a million members across nearly every industry from nursing and smelting, to teaching, welding, and crafting wind turbines.
In 1945, 15 million people were union members, 35 percent of the private sector workforce and 12 million more than a dozen years before. If labor’s rise in the late 1930s and early 1940s was rapid, its decline was slower, starting with passage of the Taft-Hartley Act of 1947. Voted in by southern Democrats and northern Republicans over President Harry Truman’s veto, the bill operated as a kind of slow poison, restricting many tactics that unions had used to organize during the New Deal.
The bill also allowed for so-called “right to work” laws at the state level (which weakened unions financially because workers could opt out of paying dues even as unions were still obliged to represent them).
By the 1950s, 35% of workers still belonged to unions, but McCarthyism systematically attacked unionized labor and cooperatives, making them synonymous with socialism and communism and the labor movement suffered another blow underneath the weight and frenzy of the Red Scare.
The Equal Pay Act of 1963 was signed by President Kennedy— ensuring there was no wage discrimination based on sex—and was followed by amendments to the Fair Labor Standards Act in 1966, which extended minimum wage protection to the 10 million workers previously excluded from the benefits of the law.
Major cities were paralyzed and Nixon declares a state of emergency; the strike won them full collective bargaining rights, the right to negotiate on wages, benefits and working conditions, but not, ironically, the right to strike.
Then comes 1981, the contentious and messy strike by the Professional Air Traffic Controllers union; President Reagen takes to the television to express his displeasure and deliver a very public threat:
“…I must tell those who failed to report for duty this morning, they are in violation of the law. And if they do not report for work within 48 hours, they have forfeited their jobs and will be terminated; end of statement.”
Interestingly enough, Ronald Reagan was formally a very union man–he’d been president of the Screen Actors Guild in fact. During his campaign for office, Reagen identified the very white, male, conservative union with lots of veterans—the Professional Air Traffic Controllers union—as precisely his demographic. Reagan committed his support to PATCO if PATCO, in turn, offered theirs. All was simpatico until PATCO threatened to strike.
A strike from air traffic controllers was a huge threat—they control air traffic and thus a huge swathe of the American economy—and it was illegal, as they were federal workers.
The government offers the air traffic controllers a 5% raise, which was unprecedented for the federal government—this was a huge raise—but the union felt their salaries should match that of the pilots. They said, “We asked for at least 10% more, and we’re serious.”
And they were. They went on strike and Reagen fired them. All 11,000 air traffic controllers who stayed on strike. And not only that, he also banned them from working as air traffic controllers for life. What Reagan managed to do is dramatically overhaul the narrative and make strikebreaking patriotic. He cast himself as the man trying to take care of the American everyman, instead of the greedy unions keen to upend the system for their own gain.
And this socio-political alchemy had seriously rippling effects; unions realized that employers wanted them to strike so that they could, in turn, fire them and replace them with nonunion workers.
This created a still-lingering atmosphere in which union members don’t want to strike at all as their leveraging power is all but destroyed. A decade after the strike, President Bill Clinton lifted Reagan’s ban on air traffic controllers getting their jobs back, but the damage to the labor movement had been done.
Billionaires vs. Workers (Or, America’s Second Gilded Age)
With unions weakened, companies faced few constraints. This can be seen in our industry—textiles. In 1996, the Kathy Lee Gifford scandal broke — it became publicly known that child labor in El Salvador was being employed to manufacture her clothing line.
Globalization had fully sunk its teeth into the industry—entire towns were going out of business as the industry moved abroad to find “cheap labor,” gutting droves of American towns and families and leading to a Second Gilded Age.
The North American Trade Union (NAFTA) goes into effect in 1994, establishing a free-trade bloc between the three largest countries of North America—the United States, Canada, and Mexico. Critics of NAFTA argued the agreement centered corporations over citizens and works, and prevented local governments from issuing laws or regulations designed to protect the public. Health and environmental standards were also a concern as well as the vast promotion of privatization.
The protest of the World Trade Organization—the Battle of Seattle in 1999—epitomized the rancor surrounding free trade and globalization; the some 65,000 protestors successfully stalled trade talks that were being criticized as detrimental to the developing world and an intrinsic threat to the labor and environmental movements.
2008 sees the Great Recession and America tumbles again into economic turmoil; unions and strikes fall out of favor—instead of galvanizing workers, it frightens them into taking whatever jobs they could get.
What can be done?
The effects of corporate power can be seen daily. More and more workers are living paycheck to paycheck. Income and wealth inequality are at record levels.
The movement of income from labor to capital over the past decade is the equivalent of each worker losing $5,000 a year, a shift that Federal Reserve chair Jerome Powell termed “very troubling.” The racial wealth gap is also growing—and, if current trends continue, the median net worth of a Black family in the US will fall below zero by mid-century.
What can be done about this? We believe the answer requires reviving a very old idea, one that the Knights of Labor promoted over a century ago — worker cooperatives. It’s worked before and it’s working now, but we need to keep our eye on the horizon and invest in a labor movement that centers our shared humanity.
We believe that union co-ops aid in our personal liberation and serve as a vital counterweight to the ubiquity and often vicious nature of capitalism today. We want to honor the storied history of American manufacturing and help write a new chapter in the labor movement.
We hope you’ll join us.
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