Why this work matters
Our economy is broken
The Challenge: Low-paid jobs are on the rise
Our broken inner city economy needs a new approach. In today’s economy, holding down a job (or even two) is not enough to get out of poverty. Our cities are full of hard-working poor people! In Oakland, for example, more than 20% of adults live below the poverty line, and 38% of these adults in poverty hold jobs. Nearly half of Oakland’s working adults earn below the Basic Family Wage, the minimum needed to cover basic living expenses of food, shelter, healthcare, transportation and childcare. For people of color, the situation is particularly bad, with Black workers in Oakland earning only 60¢, and Latinos only 47¢ per dollar earned by Whites.
Absentee business ownership, the increase in chain stores and fall in union membership all play in to the reality of our low-wage workforce, helping explain why the downward pressure on employee wages and benefits hasn’t let up and forcing many more to depend on government assistance to cover basic needs. One data point that demonstrates this: the top ten fast food companies cost American taxpayers $7 billion a year in public assistance because of how little they pay their workers.
- Absentee business ownership makes it easier for businesses to make decisions that are disconnected from what is good for workers.
- Locally-owned businesses have lost significant ground against chain stores: Walmart and other chains account for 72% of retail today versus 52% just 25 years ago.
- Unions have historically played a much bigger ‘checks-and-balance’ role for workers, but union membership has fallen to only 12% from its peak of 35%.
The “double pandemic” of COVID-19 and racism challenge us to rebuild our economy with greater resiliency and equity.
We believe that people who work hard should be paid enough to live with dignity and raise a family, and create opportunity for themselves and their children. We believe that ‘working poor’ should be an oxymoron. We envision a future where business decisions are made through a lens of what is good for workers and communities, leading to businesses that are more successful, communities that are more resilient, and workers who have stable jobs and economic security.
Employee-owned companies increase job quality, invest locally and have demonstrable positive impact on job creation, and on business retention. Job stability is also dramatically higher, given lower employee turnover rates. These impacts are deepest in companies with 100% employee ownership and democratic employee governance.
When cooperative businesses in particular achieve significant scale within a local economy (5-10% of the workforce), levels of social and economic well-being increase. There are several regions of the world where this level of scale has been achieved. A study of three towns in Northern Italy, for example, generated compelling data showing that the town with the highest percentage of people employed in worker cooperatives had higher indices of social well-being in areas including health, education, crime, social participation and perception of their social environment. While worker coops in the U.S. have not achieved such scale, there are strong successes that provide higher-than-industry-average pay, benefits, and wealth creation. These include, among others, Alvarado St. Bakery and the Prospera (formerly WAGES) and Arizmendi coop networks in the San Francisco Bay Area (with 100+ workers each) and Cooperative Home Care Associates in the Bronx, with over 2,000 employees. Arizmendi and Prospera have documented higher job quality than their competitors.
Worker-owned cooperatives are an innovative and powerful business model that can provide high quality jobs and shared entrepreneurship opportunities to low-wage workers. Project Equity’s approach is based on deep research into the barriers and success factors in worker coop development in the United States. For a summary of this research, see our publication Worker Cooperatives: Pathways To Scale. Project Equity works to create jobs that provide better compensation and enable workers to share in the wealth that their hard work generates.
Interested in learning more?
Our latest study across the United States indicates millions of businesses are at risk of closing and point to employee ownership as a solution.
Flatten the small business closure curve
- San Francisco Bay Area, California
- Twin Cities Region, Minnesota