Bernie Sanders on building co-ops

Alice Marshall
5 min readFeb 14, 2017

Turning workers into owners, from Our Revolution by Bernie Sanders:

While we create millions of good paying jobs by rebuilding our physical and human infrastructure and transforming our country, there is another economic step forward that we must take. We need to take a hard look at new business ownership models in the country. To my mind, we need to significantly expand employee ownership.

Over the last fifteen years, large multinational corporations have shut down some 60,000 factories in America and moved millions of decent-paying jobs abroad in search of cheap labor. The only thing that matters to these corporations are short-term profits, strong dividends, and high compensation packages for the CEOs. What happens to the employees what happens to the environment, what happens to the community, in which they function matters very little. These are not American companies — they are companies currently located in America. Tomorrow, if the economics made sense to them, they could be located in China. Their only allegiance is to the bottom line.

It is time, as a nation, that we stop worshiping corporate greed and businessmen like Jack Welch, the former head of General Electric. While in corporate circles, and in corporate media, Jack Welch is regarded as a brilliant and successful businessman, the truth is that he represents almost everything that is wrong with contemporary capitalism. As the CEO of General Electric, Welch moved dozens of GE factories abroad, outsourced hundreds of thousands of jobs, and slashed benefits for many of his employees. To add insult to injury, after destroying the retirement dreams of so many of his workers, he received a $400 million golden parachute for himself. This type of greed and ruthless capitalism is not an economic model we should be embracing. We can do better; we must do better.

The economic establishment tells us that there is no alternative to this type of rapacious, cutthroat capitalism, that this is how the system and glottalization works, and that there is no turning back. They are dead wrong.

The truth is that we can and we must develop new economic models to create jobs and increase wages and productivity. Instead of giving huge tax breaks to corporations that ship our jobs to China and other low wage countries, we need to provide assistance to workers who want to purchase their own business by establishing worker-owned cooperatives and majority-owned employee stock ownership plans (ESOPS). Study after study has shown that employee increases productivity, increases sales, and increases wages in the United States.

In fact, according to a survey by Georgetown University and American University, during the Great Recession in 2008, while corporations were slashing jobs, employee-owned firms increased jobs by 2 percent. Amazingly, while the construction industry slashed 10 percent of its jobs in 2008 after the housing market collapsed, many worker-owned construction firms actually added jobs.

Unlike large corporation that have been shipping jobs overseas, employee-owned businesses, by and large, are not shutting down and moving their businesses to China, Bangladesh, or other low-wage countries. Further, employee-owned businesses boost morale because workers share in profits and have more control over their work lives. The employees are not simply cogs in a machine owned by someone else. They have a say in how the company is run.

One of the great things about living in Vermont is that you don’t need a study to understand the benefits of employee ownership. All you need to do is ask the worker-owners at Chroma Technology in Bellows Falls; Gardeners Supply in Burlington; King Arther Flour in Norwich; or Carris Reeds in Rutland. I have had the honor of meeting with many of these employees. Never in my life have I seen workers who have more pride in the work that they do — from senior executives and managers all they way down to the cashier and the store clerk. Today there are more than thirty-six worker-owned companies in Vermont.

And Vermont is certainly not alone. Nationally, there are about seven thousand worker-owned businesses throughout the country, with over 14 million employees.

In New York City, Cooperative Home Care Associates in the Bronx is the nation’s largest owned worker-owned cooperative, employing over two thousand people — largely African-American and Latin-American women. This company has a turnover rate of just 15 percent — far less than they prevailing rates of 40 to 60 percent for the rest of the home care industry. Job stability for the cooperative’s worker-owners translates into better care for the clients who depend on them.

In Cleveland the Evergreen Cooperatives, a network of worker-owned businesses created in conjunction with local universities and hospitals, is creating living-wage jobs for resident of neighborhoods that have suffered from decades of disinvestment.

In Oakland, California, a group of black women opened the Mandela Food Cooperative as a worker-owned solution to the lack of healthy food in their community. In Morganton, North Carolina, the worker-owned Opportunity Threads cooperative is a leading force in revitalizing a local textile industry decimated by glottalization.

The workers in these operations understand that when employees own their companies, when they work for themselves, when they are involved in the decision-making that impacts their jobs, they are no longer just punching a time clock. They become more motivated, absenteeism goes down, productivity goes up, and people stay on the job for a loner period of time.

And these ventures don’t need to be small, niche companies. The 74,000 employees at the Mondragon cooperatives in Spain is a model for worker ownership worldwide. At a time when the rest of Spain continues to experience a serious recession, the worker-owned small businesses in Mondragon have been able to manage the economic crises exceptionally well. And the executives of these worker cooperatives cannot make more than eight times as much as their average worker. (CEOs in the U.S. earn nearly three hundred times as much as their average employee.)

Unfortunately, despite the important role that worker ownership can play in revitalizing our economy, the federal government has failed to commit the resources needed to allow employee ownership to realize its true potential.

During the next congress, I will be introducing a bill to create a U.S. Employee Ownership Bank to provide low interest loans, grants, and technical assistance, to help workers purchase businesses through a majority-owned employee stock ownership plan or a worker-owned cooperative.

I will also be introducing a bill to establish and expand employee ownership centers that provide training and technical support to promote employee ownership and participation throughout the country.

By providing low-interest federal loans, by educating business owners and employees about the benefits of worker ownership, and by providing them with the tolls to succeed, we can allow the employee ownership model to realize its true potential, and create and save millions of jobs in the process.

There are also other opportunities to encourage worker ownership of businesses. As thousands of Baby Boomer business owners begin to plan for retirement, existing federal law provides tax benefits to retiring owners who well to their workers. With federal assistance, an estimated 150,000 to 300,000 small- and medium-sized businesses could be sold to the workers who helped build them.

For many years, worker ownership enjoyed the support of both Republicans and Democrats. As Ronald Reagan said in 1987, “I can’t help but believe that in the future we will see in the United States and throughout the Western world an increasing trend toward the next logical step: employee ownership. It is a path that benefits a free people.”

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Alice Marshall

Author of “The precinct captain’s guide to political victory, buy it on Amazon Kindle.