Worker-Owned Cooperatives—The Cleveland Model

Worker-owned cooperatives are businesses owned and controlled by the people who work for them. According to the United States Federation of Worker Cooperatives, two characteristics define worker cooperatives: (1) worker-members invest in and own the business together, and it distributes surplus to them and (2) decision-making is democratic, adhering to the general principle of one member-one vote. The Canadian Worker Coop Federation describes the goals of the coop governances structure as “...service to its employees and its community rather than in service to the owners of capital. The goal is to provide the best possible employment conditions for the members and to provide the customers and community with a service or product at a fair price that meets their needs and leads to a sustainable community.”[1]

While worker-owned cooperatives have existed for generations, recent innovations made in Cleveland’s Evergreen Cooperatives are sparking a new model that combines green business practices, local economic development and fair treatment and compensation for worker-owners. The Cleveland Model is built on a partnership between the City of Cleveland, the Cleveland Clinic, The Cleveland Foundation, Case Western Reserve University, and University Hospital.  These anchor institutions provide a guarantee to purchase products and services from the Evergreen Cooperatives, while the cooperatives couple job training with living wage jobs for their members and pledge to keep their business and wealth in the local community. This video from Community-Wealth.org provides an overview of how the Cleveland Model works.

Value Proposition for Sustainable Consumption

Rather than directing profits inequitably to executives and shareholders, proceeds are directed to worker-owners, creating a higher level of economic equity within cooperative companies and creating higher-value jobs within a community. While worker-owned cooperatives don’t necessarily lead to reduced greenhouse gases or environmental impacts, the worker-owners can establish sustainability as a guiding value. Likewise, in the Cleveland Model, anchor institutions that invested in coop startups required that they act sustainably to receive funding, establishing sustainability as a core value.

Potential City Roles

• Promote—celebrate, profile local cooperative businesses
• Inventory—assess needs for locally-provisioned services
• Fund—provide grants for business start-ups
• Make policy adjustments—consider adjustments economic development and building permitting that could ease building cooperative businesses
• Convene—bring together potential non-profit anchor institutions, such as education institutions and hospitals, and other stakeholders
• Advocate—promote cooperative funding and supportive policy changes at higher levels of government

Implementation Challenges

According to a report by the Center for Community Change,[2] four areas present particular challenges to worker-owned cooperatives:

• Start-up financing—Potential Solution: anchor institutions partner to provide start-up financing.
• Accessing expertise in local economics, service delivery, customer service and business management—Potential Solution: City government, local economic development nonprofits, and educational institutions provide technical assistance to cooperatives through ongoing partnerships.
• Growth—Instead of focusing on growing organizations, focus on establishment of cooperatives in service sectors that can replace production (e.g. laundry services instead of linen production, taxi cooperatives replacing car production or Uber-type services).

Further Resources

• Center for Community Change: Understanding Worker-Owned Cooperatives
• Community Wealth: Overview of The Cleveland Model—How the Evergreen Cooperatives are Building Community Wealth
• Canadian Worker Cooperative Federation
• United States Federation of Worker Cooperatives
• Cooperative Development Institute