Worker-owned Cooperatives Create Jobs in Rural America

(Submitted by Ivory Harlow, Program Assistant, Ohio Cooperative Development Center, OSU South Centers)

Job growth in rural America lags behind growth in urban areas, according to USDA publication Rural America at a Glance. Rural areas have difficulty attracting firms, especially businesses that provide living-wage jobs to residents. Limited infrastructure and workforce challenges are two reasons firms chose urban cities over rural towns (2016).

The worker-owned cooperative model empowers rural Americans to create viable jobs close to home. A worker cooperative is a business that is owned and operated by its employees. Member equity contribution, voting rights and the sharing of profits among members are three characteristics of cooperatives. In a worker-owned cooperative, workers typically make an initial capital investment in order to become a member of the co-op. Membership entitles each worker a vote in company decision-making. Members receive a share of the company’s profits, typically in proportion to the amount of labor he or she contributes to the business.

Worker-owned cooperatives can be viewed as grassroots business organizations because decisions are made from the bottom-up, rather than top-down. Members manage operations, policies, procedures and finances based on the co-op’s Articles of Incorporation, bylaws and operating agreement.

A publication from the Department of Economics at Iowa State University found members of worker-owned cooperatives receive better pay and benefits, greater job security and overall job satisfaction (2011).

Worker-ownership can provide a transition opportunity for business owners seeking to retire. This is especially important in rural America with a large aging population. Half of American business owners retiring within five years have no succession plan for their business (2014).

The value of worker-owned cooperative business extends beyond workers to the larger community. Keeping dollars close to home strengthens the local economy. Businesses that are governed by their workers are more likely to stay in business and provide economic stability to rural areas (2011). As a result, the quality of life in rural America improves over time.

Sources:

Artz, G. & Younjun, K. 2011. Business Ownership by Workers: Are Worker Cooperatives a Viable Option? (p.20- p.22). Iowa State University. Working Paper No. 11020.

Project Equity. 2014. Case Studies: Business Conversions to Worker Cooperatives. (p.7). Retrieved May 22, 2017 from http://www.project-equity.org/about-us/publications/case-studies-business-conversions-to-worker-cooperatives/

USDA Rural Development. 2016. Rural America at a Glance. Retrieved May 22, 2017 from https://www.ers.usda.gov/webdocs/publications/80894/eib-162.pdf?v=42684