Questions for Carlos Perez de Alejo on Worker Cooperatives
This is Part Ten in an occasional series of Q&As with Texans involved in issues of the environment and energy. (Read Part One with Bee Moorhead here, Part Two with Andy Sansom here, Part Three with Katherine Hayhoe here, Part Four with Patrick Kennedy here, Part Five with Michael Banks here, Part Six with Gabriel Eckstein here, Part Seven with John Nielsen-Gammon here, Part Eight with Tad Patzek here, and Part Nine with Charles Porter here.)
Carlos Perez de Alejo is a co-founder and executive director of Cooperation Texas, a non-profit established in 2009. Originally from Miami, Carlos has lived in Austin since 2006. Committed to combating social and economic inequality, Carlos also serves on the Board of Directors for United for a Fair Economy. He holds an MA in Latin American Studies from the University of Texas at Austin and has written on cooperatives, labor, and immigration for the Austin-American Statesmen, Dollars & Sense, YES, and Z Magazine.
I interviewed Carlos by phone in April about his and others’ efforts to address environmental and economic crises by building worker-owned cooperatives. After all, the United Nations has declared 2012 the “International Year of Cooperatives.” Didn’t know that, did you?
Austin is home to a small but growing number of worker coops, including Black Star Coop, a damn good brewpub, Red Rabbit Bakery (try saying that fast three times) that offers shockingly good vegan doughnuts and Dahlia Green Cleaning Service, a group of truly impressive women who just went into business this summer.
Worker-owned coops have a venerable history but have arguably become more relevant in the face of stubbornly high unemployment and a cruel economy. Carlos explain why.
What is Cooperation Texas and what is a worker-owned business?
Cooperation Texas is a nonprofit organization based in Austin, Texas that works with folks to help set up businesses that are owned and democratically controlled by the people who work there, in other words worker cooperatives. We help develop, support and promote businesses that are owned and controlled by their workers.
You’ve got a bakery that y’all helped get up and running, Red Rabbit Bakery. And you’re also working on a house-cleaning service. What is different about the business model for one of these worker-owned cooperatives versus a traditionally-structured small business?
The main difference really revolves around the two things that separate coops generally from any kind of business, which is ownership and decision-making, or who really has control over the direction of the business. In the case of a worker cooperative it’s the workers themselves who own the business. They’ve bought into it; they have an ownership stake where they can build wealth. Only in this case, rather than having one or two owners where the wealth is concentrated, here you have shared ownership amongst the people who spend the bulk of their day at the workplace.
In terms of decision-making it can take a variety of forms, but the idea is that people have a say over key decision that affect their lives. Most of us spend the bulk of our day at work so this is an opportunity for people to practice democracy, which we’re used to hearing about in the political realm every four years, into the economic realm where it’s less of a topic for discussion.
Does it take a certain type of personality to make that work? A lot of people will say ‘I may not like my boss but you still have to have somebody call the shots’.
You see all kinds of people in worker cooperatives. There are certain skills that make for a healthier workplace to be sure. Effective communication is really critical and it’s something that people are not accustomed to at work. Most of us are used to punching in, punching out. We’re kinda locked into what a lot of people call employee mentality where we don’t take a lot of ownership or responsibility beyond our limited job description. So I think it does takes an extra level of commitment and a sense of ownership over your work and also respect for your fellow co-workers, and really developing active listening skills and kinda flexing that democratic muscle on a regular basis. It is something that takes time and it’s a process but it’s something that’s worked both nationally and internationally for over 160 years.
But at the end of the day you’re still running a business, right? You’ve still got to operate with the goal in mind of making money to make a living. … Obviously you stress the democratic aspects of the cooperative but how critical is that business element as well?
I think both are critical. I think oftentimes when people first hear about worker cooperatives they get excited about the idea that they won’t have one person telling them what to do all day. But oftentimes they forget that this is a business.
It’s important to strike that balance between what makes a cooperative different—that’s shared ownership and democratic control—but also keep in mind that in order to maintain a dignified living for your fellow worker-owners it’s important to have sound business practices as well.
Although I think what makes a worker cooperative different as compared to other businesses is that most businesses are driven solely by profits, whereas worker cooperatives often have what’s called a triple bottom-line, rather than the bottom-line. That is, they measure success not just by the money they earn but also by the wellbeing of the workers, the sustainability of the business and their overall contribution to the community and to the environment.
On the last point, a lot of these coops are green in the sense that they are involved in some business that centers around environmental need. How do you build, for example, a cooperative that cleans homes in a green kind of way? How do you build that into each of the different businesses that people want to start up?
With the groups that we work with for startup projects, usually these are groups that go through our startup course through our cooperative business institute, where we have thirteen classes that range from the basics of what is a worker-owned cooperative to the more technical side of things in terms of writing your business plan, seeking out sources of capital but included in those classes is a class on the green economy and incorporating sustainability into your business practices.
Texas is a right to work state with very few unionized workers. Are worker-owned coops in a state like Texas a replacement for unions or at least a complement or substitute?
I wouldn’t say a replacement. In fact, historically worker coops have worked very closely with the broader labor movement and there are worker coops that are unionized.
In a state like Texas, like you said being in a right to work state, it is an opportunity for workers to take more control over their economic life, more control over their workplace because that union option isn’t as available to most workers. In that sense, yes, but I wouldn’t necessarily call it a replacement as a complement to the broader labor movement.
There’s this obnoxious business school term — crossing the chasm—that refers to the strategies you need to move a product or technology from the early adopters to the masses. How do you move from what amounts to a handful of worker cooperatives to some broader adoption? Or is that even possible or desirable?
I think across the country people are becoming increasingly aware and frustrated by growing economic inequality in this country and are increasingly hungry for alternatives to business as usual. I think one of the things that goes unsaid in the Occupy Wall Street movement is that part of that frustration is a lack of ownership and control over our lives. And this is exactly what worker cooperatives can provide and have provided over the years.
We’re seeing increasing interest across the country of folks that are either unemployed or underemployed, that are seeking out another way to earn a paycheck—in a way that values their voice, that keeps jobs local, that doesn’t harm the environment, that actually builds real wealth in communities.
There’s really been an increasing level of organization to absorb that demand. At the national level there’s the U.S. Federation of Worker Cooperatives, which is a membership based organization that represents worker cooperatives, and organizations like ours that help develop and support worker coops across the country. Their membership has grown particularly with worker coops that were started by low-income communities.
Are there policies that could be adopted at the state or national level that would grow the number and success of worker coops?
There’s actually a bill being proposed called the national cooperative development act that would help provide funding to both startup coops and cooperative development organization like Cooperation Texas. Much like how the USDA helps provide for rural cooperative development, this is a bill that would commit funds to help cooperatives in the urban sector.
What are some of the biggest challenges you face, both at the level of just working with individuals who are trying to start a cooperative as well as challenges that the national and international scale?
Some of the main challenges are challenges that have been a part of the worker cooperative since Day One and one of the biggest is a lack of financing for worker cooperatives. Because so many traditional lenders are unfamiliar with the model, it becomes more difficult for worker-owners to take a business plan for a worker-owned business to a traditional bank for example.
These are issues that are being addressed at the national level. There is an effort by some folks to develop a credit union to deal specifically with the lack of financing for worker coops.
There is also a lack of professional service providers out there, like lawyers and accountants, who are familiar with the specifics of a worker-ownership model. I think that is changing at the national level. Here in Austin we have plenty of small business support but you won’t be able to go to the small business development center and talk to them about worker cooperatives or what that means. That’s part of the reason we started Cooperation Texas and part of the reason you’re seeing more organizations around the country to provide that support to folks who want to do business differently.
At the local level how do the different worker cooperatives work together or do they work together?
They do work together and in fact it’s built into the cooperative principles, this notion of cooperation among cooperatives. For example Red Rabbit Cooperative Bakery, which is a graduate of our cooperative business institute, is the sole bread provider for Black Star Coop, which is a consumer-owned and worker self-managed brewpub here in Austin. This is a direct result of that principle of cooperation among cooperatives.
You’ll also find Red Rabbit vegan donuts at Wheatsville Co-op, which is a consumer-owned food coop. These are some small-scale examples of putting that principle into action.
In other parts of the world—in Emilia Romagna, Italy; in Spain—it’s that principle of cooperatives of intentionally doing business together, of organizing associations together that has helped build a much broader network of cooperatives that are bit more integrated.
Are folks that have gone through your program, that have businesses up and running, are they making a good living? Have they been successful in the sense that they are able to make a living wage and have steady income?
Red Rabbit Cooperative Bakery started with three members going through our course and they now have roughly seven members. So they have grown and are at a somewhat unique position given the economic crisis that they are now having to think about the challenge of expanding their cooperative and growing. We are seeing really positive results and a lot of support from the community.
What else is in the pipeline?
Right now we are working with a group of women who previously had experienced a range of abuses within the cleaning industry here in Austin who came together around the idea of starting Texas’ first worker-owned green cleaning cooperative. It’s going to be five women who are members of a partner organization, the Workers Defense Project, who have recently graduated from our course and are in the process of putting together their business pan. We’re looking at a launch date of late May. [Ed. note: Dahlia Green Cleaning Service is in business now.] That will be the next worker cooperative off the ground here in Austin.
In that case what attracted those womento [a worker coop] rather than going to work for some larger cleaning service that’s traditionally structured?
In their case I think it’s more control over their schedule, deciding when they can work so they can spend more time with their families. Higher wages—traditionally in house-cleaning the wages are fairly low. Pulling their resources together to start a business that they own, where they can build equity, where they have a say over decisions that affect their workplace was a lot more attractive to them.
Some of them were used to working independently, others were working for other companies where they didn’t have much control over their work or whether they were using toxic chemicals to clean people’s houses and the effect that had on their own health.
Now they’ll be making their own green cleaning products that are better for the workers, better for the houses that they’ll be cleaning, better for the environment. That was something that was important to them
Will customers pay a premium for that? In this country people are usually looking for the low bid. Is that something that folks should expect if they are buying products or services from a worker coop- that they’re going to pay a premium?
Not necessarily. The house cleaning cooperative will be offering fairly competitive prices and there are other worker coops out there that offer affordable prices, although in some cases you might see some value-added given that the money going to the cooperative is providing dignified jobs. Part of the reason that Wal-mart and other places can offer cheap prices is that they have extremely low wages.
And that can be attractive to people—the idea that I’m willing to pay a little more if folks are getting paid a fair wage and aren’t being exposed to toxic chemicals. One would hope at least that most folks would be willing to pay a little more for that.
I think especially in a place like Austin that does has a fairly established culture that promotes and values small local businesses this is taking that foundation and stretching it a bit further to say yes we want jobs that are local, we want to create more small businesses but let’s broaden the idea of ownership and start bringing democracy into our workplaces where we spend most of our day instead of thinking about democracy as pushing a button every four years and really flex that muscle in a more active way.