By Olivia Henry
Worker-ownership has emerged as an important strategy to keep people employed, doors open and communities served in the midst of COVID-19. A Rutgers study found that majority employee-owned companies outperformed traditional businesses in job retention, pay, benefits and workplace safety during the pandemic. Local and state governments are working on policies and funds to support this movement: New York City opened an employee-ownership hotline in December and the City of Santa Clara launched a Worker Cooperative Initiative in January. The Berkeley Revolving Loan Fund opened to worker cooperatives in 2019.
As these support programs for worker-ownership grow, let’s be sure to include multi-stakeholder co-ops with strong worker-owner classes.
In my sector, journalism, several cooperatives are emerging or converting with multiple kinds of owners, not just workers. That’s the case at Means TV, where full-time employees share profits with contractor members and royalty members. The Devil Strip in Akron, Ohio has a member class for people who contribute or volunteer for the magazine and another member class for readers. In Baltimore, Bloc by Block platform cooperative plans to include local newsrooms as stakeholders along with community members. In California, The Mendocino Voice and SF Bay View newsrooms are both in the process of converting to hybrid cooperatives with potential worker, reader and community member classes.
Full employee ownership is rare in journalism. A handful of newspapers such as The New Hampshire Union Leader, Daily Herald Media Group in Chicago, Dubuque Telegraph and Cedar Rapids Gazette are majority-owned by Employee Stock Ownership Plans. Defector Media, made up of former Gawker staff, became a worker cooperative in 2020. Several media production companies such as Meerkat Media, Bonfire Media Co-op and Clickhole are also worker-owned.
Yet multi-stakeholder cooperative models — also known as solidarity co-ops — are increasingly popular. The emerge where it’s necessary for potentially antagonistic groups to work together for the success of an enterprise. In the case of journalism, blended ownership not only supports capitalization but reflects the reciprocal relationship between newsrooms and communities, which is more dynamic than that of vendor and customer. This model doesn’t necessarily diminish workers’ power, either: full-time employees at Means TV are the only class that can sit on the board of directors. In the Dominion Media Co-op, managing editors controlled the majority of board seats and had an outsized role in reaching quorum for voting.
Can these hybrid co-ops — especially those with strong worker-owner classes — participate in opportunities for worker cooperatives? Many programs and policies do not precisely define worker cooperatives, instead leaning on broad language about employee ownership and governance. The Worker-Owned Recovery California (WORC) policy agenda uses a more narrow definition of worker cooperative drawn from 26 U.S. Code Section 1042:
The term “eligible worker-owned cooperative” means any organization—
(A)to which part I of subchapter T applies,
(B)a majority of the membership of which is composed of employees of such organization
(C)a majority of the voting stock of which is owned by members,
(D)a majority of the board of directors of which is elected by the members on the basis of 1 person 1 vote, and
(E)a majority of the allocated earnings and losses of which are allocated to members on the basis of—
(ii)capital contributions, or
(iii)some combination of clauses (i) and (ii).
This standard is slightly flexible in its language around majorities of membership, voting stock, board seats and dividends belonging to employees. Yet many hybrid co-ops have numerically larger non-worker classes, and these classes take hybrid co-ops outside the scope of 26 U.S. Code Section 1042(B). The Democracy at Work Institute proposes a more spacious definition of worker cooperatives:
The term “Worker Cooperative” means any enterprise that meets all of the following criteria:
a. The enterprise is a business entity with one or more classes of membership
b. All workers who are willing to accept the responsibilities of membership and who meet member eligibility criteria are eligible to become worker-owners
c. A majority of allocated earnings and losses are allocated to worker-owners on the basis of patronage
d. The class of worker-owners has a controlling ownership interest
e. A majority of the Board of Directors or governing body is elected by the worker-owners on the basis of one-member-one-vote
f. Decisions about return on capital investment are made by the worker-owner class or by the Board
This standard still privileges employees as the controlling member class, but contains no restrictions regarding the relative size of member classes. This small tweak could open the door to more solidarity co-ops benefitting from worker-owner programs.
For now, this discussion is hypothetical: most multi-stakeholder cooperatives operating in the U.S. do not give workers the kind of control required by the DAWI definition. For example, worker- and consumer-owners of Weaver Street Market in Philadelphia pick an equal number of board seats and patronage is distributed among all owners. At Ampled — a music streaming platform with worker-, artist- and community-owners — 85 percent of dividends go to artists and 15 percent goes to workers. Moreover, it’s unclear if any multi-stakeholder co-ops with strong member-owner clases have been excluded from existing worker-ownership benefits and programs. Yet as more policies providing benefits to worker cooperatives are codified around the country, it’s important that they keep the trajectory of cooperative journalism in mind by being inclusive of solidarity co-ops that have strong worker control.