Environmentalists Should Support the National Worker Cooperative Development and Support Act

By Elic Weitzel, June 16, 2024

A large-scale shift in the very nature of our economy is … necessary to promote sustainability, and worker-owned cooperatives may provide the key to such a change.

Our current climate and ecological crises are driven by the profit-seeking actions of corporations that engage in the unsustainable extraction of natural resources, from minerals to fishes to fossil fuels. Fixing these crises therefore largely comes down to changing corporate behavior, but as environmental organizers and policymakers know well, it is exceedingly difficult to convince companies to change their ways. Investor-owned companies are almost definitionally averse to doing anything that cuts into their bottom line. Major shareholders simply want to profit by holding stock in a firm whose value is increasing, and taking action to combat climate change and environmental degradation is often unprofitable.

A large-scale shift in the very nature of our economy is therefore necessary to promote sustainability, and worker-owned cooperatives may provide the key to such a change.

On March 19, 2024, Representatives Ro Khanna (D-CA), Jamaal Bowman (D-NY), and Rashida Tlaib (D-MI) introduced the National Worker Cooperative Development and Support Act (H.R. 7721) to Congress. This bill seeks to expand worker-owned cooperatives—often called worker co-ops—in the U.S. over the next decade. Worker co-ops are businesses which are collectively owned and governed by their employees under the philosophy of “one worker, one vote.” These are still profit-driven businesses, but any profits are either reinvested in the company or distributed amongst the workers, not siphoned off by owners or outside investors who don’t actually work for the firm. Worker co-ops have enjoyed great international success for many years, but are still rare in the U.S.

If passed into law, the National Worker Cooperative Development and Support Act would instruct multiple federal agencies to develop programs and educational materials supporting worker co-ops. It would additionally establish a Council on Worker Cooperatives within the Department of Labor and create a $60 million lending program through the Small Business Administration to support worker-owned cooperatives.

Admittedly, a ten-year plan with only $60 million in federal funding isn’t going to solve our climate crisis, and the bill hasn’t even made it out of committee yet. But if we play our cards right, this Act could be an important step towards increasing federal support for a shift to economic democracy. Such a shift could not only improve social and economic conditions in our country, but help to lessen the severity of climate change as well.

As workers in a co-op decide how it is run, they can choose to implement sustainability-oriented policies at which most capitalist investors would balk. By and large, investor-owned companies focus on short-term profits as these firms are often treated simply as vehicles for investors to grow their own wealth. The average company listed in the S&P 500 will survive only fifteen years (compared to an average of 67 years in the 1940s). Worker co-ops, in contrast, have an inherently long-term and sustainable attitude as workers don’t want to jeopardize their own jobs. 

Many investor-owned companies may purport to value sustainability, but what sets worker co-ops apart is the fact that they bring democracy into the economic sector. This creates the potential for organized workers to actually act on their values without opposition from profit-oriented outside shareholders. Worker co-ops can better implement pro-environment policies because their workers are not trying to become billionaire investors who cut corners on their company’s environmental impacts. These workers are simply hoping to maintain a quality, well-paying job for a company in which they have a financial stake. As such, corporate policies like reducing fossil fuel use, limiting pollution and waste, and improving sustainability in supply chains may be more easily implemented in worker co-ops.

Additionally, cooperatives tend to function on smaller scales than investor-owned companies, often serving communities instead of global consumer bases. As such, the environmental impacts of a cooperative’s activities are often lessened as production, distribution, and consumption occur on a local level. A famous example of this is Evergreen Cooperatives, a network of several co-ops in Cleveland, Ohio which is designed to meet the needs of long-standing institutions in the city: hospitals, clinics, universities, and the government. By focusing on meeting local demand for goods and services from these community institutions, these co-ops have provided quality jobs to Clevelanders in a sustainable fashion.

Beyond these environmental benefits, worker-owned cooperatives provide several other advantages over investor-owned businesses. The data show that worker co-ops have higher productivity, profit margins, and employment growth when compared to conventional capitalist firms. They are also more stable, surviving longer and better weathering economic shocks. Workers at co-ops also commonly earn higher wages, stay at their jobs longer, and are more loyal, hard-working, and innovative since they are co-owners of the company for which they work.

Co-ops not only benefit their workers, but have the potential to reduce inequality across society as a whole. Having workers democratically decide on wages and compensation puts an important check on runaway executive salaries, preventing the wide pay disparities that are so common in capitalist firms today. Within the world’s most famous co-op federation, Spain’s Mondragon Corporation, CEO pay is capped at $1 million per year—just six to nine times higher the salary of the average worker—and even the lowest-level employees still earn three times the minimum wage. In addition to reducing pay gaps, co-ops can also prevent the runaway accumulation of wealth by removing the ability of rich investors to profit from holding shares in companies for which they do not work.

Worker cooperatives do come with their own challenges, of course. Democracy requires participation, and the co-op model is no exception. Workers must actively participate in decision-making for cooperatives to be successful, otherwise only a few individuals will come to control the company and such firms may end up looking very similar to capitalist ones in practice. Additionally, funding to start worker co-ops is generally difficult to come by, which has led to the creation of a variety of organizations like the US Federation of Worker Cooperatives, Project Equity, and the Democracy at Work Institute that help people found their own cooperatives or transition existing businesses to a co-op model.

While the National Worker Cooperative Development and Support Act alone won’t save us from climate change and ecological collapse, it would definitely move us substantially in the right direction. The bill would take important steps to address the issues of engagement and funding facing co-ops through its education initiatives, federal assistance, and the establishment of a federal lending program. It would also establish an important precedent for federal support of worker co-ops that could be expanded upon through additional legislative and executive actions. With any luck, Congress will pass this Act in the near future and we can move our country towards a more cooperative and sustainable future. 

To support the National Worker Cooperative Development and Support Act:

• Contact your congressional representative and let them know that if this bill makes it out of committee, you believe they should support it. You can also ask them to co-sponsor the bill with Representatives Khanna, Bowman, and Tlaib. 

• If your representative is a member of the House Committee on Small Business, contact them and ask them to support H.R. 7721 as it moves through committee. 

• Sign the U.S. Federation of Worker Cooperatives’ petition supporting the bill here.

Change The Chamber is a nonpartisan coalition of over 100 student groups, including undergraduates, graduate students and recent graduates.