How Worker Co-ops Reduce Wealth and Income Inequality

Worker cooperatives create quality jobs, wealth-building opportunities for low-income workers and marginalized communities, and community economic development. Through the power of the collective, worker co-ops offer members the ability to benefit from business ownership while also subverting the harm caused by accountable corporate greed driven by the unceasing need to maximize shareholder profits by any means possible.

Benefits for Worker-Owners: 

1. Above market pay – workers at worker-owned cooperatives earn higher wages than workers at conventional firms in their industry. Furthermore, the pay gap between the highest earner and lowest earner at a worker co-ops is 1.44:1 compared to 281:1 average CEO to worker pay.
2. Wealth Building – as owners in the cooperative business, worker-owners receive a share of the co-op’s profits. These dividends are allocated based on hours worked, unlike conventional ownership structures which distribute profits based on capital invested. 
3. Meaningful work – Workers at worker-owner cooperative participate in financial planning, organizational governance, and overall management of the firm. When the business is successful, they share in the success. With a stake in the business and an important role in the organization, worker-owners gain a greater sense of responsibility and meaning in their working lives.
4. Flexibility - Many worker-owners cite greater schedule flexibility and time off as a benefit of worker-ownership. As the decision-makers, worker-owners can organize their working life to better fit their personal needs and obligations around family, hobbies, and passions.
5. Job training – Worker co-ops are people centered enterprises that support their members – whether that is creating opportunities for learning on the job, or through career development opportunities, worker co-ops often prioritize the development of their existing workers.
6. Better working conditions – compared to other companies in the same industry, worker-owned cooperatives tend to have better working conditions than conventional companies. This is because the workers themselves set the policies.
7. Dignity – unlike other initiatives to reduce wealth and income inequality, which are often subject to the whims of fickle politicians and bureaucrats, worker cooperatives empower people through collective self-reliance rather than dependence. Cooperatives are communities of people working together to advance their collective interests and meet their material needs.

Benefits to Community:

1. Quality local jobs – worker cooperatives create good jobs. Since they are owned and managed by the worker the risk that the jobs will be outsourced or cut due to cost savings measures is drastically lower than conventional firms. It is also more likely that the worker-owners live in the community where their co-op is located, which means their earnings are reinvested into the local economy.
2. Beneficial local businesses – Worker co-ops are businesses that provide goods and services to the communities they serve. Worker co-ops do not engage in the types of harmful practices that many large corporations and unscrupulous small business owners do just to save a buck.
3. Civic Engagement – Through the practice of workplace democracy, worker co-ops develop citizens who have a greater aptitude and desire for democracy in the public sphere. Worker-owners are more likely to hold their elected officials accountable, and participate in civic organizations. Some see worker cooperatives as a strategy to expand the scope of American democracy beyond one election day every two to four years.
4. Community Wealth Building (CWB) – CWB is an economic development model developed by The Democracy Collaborative that centers direct and democratic community ownership of assets. The overarching idea is that many structural problems are a result of unaccountable and undemocratic ownership of the economy that lead to wealth and income inequality. By centering approaches like worker cooperatives, public banking, community land trusts, community supported agriculture, and more, CWB argues that the economy will better serve the needs of everyday people rather than the top 1%.
5. Progressive social and economic change – Members of worker cooperatives are often engaged with broader efforts to promote progressive social change in their municipality, region, and country.