Challenges Preventing Worker Co-ops from Becoming More Widespread

  1. Financing – traditional businesses are typically financed through a mix of personal investment, bank loans, private investors. However, these methods are often not available due to the complex nature of the worker-ownership structure. Since many worker cooperatives are founded by working class people who don’t have individual wealth, self-financing is often not a sufficient option.Without an individual owner to put up collateral against the loan and demonstrate strong credit, standard banks generally don’t lend to worker co-ops. And finally, the business is owned by the workers and not shareholders, private investors are not motivated to put up capital for a business they can’t gain ownership shares of. While there is a growing network of cooperative specific finance, it is very small compared to the conventional forms of lending.
  2. Business Expertise – starting a business is extremely difficult, whether it is a worker co-op or a conventional small business. Gaining all the skills needed to run a successful cooperative business can be a major challenge. Cultivating business skills among worker-owners is one of the central focuses of the co-op development ecosystem.
  3. Access to Service Providers – All businesses need lawyers, accountants, bookkeepers, and other service providers to help on the back end. But because worker cooperatives have a unique structure, service providers that don’t have prior familiarity with the cooperative model are not always the best suited to provide quality service to the cooperative. There are a growing number of service providers, but the demand is currently outstripping the supply.
  4. Practicing Democracy – While the United States is formally a democracy, in practice that often means going to the polls once every two to four years (if that). Yet nothing else about American society is organized democratically. Whether it’s the school, the family, or the workplace, the vast majority of our social, political, and economic relationships are organized based on hierarchies of command and control. Because many people don’t have experience actively governing their affairs in a genuinely democratic way, implementing workplace democracy in a worker co-op can come with some growing pains.
  5. Entrepreneurship – A worker co-op is a business. Many people who are inspired to form a worker cooperative are driven by social justice frameworks, not necessarily entrepreneurial frameworks. While worker co-ops serve the purpose of social justice, they are also businesses that require an entrepreneurial spirit to be successful. Many people from working-class backgrounds aren’t necessarily used to thinking of themselves as entrepreneurs, so fostering the entrepreneurial spirit is important for co-ops to succeed.
  6. Market Pressures – In order to pay high wages and offer quality benefits, a worker cooperative must be profitable, just like any other business. The reason why many business owners don’t provide higher wages and better benefits is often not because they are greedy capitalists wearing a top hat and smoking a cigar, but because they are being squeezed by market pressures. At a worker co-op, the likelihood that excess profits will be invested back into the workers is higher than at a conventional business – but the underlying need for profitability to achieve the benefits of the enterprise remains the same.