What Is a Worker Cooperative?

Summary

A worker cooperative applies the principle of democracy to the legal structure of the workplace. Simply put, it is a business where the people who work in the company own and control the business on a democratic basis of “one person, one vote.” In a worker cooperative, ownership and control of the business come from working in the company, rather than from simply investing capital in it. A central element of this business structure is that labor employs capital, rather than capital employing labor. Profits and losses from the business are allocated to the worker-owners according to either the hours worked or gross pay.

A worker cooperative is a business set up to mirror the structure of a democratic community. The citizens are the people who work in the company. The articles of incorporation serve as a charter or constitution, and the bylaws define rules, rights, and responsibilities.

Any kind of business can be organized as a worker co-op or a democratic firm. Today, more than 18 million workers in the US have some ownership stake in the place they work. Time and again, studies have found that when ownership is paired with a meaningful degree of employee participation, performance, productivity and firm longevity is enhanced. A democratic workplace is more than just a way to make jobs better, it’s a way to make companies better.