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Workers of the World – Buy Your Own Company!

Somerset Waters has the passion of a convert. You can hear it in his voice when he outlines why he set up the only worker-owned cooperative business in Los Angeles.

“It’s really exciting pushing the boundaries of how a small business can operate here,” he says, standing in front of a bank of solar panels outside a residence in Calabasas. “People want a sense of ownership at work, a feeling of justice, a real stake in their working lives.”

Last year, inspired by the Pioneer Valley Solar Co-Op in Massachusetts, and with guidance from co-op resource center LA WORCS, Waters created Pacific Electric, a worker-owned co-op, to see if a different kind of business model could take hold in Los Angeles.

The four-person union firm, which has plans for expansion to 100 owner-members, installs solar and other electrical systems for residential and business customers throughout Los Angeles County.

According to the United States Federation of Worker Cooperatives, there are only 30 or so worker-owned businesses in California. While the number is small, other states and cities are embracing the trend. There are good reasons why Los Angeles city officials should encourage the worker-owned movement here as well.

Despite its socialistic sounding discourse, the worker-ownership movement is not directed by employees determined to “expropriate the expropriators.” Rather, they are enthusiastic about taking on the advantages and burdens of ownership themselves.

Waters and his colleagues, who belong to International Brotherhood of Electrical Workers Local 11, gain a stake in their business after a trial period of work – 1,000 hours for journeymen and 2,000 hours for apprentices. This path to ownership also requires a small amount of equity capital from the workers as part of their buy-in and as a demonstration of commitment. Once they are member-owners they receive regular hourly wages and benefits, plus a yearly share of the profits. Most important, decisions about how the company is run are made collectively through regular governance meetings of the worker-owners.

Worker cooperatives have a long history in the United States. In the 19th century, thousands of farmers formed business cooperatives throughout the South and Midwest in response to the economic pressures from banks and railroads, and to the booms and busts of industrial capitalism.

Jessica Gordon Nembhard’s book Collective Courage focuses on African American cooperative movements throughout our history. A. Philip Randolph’s Brotherhood of Sleeping Car Porters and Alabama’s Freedom Quilting Bee, were just two of the hundreds of “alternative economies” and mutual aid societies formed to gain access to credit and income in the face of bank discrimination or landlord evictions. Members of the Quilting Bee, who were women of exploited sharecropper families, succeeded in purchasing 23 acres in 1968 to start their own sewing cooperative.

Aside from the economic benefits to the worker-owners, there are more profound reasons for encouraging the growth of cooperatives that have implications for our political system. Thomas Jefferson famously connected the conditions under which people worked with the character of our democracy. His “radical moral theory,” historian Joyce Appleby points out, outlined how self-reliant farmers would be free of economic and political dependency, thereby becoming superior citizens. Jefferson connected economics to democracy. If you were independent economically you would not be subject to a bosses’ political will.

In Stonington, Maine, 45 worker-owners have just finished a year running three grocery stores that they purchased from a family. Alan White, president of the cooperative’s board of directors, recently said that they would never have had the opportunity to own part of a business without the use of this model. “It’s the American dream where all of us have a say in what’s going on,” he said.

Vernon Seile, who describes himself as a conservative Republican and who owned the stores for 40 years, sold them to his employees after receiving offers from other storeowners nearby. “It seemed that the business strategy of the other people who wanted to buy my stores was to cut the employees’ wages or lay them off,” he said. “That’s no way to treat loyal employees so I rejected their offers.”

Los Angeles is behind the curve in supporting the worker-owned model. Last year New York City made a $1.2 million grant to provide start-up money and technical assistance to such cooperatives with the goal of establishing 30 new companies. The City Council and New York Mayor Bill de Blasio are making sure that most of the new businesses will be started in minority communities.

There is currently legislation in the California Assembly that would make it easier for worker-owned businesses to meet legal requirements in California. Assembly Bill 816, sponsored by Assemblyman Rob Bonta (D-Alameda), would provide information to small business owners who are selling their operations that one viable alternative is to convert their companies into worker-owned enterprises.

The City of Los Angeles can also help by following New York’s lead with financial and technical assistance, with a focus on conversion to worker ownership of already established firms. Hundreds of small and medium businesses close every year – not because they are not viable but because there are no family members who are interested in running them and there are no other buyers. The workers lose their jobs and the city loses part of its tax base.

Educational programs on democratic and cooperative business governance could also be established at our local community colleges or integrated into business courses and economic development efforts. The city should also consider establishing parity for procurement contracts for worker-owned cooperatives similar to advantages that women- and minority-owned businesses receive.

Somerset Waters takes what might be called a Jeffersonian view of what he is doing. “We talk a lot about democracy in the United States but generally democracy stops at the door of the workplace,” he says. He believes that the worker-owner model is deeply democratic, more equal and encourages responsibility in his own and his partners’ personal and political lives.

Pioneers, if they remain singular, are often regarded as mere cranks. A thousand pioneers, on the other hand, are the beginning of a community and a new common sense. Mayor Garcetti and other city officials can help make a worker-owned cooperative community thrive.


(Kelly Candaele is producing and directing a film on the three-year process of building the Wilshire Grand Center. It’s currently titled, Head, Hand & Heart – Craftsmanship at Work.)

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