Understanding Worker Cooperatives

A Worker Cooperative, also known as a co-op or cooperative, is a business where some workers receive a share of the profit of their business and vote for the board of directors on a principle of ‘one worker, one vote’. Workers who pay to join the system, as well as receive both a share of the profit and a vote, are referred to as worker-owners. All workers, even those who are not owners, still generally receive a wage, and the profit share is supplementary income for most worker-owners. 

Many individuals mistakenly use the terms co-op and nonprofit interchangeably despite various differences in administrative structure. For example, a co-op cannot issue formal shares, similar to a nonprofit. However, unlike a nonprofit, co-ops are free to distribute profits, generally based on seniority, hours worked, or other extenuating factors. Nonprofits cannot legally redistribute profits without justifying redistribution as compensation for services. Thus, a co-op is a profit-driven company, but is one that seeks profit for all worker-owners, not just shareholders.

Worker-owners also collectively control the business through voting. Much like the United States’ own representative democracy, most cooperatives elect a board made up of other worker-owners. This means that board members are accountable to all other worker-owners, who can better advocate for accountability and a remediation of grievances compared to conventional firms. Democratization has historically increased the productivity of worker co-ops. A 20-year study of co-ops in the UK, France, Spain, and Italy showed that production was generally more organized than conventional businesses, and workers worked “better and smarter” in co-ops than in other firms. However, as a result, co-ops tend to prioritize retaining worker-owners in times of crisis instead of aggressively downsizing like conventional firms, a potentially detrimental practice as evidenced by former co-ops like the Pacific Northwest Plywood Cooperatives.

A Lesson in Democracy: The Rise and Fall of the Pacific Northwest Plywood Cooperatives

The best case study of cooperatives as they relate to democracy occurred in the Pacific Northwest plywood industry. Various co-ops in the plywood industry had a unique structure where “shares” would be approved by the board of directors and available to workers for purchase. Not every worker in these co-ops was a worker-owner; at any point, 20-60% of the workforce was wage-labor, depending on time period and company. 

These businesses were incredibly successful in the 1960s, 1970s, and the first half of the 1980s, but an influx of cheap plywood from Japan reduced the sale price of their product. Some, like Buffelen Woodworking, responded by boosting the value of their shares through an aggressive earnings and buyback program. Share prices peaked around $40,000 in the early 1990s and the company narrowly avoided a buyout that would make them a conventional firm. At Buffelen, workers of nearly all ages were represented in decision-making that contributed to the cooperative’s survival.

Buffelen Woodworking’s survival is contrasted by the fate of the Linnton Plywood Association (LPA), a Worker Cooperative which dissolved in 2002. After the company started losing money in the 1990s due to the endangerment of the Northern Spotted Owl and subsequent increased regulations on logging, many worker-owners liquidated their share packages with some amounting to $90,000. However, a small group of worker-owners, including retired members, remained involved in the business.

LPA eventually liquidated in 2001 due to a lack of sustainable profits. Journalists analyzing the liquidation note the majority of worker-owners that remained after initial decreases in profits throughout the 1990s were primarily over the age of 50. This is also reflected in the members of the LPA’s board of directors, many of whom were also over the age of 50. With evidence of greater investment and participation from older members of the Linnton Plywood co-op, one question arises: where was the younger generation? 

Young Voters and the Crisis of Economic Exclusion

The Pacific Northwest plywood cooperatives are a unique representation of modern American democracy and demographic differences in participation. Falling voter turnout rates have remained a continual issue. Without high voter turnout, there is an increased risk of representatives becoming captured by special interests or otherwise not being representative of their constituents. However, despite this risk, voters aged 18-29 remain underrepresented at the polls. A Pew Research Center study on the 2022 election found that voters aged 18-29 made up 10% of the vote, while voters aged 65+ made up about 34% of the vote, the highest voter turnout among all age groups. 

Some argue lower voter turnout in younger voters is a result of economic exclusion. Young voters consistently rate the economy, specifically housing affordability, as their largest political concern, eclipsing other hotly-debated issues like the preservation of democracy or abortion access. Without economic stability, whether a result of unpredictable job market trends, rising costs of living or other factors, individuals prioritize personal economic survival over other interests or activities, including voting or community-building. 

Organizations such as Housing Matters have documented how housing unaffordability has increased renting, resulting in a decrease in local culture and deterioration of mental health and wellbeing.

Habitat for Humanity also notes that renters can terminate their lease faster relative to selling a house and are thus not tied to a singular place, resulting in fewer incentives to form community bonds. Other studies have shown that a legitimate sense of ownership over a property from paying a mortgage instead of rent contributes greatly towards community engagement, and by extension, participation in voting. 

Similar to the LPA, the lack of investment from younger voters results in both the further disenfranchisement of themselves and the destruction of democracy. As Habitat for Humanity notes, a lack of participation and representation of various marginalized populations only continues the deterioration of their “social, financial, and physical resources and infrastructure”.  Additionally, governments, communities, and organizations suffer without the diverse ideas, proposals, and solutions from younger individuals. Various studies, including research from Rai Chetty and his colleagues, find that one of the factors in promoting upward economic mobility is “the strength of social networks and community involvement in an area”.

Implications for Democratic Revitalization

The Linnton Plywood Association and Buffelen Woodworking are two examples of representative democracies and demographic-wide participation in ownership, decision-making, and investment. Studies across disciplines highlight the importance of civic engagement and how factors such as economic instability exclude certain populations, especially younger generations, from completing their civic duties. Today, the future of democracy rests in the hands of both the U.S. government and individual voters– of all ages.

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