Growing Together: What if Unions and the Co-operative Movement Joined Forces?
From:
http://www.christiandemocracymagazine.com/2015/02/growing-together-what-if-unions-and-co.html?utm_source=MONDRAGON+Corporation&utm_campaign=3a2508c31e-Julio_2013&utm_medium=email&utm_term=0_bd8591f254-3a2508c31e-50491545&m=1
The
tentative agreement reached this weekend between the International Longshore
and Warehouse Union (ILWU) and their Port of Los Angeles employers’
organization, Pacific Maritime Association, ended a months’ long standoff
between labor and management that had left cargo ships with nowhere to deposit
their goods at the nation’s largest docking area. What made this situation
surprising was that trade unions rarely exhibit nowadays the kind of clout and
solidarity the ILWU utilized in order to bargain for the workers they
represent.
It
was not always this way. Writing in Foreign Affairs, Bruce Western and Jake
Rosenfeld have noted the decline and fall of American unions starting in the
1970s. [Foreign Affairs, May/June 2012, Vol. 91, Issue 3, p 88-99 accessed
online] In the early 1950s, during the United States’ post-war economic boom,
approximately one-third of the American workforce belonged to a union. In some
of the heavy manufacturing states of the Midwest union membership rates
sometimes exceeded 40% of the workforce. Unions generally represented
working-class males, many of whom may have come from recent immigrant stock,
and were the main (often only) wage earner in their households. Many union
members, especially in skilled trades, worked whole careers for one firm, and
performed similar work throughout their tenure.
The
success of organized labor unions - particularly large ones in key industries
such as the Teamsters (trucking), United Steelworkers, United Auto Workers, and
the International Brotherhood of Electrical Workers - to secure the economic
well-being of this spectrum of the nation’s workforce ushered in a stable
middle class. Workplace representation and collective bargaining set the
country on a course where income equality was as well-distributed in our
history as at any other time period. According to the “Gini co-efficient”
developed by the Italian statistician Corrado Gini as a means of determining a
nation’s income distribution, the U.S. was most equal in the late 1960s [1] and has become
less and less so since then. [2]
The labor movement’s influence has waned, not so coincidentally, as wages have
stagnated and inequality has grown.
American
workers have continued to raise their level of productivity. The Economic
Policy Institute points out that between the years 1979 and 2013, productivity
rose nearly 65%, but hourly wages of production and non-supervisory workers,
who comprise the vast majority of the private sector workforce, rose only 8%.
Or, put another way, workers have been getting 8 times as much done as before
with little or nothing to show for their industriousness. [3]
One of the key elements of workplace representation in the form of trade unions
was to bargain for their members to tie productivity to gains in wages and
benefits.
An
important historical point about American labor history related by Western and
Rosenfeld is that although the New Deal’s introduction of the National Labor
Relations Board provided unions (and those that wanted to attempt to organize
one) with an agency that would remain objective, the National Labor Relations
Act created an elections system that required organized labor to develop a
union shop or factory floor at each individual company or organization.
European workers were generally more likely to have been governed by
industry-wide workplace rules. While some large unions like the United Auto
Workers might have successfully won concessions from the “Big 3” automobile
manufacturers through similar negotiations, there was no guarantee that a union
push would be successful or achieve collective or collaborative levels of pay,
benefits, or contracts at other businesses.
The
post-war period provided American industry (and the unions representing many of
those workers) a head start in what was to become a more globalized economy
because the U.S. entered the era with a fully operational infrastructure unlike
much of war-torn Europe and Asia. By the 1970s, however, increasing competition
put labor and management at a crossroads. Deregulation efforts by policymakers
in Washington and states made it cheaper to do business by cutting controls on
prices, loosening the regulations businesses had to comply with, and opened up
some industries to competition (such as trucking). But the result of these
moves over time meant that jobs that opened up were often ones that didn’t have
union backing. For instance, non-union sub-contractors could concentrate on
certain manufactured parts or services and therefore do a job for less than could
a big industrial company. Independent owner-operators were less expensive than
unionized Teamsters. As more money flowed to imported products or cheaper
domestic organizations – cheaper because they paid less wages and benefits on
average – unions had a poorer hand in negotiations with management, and over
time had to accept lower, or no, raises, and less secure pensions and other
benefits that had provided economic security in households across the United
States. When big employers found they could talk a union down to avoid layoffs,
or could simply move production to a lower wage region or outside the U.S.,
effective unionization fell by the wayside. Areas of the country dependent on
particular employers or sectors of the economy could be decimated by closures,
and economic stagnation resulted when local residents who worked for these
shuttered plants were less able to be consumers of other goods and services,
thereby hurting the livelihood of more citizens.
Unions
would be worse off than they are if not for public sector unionization, which
has actually grown since the 1970s. Approximately 2 out of every 5 employees of
a government agency belong to a union (Western and Rosenfeld). Some of the most
high profile unions these days are for teachers, police, and firefighters,
where more than half are represented by bargaining organizations. As detractors
of public sector unions like to point out, government doesn’t compete, and so
the main drama is not how the bottom line is affected by giving additional
compensation to employees but whether taxpayers want to support or rein in
unions. Residents who may receive stagnant compensation and poor benefits from
their employers may feel resentful that they contribute toward a better system
for government workers. Instead of working to improve communication and a place
at the bargaining table for themselves in their work lives we have begun to see
a “race to the bottom” where taxpayers seek to trim benefits or pay increases
for other workers who are unionized. This refusal to see solidarity with other
citizens works in the opposite direction of the old adage about a rising tide
lifting all boats.
It
has been reported that firms without unions, which may otherwise face
competition from union-shops, or just a higher than average rate of union
membership in their locality, may raise pay and promote better working
conditions simply so that they can stop a union from starting. But we now have
had scenarios where conservative, business-friendly, politicians, aided by
anti-tax groups, have engaged in open warfare to defeat unions. Governor Scott
Walker has effectively eliminated collective-bargaining rights for the public
sector and civil service employees in the state of Wisconsin. There will likely
be a major chilling effect on the labor movement from this legislation. The
Republican Party will use government employees and other “expensive” union
members as a prop to pit resentful lower wage voters and wealthy tax-averse
donors toward additional taming of workplace representation efforts. Meanwhile,
since the 1970s, the Democrats have steadily lost the vote of the traditional
working-class white voters, having alienated parts of their target market by
championing socially liberal causes that run counter to those union supporters’
beliefs.
Meanwhile,
American workers are told that they must contribute more toward their benefits,
and they receive defined contribution plans (if they receive any at all) for
their retirement instead of the defined benefit plans that provided an assured peace
of mind. The resulting economic insecurity has economic ramifications. It
stagnates growth because people are more concerned about their own bottom lines.
There are social ramifications as well. Marriage rates have floundered due to
concern over whether a potential partner is “marketable” enough.
Unions
may eventually go the way of the horse and buggy, or they might find ways to serve
their membership through an alliance with other movements. Cooperatives may
provide a vital ally for democratizing the American workplace and working
toward a society with more equality and solidarity. Cooperatives are businesses
in which the employees manage the affairs of the organization themselves (or in
some cases elect their peers to oversee it) and share in the profits.
Cooperatives are truly democratic compared to traditional American corporations
and even small businesses because the workers, as owners, usually pool their
money with other employees. Having “skin in the game” means that members of a
cooperative usually have higher morale than wage or salaried employees
elsewhere since they can realize greater gains if they succeed and have a
greater opportunity for a real say in the co-op’s direction. Similar to unions,
cooperatives attempt to raise the fortunes of all its members.
The
first major flowering of a possible link between traditional unions and the
cooperative movement took place in 2009. The United Steelworkers (USW), based
in Pittsburgh, signed an agreement with Mondragon Cooperative Corporation from
the Basque region of Spain. Their objective was to collaborate on developing
union-covered and cooperative business models. USW’s president Leo Gerard said
that Mondragon’s “one worker, one vote” philosophy was attractive to the
Steelworkers. He remarked that “(w)e see Mondragon’s cooperative model…as a
means to re-empower workers and make business accountable to Main Street
instead of Wall Street.” [Cooperative Grocer, January-February 2010, p. 9].
Both
models have current challenges to success. Unions’ ability to provide their
members with collective bargaining contracts, wages, and benefits has
diminished as industries have more opportunities to relocate production. The main
concern of cooperatives is being able to get enough access to capital and loans
to get their businesses off the ground and maintain a level of investment great
enough to (if desired) expand beyond a particular town or region.
Mondragon’s
astonishing success provides a blueprint for melding the best of the
hard-fought lessons learned by union members with the innovative techniques,
products, and local knowledge that co-ops tend to tap into. Mondragon had an
unlikely start for a successful international organization. Father Jose Maria
Arizmendiarrieta arrived in the small Basque town it is named for in 1941 and
discovered that it was a backwater still reeling from the effects of the
Spanish Civil War, with poverty, hunger, and few supporters outside the area as
the Basque culture was viewed with suspicion by the Francoist regime in Madrid.
Father Arizmendiarrieta created a technical college to train local youth, and
together with his stress on traditional social teachings of the Catholic Church
related to solidarity and civic participation, helped organize a cooperative
venture. Its first industrial venture in 1956 was to build paraffin heaters. It
eventually spun off additional co-ops involved in other projects, and today
works as a federation of more than 200 related and allied worker-run concerns
that collectively employ over 70,000 people.
There
is a startling variety of ventures Mondragon is involved with, such as banking,
insurance, industry, and education. Mondragon’s business model is such that
when particular business lines might be doing poorly, or are phased out to
bring in new products or services, the organizational flexibility allows them
to re-train and allocate co-op members to working in new fields. This means
that Mondragon can keep productive when other parts of the Spanish economy have
floundered. For instance, when unemployment reached a whopping 24% in Spain in
2012, Mondragon only idled about 12% of its workforce, and didn’t lay off any
employees at all. [4]
The
cooperative model was also a bulwark against one failed Mondragon division:
Fagor Electrodomesticos. Fagor concentrated on home durables, such as washing
machines. But housing and construction downtowns hurt sales. The parent company
offered an intra-federation bail-out to attempt to keep it afloat. When that
too failed, employees were provided an opportunity to obtain positions in other
cooperatives under the Mondragon umbrella. This type of solidarity-based
business culture could replace the layoff culture when businesses fail in the
traditional free market system here in the United States and elsewhere. [5]
But
the sophistication of enterprises Mondragon has become involved with has made
their success a little more daunting to attempt to emulate in another culture.
That is not to say it can’t be accomplished, but that an American version of
the federation will need to adapt to local conditions, concerns, and
objectives.
Mondragon
itself has colored outside of the lines a bit from strict adherence to
traditional co-ops. One of the chief problems co-ops can fall prey to is that
they work in isolation, which can put them at a disadvantage when competing
against more traditional market forces. Mondragon’s network solves much of that
problem by a frequent melding of interests with other lines of business. For
example, some of its retail stores might involve owner-workers providing
direction as one would expect, but, like a membership shopping club store in
the U.S., also might invite shoppers to become members.
The
collaborative effort, which has also been a feature of the flexible
manufacturing networks of Italy’s Emilia-Romagna region, or even, at times, the
old-fashioned Japanese model of networked company “families,” means that
Mondragon can harness economies of scale for purchasing and forecasting like a
capitalistic corporation can. A possible American model could start with (as an
example) an apple orchard. However, the co-op growers of the apples would do
well to try to begin an allied co-op market (then maybe a small chain of markets)
so that their apples can be a featured product. If the store has success with
multiple stores it should be contemplating a co-operative trucking company that
could bring those apples to co-op stores that aren’t in the immediate area. All
of these networks would need to continually seed new capital ventures by
offering new members an opportunity to work based on additional subscriptions.
There will also need to be alliances formed by like-minded but separate co-ops
to advance the cause. Co-op members would need to, whenever possible, patronize
the products and services of other sharing-economy outfits, bank with credit
unions, support the creation of co-op trade associations, and promote educational
training programs at schools of business. Pushing forward an overall
collaborative economy makes the chances of success higher for each small co-op.
The
meeting point for unions and co-ops in this scenario lies in the fact that
unions have amassed sizeable investments, dues, and are now even in some cases
running the pension and medical health plans that management used to
administer. Unions could leverage their financial holdings (with affirmative
member votes) to potentially buy some plants outright and turn them into
worker-owned plants that might be smaller-scaled ventures.
The
Union Co-op model as outlined by the Cincinnati Union Co-Ops Symposium in 2010 [6]
would involve having worker-owners gathered into an assembly as an overall body
for oversight and voting. The employees would elect a Board of Directors to
oversee administrative duties as well as a Union Committee (which, in turn,
would represent that co-op or network before a national or regional union). The
Board would decide on managers. The Union Committee would negotiate contracts,
wages, and benefits in concert with the appointed managers. The larger national
union would in turn have the ability to achieve economies of scale to help
negotiate pensions and health benefits that might not be attainable for an
individual co-op. Meetings of the employees allow the opportunity to shift
priorities and change management if the owners aren’t satisfied.
The
Ohio Employee Ownership Center (OEOC) at Kent State University works to achieve
a variety of more democratic workplaces and better distribute the means of
ownership by: helping owners of businesses set up a transfer to employees, helping
businesses form as Employee Stock Ownership Plans (ESOPs), and assistance in developing
worker-owned co-operatives.
One
of the fascinating successes in the Buckeye State was the Evergreen Cooperative
Initiative in Cleveland. Through assistance from local foundations and
institutes of higher education, a plan developed to create wealth in low-income
neighborhoods by creating a co-op business that would not take heavy
capitalization to get started. It introduced the Evergreen Co-operative
Laundry. Soon that was followed by Evergreen Cooperative Solar (a
weatherization company), and, most recently, a Green City Growers Cooperative.
All of these ventures require a low overhead in order to entering the market,
keep jobs in communities, increase stability in those neighborhoods, and
instill pride and co-operative decision making amongst members. [6] A similar venture in
Springfield, Massachusetts called Wellspring began in its first venture through
local funding organizations to seed their lift-off. Wellspring’s first business
is an upholstery service to local businesses. Based in former community
“anchor” institutions like the former Federal Armory buildings and workshops
the co-op is training low-income residents in the upholstery business (similar
to how union locals formerly did much of the skilled trades training) that they
will eventually run as a team.
Evergreen
and Wellspring’s model calls for early connections with established partners so
that up-front capital is not required to heavily market the initiative like
many new business start-ups require just to get clients. The Evergreen and
Wellspring models are also developing entrepreneurial skills within a
democratic system by studying what products and services their initial partners
require from outside the general municipal market. Those observations could
lead to new areas of expansion for the co-ops. [7]
Meanwhile,
back in Ohio, the Cincinnati Union Cooperative Institute (CUCI) formed in 2009
in response to the historic USW-Mondragon agreement. CUCI has developed more
closely along the lines of how Mondragon operates, with key social justice
outcomes, in addition to creating economically secure jobs. Some of its
initiatives like developing a sustainable food hub in the region, a
metropolitan co-operative rental housing market, and a clean energy plan are
complex projects that would transform not only the labor market, but
home-ownership, and energy efficiency. [8] These efforts will necessarily take longer and
may not always bear fruit.
Some
observers used to traditional Mom and Pop or corporate business models may look
upon co-ops as quaint and conscientious but “boutique” affairs that would never
be able to replace the hard-nosed trench-fighting of “real” capitalist
enterprise. But Americans frequently encounter businesses that have national
reach which do operate as co-ops in one form or another, such as: Ace Hardware,
Associated Press, Blue Diamond nuts, Bob’s Red Mill cereals, Cabot Creamery,
Ocean Spray juices, Land o’ Lakes, Sunkist beverages, and True Value stores. [9]
Far from being boutiques that only congregate in hip, college towns,
co-operatives actually have an equal and often greater survival rate than
traditional businesses according to Erik Olsen’s research of worker-owned
businesses in Uruguay, the United Kingdom, France, and Israel. [10]
As
noted above, the main barrier to co-op creation is obtaining enough like-minded
and skilled individuals who can “throw-in” their capital to start one. Funding
and loans have usually been the biggest barriers toward traditional business
start-ups too. In the Evergreen and
Wellspring initiatives, local foundations, colleges, and business incubator
programs have worked collaboratively to help get co-ops going and started in
the right direction. Many of them will likely be retained as advisors, mentors,
and probably funders, until the original co-ops that they helped formed can
spin off new ventures and pass along the know-how they’ve acquired.
The
OEOC has also championed the assistance it can provide to retiring business
creators and owners to keep the legacy of their venture going strong by selling
or awarding the business to their employees to operate. This type of
transaction could be valuable to a community in that it keeps knowledgeable people
in place and jobs local.
As
co-ops grow some might elect to form a union within the owner-operator
framework so that all employees are covered by a collective bargaining
agreement. Others might forego unionization figuring that the co-op model provides
enough democracy already. But forging specific ties with unions allows co-ops
to build a network toward a larger, mass movement that would be able to speak
with boldness about inequalities in society and how more workplace
democratization could bring about political democratization.
Having
a more equitable workplace also promotes a common ground philosophy that can
have real-world benefits too in building a more just society where shared
interests and mutual understanding are more readily understood. Living in an
era of rising income inequality, poor levels of civic participation, and a lack
of good political choices have brought us to a crossroad in our society. This
can be our “Fr. Jose moment” by intentionally planning our work places to give
us a balance between productive work, a comfortable standard of living, a say
in how our economy works, and more opportunities to spend with family and
friends.
— Kirk G. Morrison
Kirk
Morrison is chairman of the National Committee of the American Solidarity
Party.