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Blueprint for Increasing Worker Ownership in Low-Income Communities
How to replicate a regional approach to economic development
through the lens of cooperative ownership
March 31, 2015
Sushil Jacob, Alison Lingane, Ricardo Nuñez
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AGENDA
1. Introductions
2. Why a BLUEPRINT for worker ownership?
3. Elements of the BLUEPRINT
4. What we learned
5. Resources available
6. Next steps from here
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1. Introductions
Alison LinganeProject Equity
Ricardo NuñezSELC
Sushil photo
Sushil JacobEBCLC
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2. Why a BLUEPRINT for worker ownership?
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45% of working adults in the East Bay earn below
Basic Family Wage
55%
% working adults
45%
http://workingeastbay.org/wp-content/uploads/2014/05/State-of-Work-in-the-East-Bay-and-Oakland-2012.pdfBasic Family Wage is the minimum needed to cover basic living expenses of food, shelter, healthcare, transportation and childcare. In California it is $18.15 / hour for a family with 2 working parents. www.lafla.org/pdf/MakingEndsMeet.pdf
THE PROBLEM WE WANT TO SOLVE“Working poor” has become the norm
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What are Worker-Owned Cooperatives?
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What are Worker-Owned Cooperatives?
Cooperatives
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What are Worker-Owned Cooperatives?
Cooperatives Employee Ownership
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What are Worker-Owned Cooperatives?
Cooperatives Employee Ownership
Worker-OwnedCoops
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What are Worker-Owned Cooperatives?
Cooperatives Employee Ownership
Worker-OwnedCoops
Businesses that are owned and controlled
by their workers
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WHY? Worker ownership brings significant benefits
All citations are in Worker Cooperatives: Pathways to Scale
TO WORKERS Better pay and benefits Assets (business ownership) A voice in key decisions
TO BUSINESSES Higher productivity and growth Lower employee turnover Improved business longevity
TO SOCIETY Local spending multiplier Higher voting levels Correlation with other social benefits
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3. Elements of the BLUEPRINT
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We have a vision that many share...
Worker-owned coops building
community wealthat scale
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Some imagine a yellow brick road...
Worker coopsat scale
“Let’s just start more worker cooperatives, and grow them to be big players in our local economies!”
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But in fact, there are MULTIPLE ways to get there
Worker coopsat scale
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Each one plays an important role in the economy
Start and grow SMALL businesses
Start and grow BIG businesses
Convert EXISTING businesses
Worker coopsat scale
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Each one plays an important role in the economy
Start and grow SMALL businesses
Start and grow BIG businesses
Convert EXISTING businesses
Worker coopsat scale
Our guiding question:How can we accelerate growth along any or all of these pathways?
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Bay Area Blueprint for Increasing Worker Ownership in Low-Income Communities
WORKER COOP ACADEMY:small-scale coop entrepreneurship
SCALE STRATEGY 1: scalable coop incubation plan
SCALE STRATEGY 2: business conversion assessment
Worker coopsat scale
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Bay Area Blueprint Multi-Sector Partners
xf
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4. What we learned
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Worker Coop Academy:small-scale coop entrepreneurship
Scale strategy 1: scalable coop incubation plan
Scale strategy 2: business conversion assessment
Worker coopsat scale
Bay Area Blueprint learnings
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First cohort 7 teams graduated on 12/10/14
4 teams get follow-on business coaching and 6 get legal counsel
Pictured here:Mandela Foods Coop, Mandela Marketplace & WCA organizers
WORKER COOP ACADEMY, Oakland
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WORKER COOP ACADEMY: Multiple participant types
Mix of coop types – by design to meet ‘market’ need• 1 start-up• 1 existing looking to expand / grow• 2 nonprofit developers (with coop members)• 3 conversions
Business models that build a better world• 3 farming / fresh food access (Planting Justice, Mandela, New Hope)• 2 sustainable landscaping / construction (Mariposa, DIG)• 2 holistic health (Sarana, On The Spot))
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WORKER COOP ACADEMY: What participants told us
“Having the opportunity to be in the Academy with my co-workers and to learn about coop-specific things like cooperative governance was invaluable. We need more of this kind of thing if we’re going to build the kind of economy we want, especially for people of color and low-income folks.”
“The Academy was very impactful for me in giving great resources and viable opportunities for cooperatively- minded people/organizations to support each other in growing their visions while strengthening the bones of the businesses.”
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Worker Coop Academy:small-scale coop entrepreneurship
Scale strategy 1: scalable coop incubation plan
Scale strategy 2: business conversion assessment
Worker coopsat scale
Bay Area Blueprint learnings
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SCALE STRATEGY 1: Business fit scorecard ranks business ideas for social impact and business feasibility
JOB CREATION Ability to create 50-100+ good jobs at maturity Speed to 50 jobs % of total jobs that are available 'entry level' to LMI workers
JOB QUALITY Compensation, relative to the cost to sustain a family locally Career laddering and professional growth potential Potential for higher than industry average pay and robust asset sharing Other job quality factors
BUSINESS CHARACTERISTICS Competitive advantage Potential for mission-aligned or anchor institution business contracts Start-up capital requirements
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Business Fit Scorecard
Score, then compare individual business ideas based on relative importance of social impact components and strength of business ideas
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SCALE STRATEGY 1: Analysis of Bay Area industries identified business ideas in many sectors
• Biotechnology (along supply chain)• Green building services
– Sub-sector: LED lighting• Green infrastructure
– Sub-sector: Stormwater management• Healthcare• Logistics & Transportation• Manufacturing
– Sub-sector: Specialty food and other light manufacturing
• Tech Services– Sub-sector: Networking, security and
helpdesk services
• Reviewed local reports on the Bay Area Economy completed by regional and city-focused organizations, and nonprofits
• Interviewed nearly 50 individuals across nine sectors
• Significant web research
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SCALE STRATEGY 1: Leading to additional considerations for selecting a business
• Presence of quality job training programs
• Mission focus of business
• Potential for support from existing local coops
• Unique “connection to market” opportunities
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SCALE STRATEGY 1: Example businesses demonstrate different approaches to “connection to market”
• Based on market demand and differentiated offering (competitive advantage)A “design-build-maintain” company with strong design aesthetics in the stormwater / water efficiency space
• For anchor clientsLED lighting retrofits for public and mission-aligned institutions that have long-term commitments and incentives to increase energy efficiency
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Worker Coop Academy:small-scale coop entrepreneurship
Scale strategy 1: scalable coop incubation plan
Scale strategy 2: business conversion assessment
Worker coopsat scale
Bay Area Blueprint learnings
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SCALE STRATEGY 2: Why focus on business conversion?
• Lack of succession planning is the #1 preventable cause of job loss
• Baby boomer retirement wave (“silver tsunami”)
• Bay Area beach head of socially responsible companies
• Business “conversion” risk < start up risk
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xf
SCALE STRATEGY 2: Lack of succession planning is the #1 preventable cause of job loss
According to the Ohio Employee Ownership Center
• Only 15% of family businesses succeed to the 2nd generation
• Only 5% succeed to the 3rd generation
• Those that don’t close are sold to out-of-state buyers or private equity firms that often relocate jobs or the entire business
What if, instead, these businesses were sold to their workers?
http://www.oeockent.org/exit-planning/
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“Trillions of dollars of business value are going to change hands in the next 10 to 20 years.”
Image: Brett Ryder, The EconomistQuote: Bob Balaban, Headwaters MB, a Denver-based investment bank
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SCALE STRATEGY 2: Employee ownership addresses business owners’ fears about selling their businesses
Owners fear that a sale of their business to another (usually larger) company would result in its mission being overshadowed or cut out altogether, local offices or stores closed down, employees laid off and valued customers, vendors and partners de-prioritized
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SCALE STRATEGY 2: Quantitative analysis of Oakland businesses shows concentration in a few industries
Analysis criteria• Growing industries• 20-200 employees• Low wage workers
Resulting target industries• Manufacturing• Commercial printing• Logistics & shipping• Health services
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SCALE STRATEGY 2: Quantitative analysis of Oakland businesses showed concentration in a few industries
Analysis criteria• Growing industries• 20-200 employees• Low wage workers
Resulting target industries• Manufacturing• Commercial printing• Logistics & shipping• Health services
The Bay Area’s concentration of mission-driven
companies becomes a “beach head”
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SCALE STRATEGY 2: We need to use our megaphone with business owners, business associations, employees, CPAs, and engage impact investors
“If I heard success stories about this a couple times a year, it would be on my radar when I am ready to sell my business.”
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5. Resources available
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Resources availableWorker Coop Academy
• Round 2 next fall (we are actively fundraising for this)
• Think Outside the Boss workshops and manual
• WCA curriculum will be available early Fall 2015
• Upcoming Laney course as soon as Fall 2015
• Co-opLaw.org: online resource about worker coop law
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Resources availableSCALE STRATEGY 1: scalable coop incubation plan
• Business fit scorecard
• Written industry and sector assessments
– Biotechnology (along supply chain)– Green building services, sub-sector LED lighting– Green infrastructure, sub-sector stormwater management– Healthcare– Logistics & Transportation
• Worker Cooperatives: Pathways to Scale white paper
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Resources availableSCALE STRATEGY 2: business conversion assessment
• Methodology for assessing business “conversion” potential in your city
• Outreach plan to engage business owners, employees, investors and professional service providers (CPAs, accountants, lawyers)
• Case studies of businesses that have converted – released in early April by Project Equity
• Guide to worker coop conversions will be available later this year
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6. Next steps from here
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Implementing the Blueprint
WCA – Round 2, Fall 2015
SCALE STRATEGY 1: scalable coop incubation plan– Project Equity is looking for partners and creative “connection to market” opportunities– Project Equity will focus more on this strategy in the coming years
SCALE STRATEGY 2: business conversion assessment– Coop Conversion Incubator with aggressive “pipeline development” (Project Equity)
“Collective impact” effort in its nascent organizing stages– Project Equity and SELC are spearheading
Worker Cooperative Bill in CA Assembly– SELC and EBCLC sponsoring AB 816 to create a worker cooperative statute
City Ordinance for the Promotion of Worker Coops– SELC is currently working with Oakland City council members to pass a city ordinance
that promotes the development of worker cooperatives.
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For more information…• On the Bay Area Blueprint, visit Project Equity’s website:
www.project-equity.org/bay-area-blueprint
• On the Bay Area Worker Coop Academy, visit SELC’s website: www.theselc.org/worker-coop-academy
Sushil Jacob [email protected]
Alison [email protected]
Ricardo Nuñ[email protected]
Hilary Abell (not presenting) [email protected]
Blueprint for Increasing Worker Ownership by Blueprint Collaborative is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License.
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Questions, comments, or thoughts to share?