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Blueprint for Increasing Worker Ownership in Low-‐Income Communi<es
How to replicate a regional approach to economic development
through the lens of coopera6ve ownership
March 31, 2014
Sushil Jacob, Alison Lingane, Ricardo Nuñez
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AGENDA
1. Introduc<ons 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. Introduc<ons
Alison Lingane Project Equity
Ricardo Nuñez SELC
Sushil photo
Sushil Jacob EBCLC
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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%
hQp://workingeastbay.org/wp-‐content/uploads/2014/05/State-‐of-‐Work-‐in-‐the-‐East-‐Bay-‐and-‐Oakland-‐2012.pdf Basic Family Wage is the minimum needed to cover basic living expenses of food, shelter, healthcare, transporta6on 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 Coopera<ves?
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What are Worker-‐Owned Coopera<ves?
Coopera<ves
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What are Worker-‐Owned Coopera<ves?
Coopera<ves Employee Ownership
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What are Worker-‐Owned Coopera<ves?
Coopera<ves Employee Ownership
Worker-‐ Owned Coops
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What are Worker-‐Owned Coopera<ves?
Coopera<ves Employee Ownership
Worker-‐ Owned Coops
Businesses that are owned and controlled
by their workers
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WHY? Worker ownership brings significant benefits
All cita6ons are in Worker Coopera*ves: Pathways to Scale
TO WORKERS ü BeQer pay and benefits ü Assets (business ownership) ü A voice in key decisions
TO BUSINESSES ü Higher produc6vity and growth ü Lower employee turnover ü Improved business longevity
TO SOCIETY ü Local spending mul6plier ü Higher vo6ng levels ü Correla6on 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 wealth at scale
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Some imagine a yellow brick road...
Worker coops at scale
“Let’s just start more worker coopera6ves, 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 coops at 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 coops at 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 coops at scale
Our guiding ques6on: 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 Communi6es
WORKER COOP ACADEMY: small-‐scale coop entrepreneurship
SCALE STRATEGY 1: scalable coop incuba6on plan
SCALE STRATEGY 2: business conversion assessment
Worker coops at scale
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Bay Area Blueprint Mul<-‐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 incuba6on plan
Scale strategy 2: business conversion assessment
Worker coops at 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: Mul<ple par<cipant types
Mix of coop types – by design to meet ‘market’ need • 1 start-‐up • 1 exis6ng looking to expand / grow • 2 nonprofit developers (with coop members) • 3 conversions
Business models that build a beQer world • 3 farming / fresh food access (Plan6ng Jus6ce, Mandela, New Hope) • 2 sustainable landscaping / construc6on (Mariposa, DIG) • 2 holis6c health (Sarana, On The Spot))
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WORKER COOP ACADEMY: What par<cipants told us
“Having the opportunity to be in the Academy with my co-‐workers and to learn about coop-‐specific things like coopera6ve 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 impacqul for me in giving great resources and viable opportuni6es for coopera6vely-‐ minded people/organiza6ons 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 incuba<on plan
Scale strategy 2: business conversion assessment
Worker coops at 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 ü Ability to create 50-‐100+ good jobs at maturity ü Speed to 50 jobs ü % of total jobs that are available 'entry level' to LMI workers
JOB QUALITY ü Compensa6on, rela6ve to the cost to sustain a family locally ü Career laddering and professional growth poten6al ü Poten6al for higher than industry average pay and robust asset sharing ü Other job quality factors
BUSINESS CHARACTERISTICS ü Compe66ve advantage ü Poten6al for mission-‐aligned or anchor ins6tu6on business contracts ü Start-‐up capital requirements
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Business Fit Scorecard
Score, then compare individual business ideas based on rela6ve importance of social impact components and strength of business ideas
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SCALE STRATEGY 1: Analysis of Bay Area industries iden<fied business ideas in many sectors
• Biotechnology (along supply chain) • Green building services
– Sub-‐sector: LED ligh6ng • Green infrastructure
– Sub-‐sector: Stormwater management • Healthcare • Logis6cs & Transporta6on • 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 organiza6ons, and nonprofits
• Interviewed nearly 50 individuals across nine sectors
• Significant web research
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SCALE STRATEGY 1: Leading to addi<onal considera<ons for selec<ng a business
• Presence of quality job training programs
• Mission focus of business
• Poten6al for support from exis6ng local coops
• Unique “connec6on to market” opportuni6es
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SCALE STRATEGY 1: Example businesses demonstrate different approaches to “connec<on to market”
• Based on market demand and differen6ated offering (compe66ve advantage) A “design-‐build-‐maintain” company with strong design aesthe6cs in the stormwater / water efficiency space
• For anchor clients LED ligh6ng retrofits for public and mission-‐aligned ins6tu6ons that have long-‐term commitments and incen6ves to increase energy efficiency
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Worker Coop Academy: small-‐scale coop entrepreneurship
Scale strategy 1: scalable coop incuba<on plan
Scale strategy 2: business conversion assessment
Worker coops at 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 re6rement wave (“silver tsunami”)
• Bay Area beach head of socially responsible companies
• Business “conversion” risk < start up risk
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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 genera6on
• Only 5% succeed to the 3rd genera6on • Those that don’t close are sold to out-‐of-‐state buyers or
private equity firms that oyen relocate jobs or the en6re business
What if, instead, these businesses were sold to their workers?
hQp://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: BreQ Ryder, The Economist Quote: 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-‐priori<zed
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SCALE STRATEGY 2: Quan<ta<ve analysis of Oakland businesses shows concentra<on in a few industries
Analysis criteria • Growing industries • 20-‐200 employees • Low wage workers Resul<ng target industries • Manufacturing • Commercial prin6ng • Logis6cs & shipping • Health services
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SCALE STRATEGY 2: Quan<ta<ve analysis of Oakland businesses showed concentra<on in a few industries
Analysis criteria • Growing industries • 20-‐200 employees • Low wage workers Resul<ng target industries • Manufacturing • Commercial prin6ng • Logis6cs & shipping • Health services
The Bay Area’s concentra6on 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 associa<ons, employees, CPAs, and engage impact investors
“If I heard success stories about this a couple *mes 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 available Worker Coop Academy
• Round 2 next fall (we are ac6vely 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 available SCALE STRATEGY 1: scalable coop incuba<on plan
• Business fit scorecard
• WriQen industry and sector assessments
– Biotechnology (along supply chain) – Green building services, sub-‐sector LED ligh6ng – Green infrastructure, sub-‐sector stormwater management – Healthcare – Logis6cs & Transporta6on
• Worker Coopera6ves: Pathways to Scale white paper
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Resources available SCALE STRATEGY 2: business conversion assessment
• Methodology for assessing business “conversion” poten6al 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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Implemen<ng the Blueprint
ü WCA – Round 2, Fall 2015
ü SCALE STRATEGY 1: scalable coop incuba6on plan – Project Equity is looking for partners and crea6ve “connec6on to market” opportuni6es – Project Equity will focus more on this strategy in the coming years
ü SCALE STRATEGY 2: business conversion assessment – Coop Conversion Incubator with aggressive “pipeline development” (Project Equity)
ü “Collec6ve impact” effort in its nascent organizing stages – Project Equity and SELC are spearheading
ü Worker Coopera6ve Bill in CA Assembly – SELC and EBCLC sponsoring AB 816 to create a worker coopera6ve statute
ü City Ordinance for the Promo6on of Worker Coops – SELC is currently working with Oakland City council members to pass a city ordinance
that promotes the development of worker coopera6ves.
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For more informa<on… • 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 Lingane alison@project-‐equity.org
Ricardo Nuñez [email protected]
Hilary Abell (not presen6ng) hilary@project-‐equity.org Blueprint for Increasing Worker Ownership by Blueprint Collabora6ve is licensed under a Crea6ve Commons AQribu6on-‐NonCommercial-‐ShareAlike 4.0 Interna6onal License.
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