Emplo yee Owned Business Cooperatives

Employee Owned Business Cooperatives (EOBs), sometimes called Worker-owned cooperatives, are business enterprises that are owned, managed and governed by their employees. All EOBs share several characteristics: 1) workers own the business and they participate in its financial success on the basis of their labor contribution to the business. Workers typically are hired on a trial basis by the cooperative, and after an evaluation period, can purchase ownership in the cooperative company; 2) cooperative workers have representation on and vote for the board of directors; 3) major corporate decisions are decided through a voting process; and 4) EOBs, because of their ownership structure, typically have multiple bottom lines, balancing employee and community benefits with profits.

Any business can be employee owned, and can have different corporate forms (C-corporation, LLC, non-profit), and operate across a range of industries, though they are concentrated in the U.S. in the service and retail sectors. Employee owned Business Cooperatives are a subset of the broader category of Cooperatives that operate in the U.S., which also include producer, purchasing, and consumer cooperatives.

According to a University of Wisconsin study, nearly 30,000 cooperatives of all kinds (consumer, producer, employee owned, etc.) operate within the United States, own over $3 trillion in assets, and generate over $500 billion in annual revenue. Over 1,700 Worker and Producer Cooperatives in the U.S. employ over 75,000 people, generating over $65 Billion in revenues, and $3 Billion in wages. Worker cooperatives are typically small businesses. The average size of an EOB cooperative in the U.S. is 50 people, and the largest employee owned business cooperative is Cooperative Home Care Associates, with 2,000 workers. 31% of EOBs have annual revenues of $1 Million or more. 150 EOBs have been formed since 2000. [Deller, Hoyt, et al.]

The use of EOBs as a community development mechanism is gaining attention because they are seen as business structures that address growing income and wealth inequality, create quality jobs and workplaces with better benefits for their worker/owners, tend to stay within a community even while growing, and are a pathway to building wealth and asset ownership for populations who otherwise face barriers to owning a business. New research also indicates that EOBs are more resilient and less susceptible to business cycle downturns because they have greater flexibility to adjust profits and wages in response to changing business conditions.

The study team was unable to obtain accurate data on the number of employee owned business cooperatives in Miami-Dade County. However, while they are not EOBs, the County has a significant number of credit unions, which are financial cooperatives, including the South Florida Educational Federal Credit Union, and the Dade County Federal Credit Union (DCFCU). Southern Gear and Machine, a maker of gears for aerospace with 75 employee -owners, is one of the County’s best known employee owned businesses.