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New legislation could accelerate the development of Worker Cooperatives across the US

People Powered Economy featuring Worker Cooperatives from Sustainable Economies Law Center
People Powered Economy created by Janelle Orsi of Sustainable Economies Law Center (CC)

From small towns to large cities throughout the country, a significant shift towards workplace democracy and equitable wealth sharing is gaining momentum. At the forefront of this movement are worker-owned cooperative businesses, where employees work and share ownership and decision-making.

Observing the transformative impact of such cooperatives, from home care agencies to pizzerias, breweries, and bakeries, U.S. Representatives Ro Khanna (D-CA-17), Rep. Jamaal Bowman (D-NY-16), and Rashida Tlaib (D-MI-12) have introduced the National Worker Cooperative Development and Support Act (HR 7221). This groundbreaking legislation seeks to foster the growth of worker co-ops across the United States, a move that could redefine the future of American labor.

The bill, developed over years of advocacy by the U.S. Federation of Worker Cooperatives (USFWC), Democracy at Work Institute (DAWI), and their members, proposes a comprehensive federal strategy to support these co-ops. It calls on major federal agencies like the Small Business Administration (SBA), Internal Revenue Service (IRS), and the Departments of Treasury, Commerce, Agriculture, and Labor to implement programs that will remove regulatory barriers, ease access to capital, provide educational resources, and offer technical assistance to worker co-ops.

Notably, the act envisions the establishment of a United States Council on Worker Cooperatives within the Department of Labor, tasked with coordinating federal efforts to bolster the worker co-op sector. This includes developing a federal strategy to integrate worker co-ops into economic development plans, identifying and solving regulatory barriers, and ensuring the availability of research and educational materials on co-ops.

In addition to policy support, the bill proposes a tangible boost to worker co-ops through a 10-year, $60 million small business lending pilot program administered by the SBA, aimed specifically at worker-owned cooperatives. This financial lifeline is complemented by funding through the Community Development Financial Institutions Fund to help establish and manage worker co-ops.

The initiative has been met with enthusiasm from lawmakers and advocates alike. Rep. Khanna, inspired by the success stories within his own district, sees worker co-ops as a vital response to rising inequality and the displacement of jobs due to automation. “Worker-owned businesses empower employees, promote equitable wealth distribution, and anchor jobs locally,” Khanna remarked, highlighting the alignment of worker co-ops with American values of liberty, democracy, and fair opportunity.

Rep. Bowman echoed this sentiment, emphasizing the potential of worker cooperatives to build wealth in local communities and strengthen democracy. As a champion of worker co-ops, Bowman has incorporated support for these businesses into federal initiatives like the CHIPS and Science Act and seeks to continue this support through the new bill.

As the U.S. braces for the “Silver Tsunami” of retiring business owners, this act represents a proactive step to keep businesses open, save jobs, and bolster the economy by transitioning these businesses to worker co-ops.

By addressing the challenges faced by the worker co-op sector, including a lack of awareness and understanding, the National Worker Cooperative Development and Support Act aims to pave the way for a more inclusive and sustainable economic future where workers not only have a say in their workplace but also share in its success. This legislation stands as a beacon of hope for a more equitable, cooperative America, drawing on the power of shared ownership to transform lives and communities.

Sign on as a supporter of the National Worker Cooperative Development and Support Act (individuals and organizations) HERE.

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