Company ... Apple
Huge profits extracted from customers

If Apple Were A Worker Cooperative, Each Employee Would Earn At Least $403K

Burgess COMMENTARY

Peter Burgess

If Apple Were A Worker Cooperative, Each Employee Would Earn At Least $403K

Apple has 98,000 employees and earned $39.5 billion after tax over the past year. If Apple was a worker cooperative, then each employee would’ve received a $403,000 dividend on top of their salaries. Even the lowest paid worker would’ve earned at least $403,000 in Apple as worker cooperative.

The first thing naysayers and disbelievers will say is “but, Apple isn’t a worker cooperative.” Mondragon is a worker cooperative that has about 74,000 employees and earned $12.6 billion in revenue. Mondragon is smaller than Apple, but it’s at a scale that demonstrates that we can do better as employees.

What Is A Worker Cooperative?

A worker cooperative is a company that is owned by the employees. Thus, employees receive salaries for their labor and a dividend at the end of the year from the company’s profits. As employees, we all see how much our employers charge their customers. I used to bill $475 per hour to my employer’s client, but I was only getting paid $35 an hour. Seeing this makes everyone question why they’re making so little.

Worker cooperatives answers the question we’ve all asked ourselves – what’s the point of working hard for someone else? Finally, we’re able to justify working ourselves to the bone for our fair share of the spoils. Instead of the scraps that manifest as 3% inflationary raises.

How Does It Work?

A worker cooperative is a business like any other company you’d see on Main Street or listed on a stock exchange. The only difference is that the employees own the business. Generally, worker cooperatives allow each employee to purchase a share in the company. Each employee owns a single share and receives a single vote in the company. Thus, no one can unilaterally make a decision that will affect the company. Everyone gets an equal right to control the company.

Why Do We Want More Worker Cooperatives?

Sustainable Jobs

Worker cooperatives are great for the economy. Everyone was directly affected by the mass layoffs during the last recession. Worker cooperatives are better equipped to protect jobs and protect their workers from dangerous work conditions. For example, an average company is focused on creating profits for only their owners, thus they would lay-off employees to increase their profit margins. But, a worker cooperative would protect their jobs because each employee is an owner. Each worker-owner would make less, but they would all weather through the recession and retain their experienced staff for the eventual economic recovery. Middle Class

The middle class is a shrinking population in the United States. The news and media outlets are constantly reminding us of the growing wealth gap. Growing the middle class is the best way to strengthen our economy and improve the quality of life for everyone. The worker cooperative is the perfect vehicle for the creation of a strong middle class. Worker cooperatives focus on being profitable, while assuring that worker-owners are paid fairly for their labor and in safe conditions. Instead of centralizing wealth and profits, the worker cooperative would give everyone a share of the spoils. Spreading wealth across a healthy middle class means a stronger economy and a better opportunity for everyone to improve their lives.

The biggest problem with the American economy is the centralization of wealth in a very small group of people. There’s nothing wrong with being wealthy, especially if it’s from the hard work you’ve put in through decades of labor. The problem is that when wealth is centralized in a small group of people, money does not circulate in our economy. For example, during the recession we’ve all heard that banks stopped lending and that prevented qualified potential homebuyers from buying homes. If the wealthy decides to spend less or invest less, then our economy grinds to a halt.

Worker cooperatives spreads the wealth among a larger group of people, so that each person will be able to spend more to strengthen our economy. Ironically, the most “American” thing we can do is to spend more money. (Obviously, everyone should always spend their money wisely and not wantonly.)

Worker Cooperatives Pay More Taxes

Worker cooperatives will likely pay more taxes than your average company. Worker cooperatives seek to pay their employees livable wages and share their profits among their workers. The average company is encouraged to pay employees as little as possible and to transfer their large profit margins to their shareholders. These shareholders are able to shelter their gains or income through lower tax rates from “capital gains” and avoid paying social security because dividends are not “earned income.”

Worker cooperatives pay more taxes because each employee that earns more money would pay their fair share of employment taxes and at a higher “personal income” tax rate. Thus, worker cooperatives are profitable and are better citizens that work to support every American.

Negatives

Every business model has its strengths and weaknesses. Worker cooperatives face two major criticisms. First, critics argue that worker cooperatives are unable to effectively find investors or capital. Most banks and lending institutions are unfamiliar with the worker cooperative business model. Lending institutions rarely make business loans to new business models because it is a higher risk to the bank.

Investors are unwilling to invest in companies where owners must be worker-owners. Also, investors seek to invest their money in businesses that focus on returning the maximum profit allowable to its stakeholders. A worker cooperative seeks to primarily compensate their workers-owners, thus investors are not the primary stakeholders.

The first solution to this problem is that worker cooperatives may not require large investments or capital. Payroll is the largest and the most difficult expense for service companies to manage, but worker-cooperatives have the ability to determine their own wages. Thus, service worker cooperatives are able to start without heavy capital requirements.

But, there are alternative funding options for worker cooperatives that require heavy investments such as manufacturing. One is funding from the local community. Prof. Carmen Huertas-Noble, founding director of the Community Economic Development Clinic at CUNY LAW and the leading national worker-cooperative attorney, with CUNY students, alumni and community partners were able to secure $1.2 million in New York City Council funding to support local worker cooperatives. New York City’s pledge is the largest investment by any US city government to date. This pledge was brought about through the efforts of Assemblyman Carl E Heastie, Chair of the Labor Committee and Councilwoman Maria Carmen Arroyo, Chair of the Community Development Committee.

Prof. Huertas-Noble and 1worker1vote have taken their success in New York and helped to spurred other communities such as Madison, Wisconsin to make the same pledge. Last month, the City of Madison, Wisconsin approved a plan to provide $1 million per year in support of local worker cooperatives for five years.

Prof. Carmen Huertas-Noble’s CEDC has partnered with 1worker1vote and Mondragon University to develop a Social Economic Cooperative Enterprise Program to teach other communities how to achieve results similar to New York and Wisconsin.

Secondly, critics complain that the business model is not scalable. Critics believe that worker cooperatives are unable to grow to the scale of a company such as Apple. This is clearly disproven with the existence of companies such as Mondragon. All companies face the same problem as they grow – recruiting good people. Finding the right people to join the team is most important factor in whether a company is able to succeed at scale. Worker cooperatives are able to attract the best talent because they’re able to provide the opportunity for ownership of their work. A capable person is incentivized to join a worker cooperative because they will own a piece of the company, instead of simply earning a flat wage.

Conclusion

Worker cooperatives are a great option for Americans to achieve the “American Dream.” The United States was built upon entrepreneurialism and control over our own destiny. This vehicle is way for every American to realize that opportunity.