In the fall, the Urban Design Forum will launch Cooperative Works, an initiative exploring how New York City can advance economic justice in its coronavirus recovery. In partnership with Deputy Mayor for Strategic Policy Initiatives J. Phillip Thompson and the Mayor’s Office of M/WBE, our Fellows will conduct research on how to create economic opportunity for MWBEs and employee-owned businesses through climate investment, leveraging the new market for building energy retrofits created by Local Law 97.
Leading up to the program, we are pleased to publish a series of interviews with leaders in sustainability in the built environment, inclusive economic development, and racial justice. In our interview with Maru Bautista, Director of the Cooperative Development Program at the Center for Family Life, we discuss the benefits cooperative ownership can have in a community, what kind of support new cooperatives require, and the resiliency of cooperative models.
Daniel McPhee: Through the Center for Family Life, you have helped to incubate over 20 worker cooperatives, most notably Up&Go and Brightly Home Cleaning Services. Can you tell us a little bit more about the benefits of incorporating as a cooperative?
Maru Bautista: When you incorporate as a worker cooperative, you inculcate a sense of solidarity and use the power of the group to support one another. In our mostly immigrant community in Sunset Park, a lot of people face exploitation in the workplace: people not getting paid well, wages getting lost.
When people talk about the impact of joining a cooperative, the first thing they mention is not just the economic impact of seeing their wages double or sometimes triple, but the fact that they’re not alone. If something goes wrong in that job, they have the backing of the business and the backing of the group.
Starting a business with more people also reduces the risk that one would take opening a business on their own as an immigrant in this country. Doing that collectively with technical assistance has been really good for women of color and immigrant communities.
Furthermore, the democracy in decision-making fosters a sense of self and power. It impacts how the people in our community get civically engaged.
DM: As you mentioned, much of your work has been with low-income and immigrant communities in Sunset Park. How does the cooperative model meet the needs of that neighborhood in particular?
MB: The Center for Family Life has been in Sunset Park since 1978. As an organization, we’re entrepreneurial and always create programming that meets the needs of our community. This program arose from a need expressed to us by an ESL class. They said, “You have a workforce development program for people to get ready to find a regular employment, but you don’t have anything for us. We don’t speak English, and sometimes we don’t even have the level of education that a lot of employers are looking for. What can we be done for us?” People need better work, right? That’s an important need in our community and the worker cooperative model helps address that.
“It is not just the economic impact, it’s a question of people power.”
Systemically in this country, we try to isolate immigrant communities and push them away. The worker cooperative model—or what we have built now, which is more of a network of coops—really has a presence in the fabric of the community in Sunset Park. People know about the coops, and people know that through the worker ownership model, they can have their rights. It is not just the economic impact, it’s a question of people power. It’s absolutely necessary for our community. Then people get involved with the church, and they are more engaged with their kids and their education because they have more time to be with the children.
DM: What are some of the toughest barriers to creating a worker cooperative?
MB: I’ve been thinking a lot about this. Sometimes I think that the biggest challenge is business savviness, but you can fix that, and we do that with technical assistance and coaching.
I would say the toughest barrier is time. The model for building coops needs to address the learning curve for people to be able to manage and govern on their own, which takes time. Can they afford to be engaged in an eight-month process to learn all of this and build the business model together, or do they have to work tomorrow because they need to put food on the table? Those considerations are important.
Time is also important in thinking about how much capacity-building you’ll need to do for any given industry. Our choices about where to start coops have been about where there are the lowest barriers to entry. We will work with anybody who wants to start a coop, regardless of experience, regardless of how much capital they have. Together, they can get the capital that they need to start the business. But all the coops that we work with are low capital intensive, so they don’t even need to raise that much money to begin with.
Some people will tell you the biggest barrier money, but even with access to money, you still need time.
DM: The Center for Family Life’s incubation model is really notable in terms of how you work with cooperatives. Could you talk a little bit more about the incubation services that you provide and the infrastructure that you offer to help these businesses form?
MB: We start by doing a feasibility study, so that we know what we’re getting ourselves into: What does the market look like? Is there a need for this particular industry or business? What are the requirements legally and insurance requirements?
Once we complete that and feel like there’s some feasibility to enter that market with the particular community that we’re working with, we invite people to an info session, where we talk about what we’re trying to do. Then we invite people to come to an intensive weekend. After that, we meet weekly, where we do a combination of workshops and tasks. People work in different missions, such as getting all of the financial pieces ready, getting a bank account, and making sure everybody has an ITIN number. They participate in workshops to understand how to do business finances, budgeting, all of those things. We also partner with lawyers that understand coops. Halfway through the process, they come and help the coops create their operating agreement.
We meet with members for three hours every week. Now we’re doing them virtually; otherwise, while doing them in person, we provide childcare and food. One person on my team is assigned to develop these trainings, adapt them to the needs of this particular coops, and meet with them weekly until they launch. It’s a long journey.
DM: How you communicate the value of cooperatives, not to the workers themselves, but also to clients?
MB: It is about quality and social justice. First, quality: because the workers are the owners of the business, they are so invested in the quality of the service that they’re providing. Nobody is going to do a better service than the worker-owners themselves. That has been a good marketing strategy and something that people value when booking services through all of the coops.
The social justice component is a tricky one. We’ve often thought that this is not the most compelling reason for clients, but we’ve been proven wrong. People want to value the work that workers do and pay the wages that they deserve. We uplift the idea that workers are earning a fair wage or say what percentage of what people are paying goes directly to the coops. The idea of equity and distribution has been really helpful.
But this is all in the service industry, where there’s a lot of precarity for most workers, so the values of worker ownership have been a good marketing strategy. Now, the coop model is better known in various sectors. People used to think about coops just as housing coops or the Park Slope Food Coop. There, the interaction as consumer-owners is not the same as with a worker-owner.
One thing that has been interesting to see is that people don’t have high expectations of the management and administration of the business. They continue to think, “Because it’s a small coop, they won’t be efficient.” Creating marketing strategies to target that and building the model to be competitive in the market have been really important for us. We provide back office services for the coops that we support, so that checking email and responding to inquiries is not something we struggle with. Sometimes the workers themselves are not bilingual, or have difficulties taking on that task, so our model included this from the very early stages.
DM: What kinds of policy changes would make it easier for cooperatives to form and be able to sustain their work?
MB: There’s a policy group in New York CIty that is advocating for some changes in legislation at the state level. The current cooperative corporation statute is prohibitive to many communities, mainly because of the way individuals are taxed. None of the coops that we work with are registered as cooperatives, even though they could technically. That impacts the benefits they can get fiscally, for instance. A lot of the coops that we work with have to figure out how to work under the LLC model.
Procurement has also been difficult. We are part of an initiative called the Worker Cooperative Business Development Initiative. We all work to develop coops, and we’ve all had a dream of procuring a contract with the city. But the system is just so difficult to navigate. The contracts go out super quickly and they’re gigantic contracts, so if you’re not already connected to a contractor to become their subcontractor, it is really hard to access.
A lot of city agencies do not understand the worker ownership model, so things are not easy to do. For instance, a coop that we were supporting a few years back needed to get a construction license. There were twelve worker owners and one of them said, “I’ll be the one who takes the test on behalf of my coop,” but then there were all these little obstacles, like all the owners needed to be there for fingerprinting at the same time. The idea that businesses can be owned by multiple people is still not understood across agencies, and the systems that are built to serve businesses don’t really understand how to do that with worker cooperatives.
The personal guarantee that a lot of different things require, like loans, is a battle, because how are you going to have a personal guarantee for twelve different people? Nobody can help us with that. It’s really hard to navigate. With the recent federal relief programs, there was a lot of advocacy to push for the removal of that clause so that it could be accessible to cooperatives in general. Luckily, we won and cooperatives were able to access those loans. Understanding the worker cooperative model, understanding that there can be more than one owner of a business and just making changes when it’s necessary would be really great.
DM: I’m sure the current pandemic is impacting every single one of your cooperatives. What lessons are you learning about resiliency of the cooperative model in a moment of crisis?
MB: So many things. I am inspired by the women that we work with every day.
“There are more ideas coming out of a group that values people’s experience and knowledge.”
Coops make decisions that are not just based on the economic need of the business. What happens with other businesses is that if you lose your revenue for a month, the first thing you do is to cut costs. You let people go. Coops can make decisions like not taking a draw if there’s no money in the bank, but they can stay in business, and they use the time to strengthen other areas of operation.
In the case of the cleaning cooperatives that we’re supporting, the question is how do we pivot, and what opportunities are there to develop a new line of business? While our residential cleaning portfolio can’t be in operation because it’s not considered an essential service in New York City or New York State, our commercial cleaning is. How do we increase that? What kind of training do we need to get? What kind of marketing do we need to develop in order to take this as an opportunity to pivot, stay relevant, and continue to do business?
I think there are a lot of advantages because of the members’ entrepreneurship and the network that they’re part of. It’s not easy, but they can use everybody’s skill set and everybody’s voice. There are more ideas coming out of a group that values people’s experience and knowledge, rather than just dissolving.
What I think we are going to see in a few months is that the coops will bounce back. I don’t think the coops are going to lose members. Regular small businesses can’t do that; they will have to fire workers and then bring them back. But here, labor is so valuable that they are going to come back and rebuild.