Democracy in Child Care: A Conversation with Esteban Kelly on Child Care Worker Ownership

Joe Waters interviews Esteban Kelly of the U.S. Federation of Worker Cooperatives on the advantages of worker cooperatives for advancing a more equitable child care industry.

Photo by Felipe Salgado on Unsplash

On May 21, 2020, Capita hosted a roundtable discussion, Advancing a More Equitable Child Care System: The Promise of Worker Cooperatives. (Worker cooperatives are owned and governed by their members. They are driven by their members’ values, rather than the profit motive.) Joe Waters spoke with Esteban Kelly, executive director of the United States Federation of Worker Cooperatives, as part of Capita’s continuing exploration of the role of worker co-ops in the child care industry.

Esteban Kelly has offered visionary leadership and creative strategy in solidarity economy and co-op movements since 1999. A Jamaican raised in New York, he grew up organizing in multiracial, multilingual, and cross-class contexts. Esteban is a cofounder and worker-owner of AORTA (Anti-Oppression Resource & Training Alliance), a worker co-op that builds capacity for social justice movements and projects through intersectional training and consulting. Esteban inspires organizers by drawing on science fiction, social theory, and collective liberation. He holds a master’s degree in Socio-Cultural Anthropology from the City University of New York and received a B.S. in Political Ecology and Global Development from University of California, Berkeley.

Esteban Kelly

As an advocate for economic development, Esteban was the co-founder and first board president of the Philadelphia Area Cooperative Alliance (PACA) and previously worked at the New Economy Coalition as development director and then staff director. Esteban is a mayoral appointee to the Philadelphia Food Policy Advisory Council, which he now co-chairs after co-founding both its Zero–Waste and Workforce & Economic Development Subcommittees. He spent eight years as a manager and worker-owner at Mariposa Food Co-op, institutionalizing its staff collective and expanding food access in West Philadelphia. Esteban won a Philadelphia Social Innovation Award for Public Policy in 2018 and was inducted in NASCO’s Cooperative Hall of Fame in 2013. He has served on numerous boards, including the Democracy at Work Institute, the U.S. Solidarity Economy Network, the LCA Land Trust, the National Cooperative Business Association (NCBA-CLUSA), and the Cooperative Development Foundation (CDF).

This conversation had been edited for length and clarity with the assistance of Nancy Vorsanger.

Joe Waters: Worker cooperatives are values-driven businesses, which allow workers to align their work with their values. Do workers stay with worker cooperatives longer with other businesses?

Esteban Kelly: Yes, it tends to be longer. The tricky thing is, we gather data from co-ops in different fields. So the best we can do is a rough comparison of industry-level data.

Certain industries, like child care, have more of a revolving-door effect, but it tends to be a slower revolving door in co-ops. But it's not enough to simply compare average workers in this industry. because in child care, the rates of churn are quite different when you're a manager versus when you're entry level. For instance, when you are entry level and you're not certified yet and you get that childcare job, as part of your professional development or certification, you might be getting an extra degree. Then you might leave that workplace and go to a new one. So there's some churn that's about what your status is within a particular firm. However, regardless of the industry, regardless of how arduous the work conditions are and how quickly turnover generally happens, worker co-ops across the board have a much higher retention rate.

Do we know why worker co-ops have a higher retention rate?

Worker co-ops have the power to shape their conditions. Whatever the pain points are, they can address them.  In traditional firms, if you have a pain point, if you bring it up, managers might say, “Okay, cool, that's easy to fix.” But maybe they will say, "Suck it up. I'll just hire someone else. We'll replace you." Oftentimes that second response is what happens in child care.

“Worker co-ops have the power to shape their conditions. Whatever the pain points are, they can address them. ”

If that traditional workplace is unionized, the union might make that pain point a part of its bargaining plan, and that might extend retention. But oftentimes in negotiations, every issue, every grievance, every pain point, is a bargaining chip. Some are removed, some are included in the final deal, and then that deal lasts for a certain amount of time. So if that contract is good for three years, then you can't change anything else within that period. But in a worker co-op, you are working alongside everyone else, including managers or other people who have a higher status. Because of this style of work, the managers are already aware of the pain points. Often they are able to solve them quicker. In comparison, even in a great workplace that is not worker owned, it's just going to take longer for that information to get to the people in power and for them to assess what needs to happen. And sometimes they're going to solve it in the wrong way, because they're not the frontline workers. They don't really understand the conditions. But in a worker co-op, they do. There is a much broader set of voices who are articulating not just what the problem is, but also the solutions.

Also, worker co-ops tend to pay workers more than traditional firms do, and that also contributes to their higher retention rates. Managers may think, “Hey, it's harder when we have people who are undertrained or who don't have enough experience—they need hand holding, and that diverts me from time with children. I’m willing to pay more to attract more qualified people. “

We know that thousands of small businesses have already closed since the pandemic began and that we may be in a recession. Can you share what we know about the resilience of worker cooperatives as businesses?

It's really early and we still don't know a lot. But from the data we've gathered so far, it seems that worker co-ops have been more resilient than their traditional industry peers. But I think we have to ask important questions about what we mean by resilience. Is it the resilience of the workforce as a whole? Is it the resilience of the workers themselves? Of the enterprise? Of the clients?

In a worker co-op, members assess all of those things, whereas shareholders in a traditional firm might take a different approach: “Oh, maybe it’s time to cash out, fold up the business, cut our losses, take whatever profit we can. It’s been a good run, let’s move on to the next thing.”

In worker co-ops, members say, “we have families that are depending on us or “we’re doing a sustainable practice that the world needs” or “we have a workforce that needs those jobs.” And so they’re much less likely to say, “Sorry, we’re laying you off, go collect unemployment and good luck to you out there.” The co-op is their  business. It is their sustenance. They’re much more likely to say, "We're staying in business, even if we need to do things differently.”

So far, we haven't heard much about businesses closing. Some are floating on support from PPP or EIDL  loans. But because of how they’re structured, worker co-ops have always had less access to financing instruments that other businesses can tap, such as loans from the Small Business Administration loans and assistance programs. So what does it mean to assess our resiliency versus non-employee-owned firms that have access to these programs? And are we comparing to larger industries and Fortune 500 companies, or are we talking about independent or mom-and-pop businesses?

There's a lot of talk in the child care space about the need to unionize or join the Service Employees International Union, National Education Association, or American Federation of Teachers. I'm curious about your take on the power of unions and on similarities in the role of co-ops and unions in building  worker power outside of the firm itself.

Co-ops blend many interests. Worker-owners are, of course, the labor force, but they are also the board members, the shareholders, sometimes the founders.

Within our membership are what we call “union co-op firms.” These are worker co-ops that are also unionized shops. For a majority of these firms, the motivation is purely solidarity with other workers in the same union who are not in cooperatives. They're paying dues and supporting unions out of a sense of solidarity and a way of expanding spaces for democracy and workers voice in those workplaces. There isn't a lot of direct benefit for those worker-owners.

There's another group of co-ops that are supporting unions not only out of solidarity, but also to help advance standards that will benefit all workers in the industry. Worker co-ops are typically way too small to have a significant voice and impact on industry standards, but unions have much more technical grit, as well as advocacy power in aggregating workers. They are able to insist on laws or policies—for instance, on safe shifts or personal protective equipment during COVID.

So it's less about bargaining with management and more about advocating within their industry, as well as the broader environment of vendors or clients or timescales or state or federal policies. And that's part of what I was getting at when we were on the child care roundtable: there is important advocacy that needs to happen at the state level when it comes to industry standards, reimbursement rates, and issues like that. A union like the Service Employees International Union is going to be much more capable of doing that level of advocacy.

Last, there's a group of co-ops that unionizes for the benefits.  It may be the only way their workers have access to retirement plans or healthcare or stipends in the case of disability—things like that.

What else do you think early childhood leaders and experts need to know about worker cooperatives and the opportunities for developing them in the child care industry?

“Worker co-ops create good jobs and pathways to wealth. Cooperatives have a much higher success rate at weathering those critical first five years of business and surviving beyond that. ”

Worker co-ops create good jobs and pathways to wealth. Cooperatives have a much higher success rate at weathering those critical first five years of business and surviving beyond that. They also pay a lot higher for entry-level positions. Whereas the typical job in the U.S. might have an entry level wage of something like $7 an hour, in worker co-ops it’s closer to almost $20 an hour, depending on the industry. The pay ratio in worker co-ops is about 2:1 from the highest paid to the lowest paid. In a traditional corporation, it's 278:1. Not to mention, in worker co-ops folks have more opportunities to rise to higher levels of worker ownership, maybe even becoming board members.

Last, there's this issue of patronage, which means surplus. In co-ops, patronage gets distributed to the workers in relation to how many hours they put into the business. So if everyone works the same, they each get an even cut. If some folks are part time and some are full time, it’s going to be proportional. Of the businesses in our membership that we've surveyed that pay out a patronage dividend, this is an extra $8,000 a year on average that is going to the workers.

That's over and above what I was saying about the better entry level wages and the smaller pay ratio. This is additional income, and sometimes for workers it can mean being able to put their kids through college or to put a down payment on a house.