In Union is Strength: A Conversation with the University of Wisconsin's Courtney Berner
Joe Waters chats with Courtney Berner of the University of Wisconsin’s Center for Cooperatives about the risks and rewards of cooperation.
Beall, Lester, 1903-1969, artist / Public domain
Courtney Berner joined the University of Wisconsin Center for Cooperatives in 2011 and served as a cooperative development specialist until assuming the role of executive director in January 2018. Courtney develops research, outreach, and education programs on cooperatives and provides support to new and established cooperatives in a wide range of industries. Her areas of expertise include cooperative education, business development, cooperative finance and governance, and innovative uses of the cooperative model. Courtney also teaches a course on cooperatives at the University of Wisconsin-Madison and loves challenging students to think critically about why co-ops emerge, how they differ from other forms of enterprise, and how the model can be used to address current social and economic issues.
Prior to joining the Center, Courtney worked at the Worldwatch Institute, a Washington, D.C.-based research institute devoted to global environmental concerns. She holds an M.S. in agroecology from the University of Wisconsin-Madison and a B.S. from Pacific Lutheran University.
This conversation was edited for length and clarity by Nancy Vorsanger.
Joe Waters: Worker-owned cooperatives shift both the reward and the risk in a fundamentally unstable, underpaid industry to already vulnerable workers. Is this ethical?
Courtney Berner: It's certainly a question that comes up anytime I'm working with a startup group. They often want to know what their financial liability is if the business goes away. There are a few different ways to think about risk in a child care business, which tends not to be a capital-intensive industry. It provides a service, so it's unlikely that a group of workers that own the child care cooperative are going to get a large loan or major financing, unless they have a mortgage on the building.
What’s most important is making sure that potential worker-owners know what the risk is and that they have support. Often when people think about business ownership, they think about the upside, about all the good things. But once you start talking about the extra work and potential financial risk, people get a little more cautious. They need to go in with their eyes wide open and with a real understanding about what that risk might be. It might actually be quite minimal. A cooperative is a legal business structure like a corporation. So it offers the same legal rights that owning an LLC or a C corp affords. As long as people are behaving within the law and ethically, there shouldn't be any additional risk in terms of being sued, for example. However, depending on how the business is capitalized, how many assets the business owns, the workers could end up being responsible for that.
It’s also important to have a healthy ecosystem of support, just like there is for small businesses: small business development centers. How do we make sure that these worker cooperatives are supported so that they can make good decisions and have access to the right resources?
How do we connect the dots between what is essentially a low-revenue, undercapitalized industry and higher pay for workers? Can co-ops help us solve the challenge of higher pay for workers if they don't have more revenue than any other business structure for child care?
I don't see how they can. The co-op structure by itself cannot solve the wage issue. Child care is a public good that needs public funding, a public subsidy of some kind. There are a lot of examples of how to do that, but it's really challenging.
Our son goes to a nonprofit child care center that has an elected parent board. It's not a cooperative. I love my son's teachers. I want them to make more money. We also are paying a lot of money for child care. We only have one child, so imagine if you have more than one. There's only so many cents in a dollar, so without some form of subsidy, I don't think a co-op model can fix every market failure. There are some things that are public goods and need public interventions.
I think that's a distinction that maybe is a little bit more nuanced in other industries and sectors than in the child care space when people advocate for it as a public good.
Yes. I think of Italy, where public funding goes to worker-owned cooperatives to provide really high-quality child care. It's proven to be an effective system. The government isn't providing child care, but it’s defraying the costs for those who are sending their children. Owners still have some autonomy and an incentive to run a really high-quality business.
One hypothesis is that small child care businesses just don't financially work and we need more scale through networking existing businesses. Are all worker cooperatives small?
There are a lot of examples of large worker cooperatives. But it's important to think about the different ways that you can achieve scale or efficiency through scale. One way is to have a really big center with a lot of workers. Another way is to have a network of centers that are all worker owned, but are distributed geographically, maybe in a city. Another way is to have a shared-services cooperative where both worker- owned and non worker-owned child care centers get access to better pricing on inputs. Maybe they share administrative services, HR services, billing services, food production, all sorts of things. So that allows you to keep a small center because a lot of people, especially given what's going on with COVID right now, might want their child in a smaller setting. But by banding together with other centers, you're able to achieve some efficiency.
The largest worker cooperative in the United States is a home care cooperative in New York. Here in Madison, Union Cab is a fairly large worker cooperative. They've been through a lot of changes given the dynamic nature of that industry, but always have at least a couple of hundred worker-owners. Isthmus Engineering is another firm in Madison that's worker owned. They have approximately 75 employees, half of whom are member owners of the cooperative.
There are certainly considerations to getting larger. As you scale, how do you make sure that you're scaling your governance structure,? Any business that goes from a sole proprietorship to a five-person LLC to a 25-person business has to think about what that means for all dimensions of the business. It's the same with a co-op. It's possible, you just have to plan for it and be thoughtful as you're growing.
Cooperatives are committed to the educational development of their members, which is especially important in child care. How can cooperatives help advance the educational interests of their members?
“Co-ops are owned by members, so there’s no single owner extracting the profit. The workers decide what to do with those resources. Often they will want to raise wages, particularly in low-wage industries. ”
In a traditional business, the owner extracts value. I realize that “extract” sounds negative, but I'm not anti-business owner. That's part of why you run a business-to make a living. But if you take that motive out of the equation, in theory you free up resources. Co-ops are owned by members, so there's no single owner extracting the profit. The workers decide what to do with those resources. Often they will want to raise wages, particularly in low-wage industries. What are other ways that workers choose to allocate resources? One is education and training. There's nothing to say that they have to choose training and education, but worker-owners have a vested interest in their own professional development presumably, and in the success of the business.
Worker co-ops are not the only type of co-op. Many people will be familiar with parent or consumer co-ops, but what role might multi-stakeholder co-ops play in the child care sector?
Whenever I'm working with a group that's thinking about starting a multi-stakeholder cooperative, I ask them to think about two questions.
The first question is to the primary class of members that's thinking about starting the co-op. So it might be parents, it might be workers. Is it worth it to you to share ownership in order to have this other class of members involved with the cooperative? What power, control, resources, money are you willing to give up in order to bring this other class of members into the cooperative? There's not a yes-no, right-or-wrong answer, but it's something to really think about.
Then the second question is, Does that potential class of members, that group of people that you are thinking about bringing into the co-op, even want an ownership relationship with this co-op? I think people who are excited about owning a co-op assume that everyone would want to join. But there are all sorts of relationships you can have with people. They may not actually want to be owners of a child care co-op. They might just want to write you a check every year. They just want it to happen. They probably don't need another thing to do, they don't want another board to sit on. You need to ask yourself if you are offering value, if that is what that person or group wants in terms of their relationship with your business.
So multi-stakeholder co-ops are super interesting. I think they're worth exploring in a lot of cases, but proceed with caution.
My reading is that multi-stakeholder cooperatives have been more successful in Canada than in the United States. Is that right?
Yes, that's certainly true. There are more in Canada. I do think, though, that child care is a place where you have two groups, parents and workers, who both have a strong interest in the success of the endeavor and have things to add. It’s a space where I could see a parent- and worker-owned cooperative. There are also some worker-owned cooperatives and parent-owned cooperatives that are not technically multi-stakeholder cooperatives, but have representatives from those other classes, because they recognize value in having the buy-in and input.
The other type of cooperative that could be really useful in the context of child care is a purchasing or shared-services cooperative. What areas are ripe for collaboration, where you could save time or money, by pooling your resources? For instance, you could have a joint contract for buying food or hiring one or two cooks who make all the food in a commercial kitchen and deliver it. There are a lot of considerations, but to me that's one of the more exciting possibilities in the child care space, because it could lift all boats. It could really benefit small child care providers that are struggling.
On the multi-stakeholder cooperatives, is it possible for an existing parent cooperative to convert to a multi-stakeholder co-op by bringing their staff in as a membership class?
There's a grocery co-op here in Wisconsin that started off as worker owned and then converted to worker and consumer owned. So for a hot second, it was a multi-stakeholder cooperative, and then eventually it converted to a 100% consumer-owned cooperative. So yes, it's possible. The legal path is likely impacted by your state’s statutes or how you're incorporated now, but yes.
“Whenever I teach about co-ops or work with young people, I talk about the New Deal rural electrification program. To me, it was that sweet spot, combining access to capital, technical assistance, and education. It was a national program, but with really strong local roots, and it required local investment and participation as well, which led to an ownership mentality. ”
Is there a danger that people might see co-ops mainly as a way to get access to resources or to save money, without developing a sense of ownership or responsibility?
You can do all the education in the world about co-ops, and you will move the needle a little bit, but without some actual incentive to use the model, you only get so far. But how do you create the right level of incentives for people to create co-ops without incentivizing it so much that people use the model just to get access to resources? We don't want to be incentivizing them to the point where people are just using it as a vehicle to access programs.
There's a sweet spot where you're centering the work in local communities, so the projects are informed by local knowledge and culture, but also developing that sense of ownership, with an infusion of education, technical assistance, and money at the federal level. Whenever I teach about co-ops or work with young people, I talk about the New Deal rural electrification program. To me, it was that sweet spot, combining access to capital, technical assistance, and education. It was a national program, but with really strong local roots, and it required local investment and participation as well, which led to an ownership mentality.