GREENSAW Blog: Op-Ed: By Jim Steiker, the oldest young employee ownership lawyer in America

Wednesday, January 19, 2011

Op-Ed: By Jim Steiker, the oldest young employee ownership lawyer in America

So Greensaw believes in "re-using material, and building with existing structures." There is a history to worker cooperatives in Philadelphia. Omega Press was a worker-cooperative printing company in the '70s and '80s, back when there were printing companies. House of Our Own was a worker-cooperative book store in West Philadelphia. The Philadelphia Association for Cooperative Enterprise ("PACE"), my original employer, promoted worker cooperatives for 10 years in the Delaware Valley in the '70s and '80s from center city offices and helped form a worker-cooperative supermarket in the Strawberry Mansion part of the city. Childspace is a worker-cooperative day care center in Mt. Airy and Germantown providing high quality child care today. There's material to reuse and structures to build on in this history.

Why did most of these worker cooperatives fail, or, at least, why aren't they around any more? The short answer is that they didn't make enough money to maintain themselves. For those who pick on Enron as the emblem of the failure of ESOPs, Enron fundamentally had the same problem. The ownership structure does not matter if the business can't make a sufficient profit to stay in business and provide an adequate reward for ownership.

The worker-cooperative movement is and has been about creating cohesive companies with a shared sense and reality of ownership and mission. The beauty of the structure is the dignity it creates for each employee owner and the cultural and class differences it breaks down in involving and rewarding each employee owner.

There is no dignity in "lemon socialism". This is America and folks want to play for a winner. We can define winning in a lot of different ways, we can view the game as a team sport, and we can win as a team but winning matters. Greensaw will succeed as a business because it has a winning business proposition for its customers, who ultimately pay money to Greensaw for Greensaw to do its work. The worker cooperative can make Greensaw better as a business and increase its appeal to its customers because of the ability of the structure to attract and retain great people and the ability of the people to make Greensaw a great place to work and be.

One downside of the worker-cooperative structure is the degree to which the members can focus inward on each other, endlessly defining and negotiating the rules of the game, rather than focusing outward on customers and the need to succeed as a business. My best answer to Beeg's bourbon-fueled lament is that he should form his own company if he thinks that's a better opportunity than the one in front of him to buy the business from Brendan and continue and build it as a worker-owned cooperative. Brendan's got the right and ability to get a fair return for what he's built and his job is to develop a good transition to worker-ownership that creates an attractive opportunity for Beeg and the rest of the folks at the company. This may involve making sure that the longer-time key folks get more in either pay or ownership from the business--this isn't unfair and doesn't undermine the worker-cooperative structure as long as each member with the ability and the commitment to the enterprise ends up with the same opportunity.

Finally, why do I do primarily ESOPs now, rather than worker-cooperatives, despite the "Enron" example? Well first, John Abrams is right in discussing Enron as a perversion. Enron wasn't an ESOP, it was a 401(k) plan where individuals could buy Enron stock as an alternate investment and it was a fraud. Second, most of the lost money was "Madoff profits"--money folks thought they had made on the run-up rather than actual invested money. Finally, ESOPs create some great employee-owned companies. Some, like Carris Reels, are more "coop"-like and some are more conventional. Some share wealth and governance more broadly and some start out primarily tax-driven for the seller. Nevertheless, they are all part of a potential transition to workplaces that create more dignity, involvement and reward for working people and should be honored on that basis. Greensaw, not surprisingly from what I've learned of them, is simply on the leading edge of this movement in its transition to a worker cooperative.

posted by Brendan Jones @ 6:20 AM

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A blog addressing the importance of re-using material, and building with existing structures. A strong emphasis on architectural salvage, as well as the people that make the difficult work possible.

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Name: Brendan Jones
Home: Philadelphia, PA, United States
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