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Worker-Owners in the Bay Area: A Business Model for the 21st Century

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A few years ago, when former CA state legislator Tom Hayden suggested that Northern California should apply for observer status with the European Union, it was understood that our region had more in common with Europe than much of the rest of America. Widely recognized for its progressive politics, the Bay Area is also home to the largest number of worker-owned businesses in the country.

Though they receive little to no press, these models for 21st century business are still below the radar. Perhaps they are not dramatic enough (they are successful) or corrupt enough (no one is suing anyone), or exploitative enough (all worker-owners earn a living wage).

Inspired by the Mondragón Cooperatives in the Basque region of Spain, many of these local businesses have flourished for years and have developed a template that works in the US.

One of the better-known examples is the Alvarado St. Bakery, featured in Michael Moore's film Capitalism: A Love Story, and located in Sonoma County. Alvarado St. was established 1981 by five people with roots in the 1970's "Food for People, not for Profit" movement in San Francisco. Today, they employ more than 100 worker-owners in what has become a national business.

Alvarado Street uses whole grain and organic ingredients whenever possible and sells to natural food stores as well as large supermarkets that package Alvarado St. bread under their own labels.

Joseph Tuck, the CEO of Alvarado Street said that worker-owners' salaries range between $57,000 and $63,000 a year. Clearly, the democratic model of worker ownership honors a substantial living wage. The highest salary approved in their system could reach 3 times the lowest salary, but no one is currently receiving that high a wage. With revenues of $24.6 million in 2009, Alvarado St. has proven that worker ownership thrives, even in an economic downturn.

Alvarado St. offers a robust medical plan that includes dental and vision. Workers pay $30 per month for a family plan and $10 per month for a single. Fourteen percent of Alvarado St. profits go into 401k plans for workers. They do not have to match the contributions.

San Francisco's Rainbow Grocery, the largest worker-owned supermarket in California, won SF's Bay Guardian 2010 award for best Bay Area grocery store. What began as a small collective in 1975 today employs 239 worker-owners. Kasper Koczab, who was Steering Committee Secretary at Rainbow and is now working for the Network of Bay Area Worker Coops, said that Rainbow was strictly worker-owned and not a consumer coop. One worker-owner equals one share and one vote. Rainbow Grocery has outgrown its premises three times and has had to move to larger quarters or add nearby space. Rainbow also offers an excellent healthcare plan that includes preventative care, fitness and even massage.

Representatives of the worker-owned businesses noted how difficult it is to get loans for these types of enterprises. When there is no designated owner, banks are reluctant to lend money. Consequently, Rainbow Grocery has paid cash for all of its expansions.

Worker-owned businesses even have a support group in the Bay Area, the U.S. Federation of Worker Cooperatives. Their stated purpose is to support the growth and development of worker-owned cooperatives. They sponsor workshops, conferences, resources and networking opportunities for new and established cooperatives. Melissa Hoover, the executive director of the federation, is also on the board of the Arizmendi Association of Cooperatives.

The five Arizmendi Bakeries, including the Cheeseboard in Berkeley, are famous for their pizzas, pastries and breads. Labeled "socialist scones" in a Salon.com article, the Arizmendi bakeries emerged from a study group that was learning about the Mondragón Cooperatives in Spain. Father Don Jose Maria Arizmendi, the founder of the Mondragón Cooperatives, inspired the name.

Hoover said that the mission of the Arizmendi coops "is to create as many living wage jobs as possible and to offer significant opportunities for personal and professional development." With more than 100 worker-owners, the Arizmendi Association is planning to expand their businesses beyond bakeries, maybe even branching out into finance.

While the Bay Area may have much in common with Europe, we have also been raised with the same competitive values as other Americans. We value innovation and creativity and these qualities are needed in both private businesses and cooperatives. Clearly, worker-owned businesses in the Bay Area are competitive with private businesses and are highly creative and innovative. What sets cooperatives apart is their focus on sharing the wealth, supporting each other, and responsibly living within limits on a planet with limits.

For those who claim worker-ownership can only develop in countries sympathetic to socialist ideas or cultures where cooperation is highly valued, the success of worker-owned businesses in the Bay Area and in many other parts of the US demonstrate that people who are motivated by sharing the wealth and creating jobs can create coops anywhere. The resources listed below can help those interested in learning more about worker-owned businesses:

www.usworker.coop
www.arizmenibakery.org
www.alvaradostreetbakery.com
www.rainbowgrocery.org
Video presentations of the people cited in this article
An entry on the Mondragón Cooperatives