A business model that allows workers to have a stake in how their employer pays and supports them while also tackling social justice issues is expanding in Madison and statewide.
The worker cooperative model, which already has a history in Wisconsin and the city spanning decades, is one in which the business is equally owned and governed by its employees — they each get a say in their pay, benefits and how to divvy up company profits.
In Madison, an accelerator for worker cooperatives that want to make that social impact was recently put together by Downtown startup promoter gener8tor and the Nehemiah Center for Leadership and Development. Also, a local worker cooperative called Roots4Change, which partners with health organizations to support Hispanic mothers through their pregnancies, is expanding.
Roots4Change is slated to soon move into a new space on the East Side, a venture that will likely be covered by a capital campaign worth $1 million, said manager and doula Mariela Quesada Centeno. A doula is a birthing coach.
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At the state level, the Wisconsin Economic Development Corp. last week unveiled its inaugural round of seven “Cooperative Feasibility Study” grants, which allows businesses to explore different models for operating before making large investment decisions. Businesses that received grants aim to help people find affordable housing, access food, build grocery stores and more.
The recent interest in worker co-ops is driven by several factors, said Courtney Berner, executive director of the University of Wisconsin Center for Cooperatives, adding there are just over 700 businesses in the state that have incorporated as cooperatives.
The number of worker cooperatives in the U.S. has grown more than 30% since 2019, according to data from think tank the Democracy at Work Institute. In 2021, there were 612 worker cooperatives in the country employing 5,966 workers.
“I’ve seen that interest increase since the (2008) recession … a push back against Wall Street,” she said. “There’s the trend of baby boomers that are retiring. How do we retain those businesses?”
There’s also an increasing use of the worker cooperatives model by women and people of color, as well as municipalities, to achieve social and economic goals, Berner said.
“The labor market has shifted a lot within the last year,” she said of why that’s occurring. “There’s a desire for more dignified work. Wages have been stagnant for a long time. Employees want to have a different kind of relationship with their (employer), and more control.”
But keeping the business model as an option in the minds of prospective entrepreneurs not only involves programs like the accelerator, but monetary incentives to keep those initiatives afloat — like the millions the city of Madison invested a half decade ago into ventures like the Madison Cooperative Development Coalition, which is focused on forming worker cooperatives that address racial disparities and income inequality.
It was a $30,000 grant from the coalition that supported the launch of the accelerator.
But that funding is ending later this year, Berner said, adding that she hopes the city will renew it.
An accelerator kicks off
Earlier this month, Roots4Change’s six doulas (each having a Hispanic/Indigenous cultural background) participated in a gener8tor-hosted panel discussion with two fellow cooperative owners to kickoff the accelerator. The program, first introduced last winter, seeks to train entrepreneurs who address social issues using the unconventional model.
The panelists reflected on the nuances and challenges of owning a worker cooperative during the online event, for which 52 people registered, said Lauren Usher, gener8tor’s managing director of accelerator programming.
Along with Roots4 Change, panelists included Georgia Allen, a Black woman and co-founder of Madison in-home care worker cooperative Soaring Independent, and Matthew Earley, former co-founder of the Madison-based Just Coffee cooperative.
When building Soaring Independent with her team in 2019, Allen said the goal was to provide livable wages for a minority-dominated health and personal care workforce to address high turnover rates. But gaining a network of support for that proved difficult at first, she said.
“Building that traction was hard,” she added. “It is vital to have that expertise to help us navigate systems that weren’t set up to benefit communities of color.”
Interested entrepreneurs can now choose to take part in the four-week-long accelerator in which up to 40 participants will connect with mentors to develop their business idea.
The participants, along with anyone else interested, can also attend a “Lunch and Learn” series, which includes experts in areas such as funding and the law. The program could end with a networking event, Usher said, but that's still being discussed.
The six women that make up Roots4Change primarily hail from South American countries, where the cooperative model is deeply and historically embedded in the societies that reside there, said doula and co-president Aida Inuca, who is from Ecuador.
The worker cooperative operated for seven years before officially adopting the business model in 2018, she said, adding that Roots4Change aims to be an advocate for its Spanish-speaking mothers and the barriers they face as minorities in the U.S. All of the cooperative’s educational materials are printed in Spanish.
And up until now, Roots4Change operated inside Centro Hispano on Badger Road next to the Madison Area Technical College campus.
The current space offers two offices and a large living room with tables and chairs for the doulas to provide mothers their various services, which include prenatal yoga, trauma-informed birth coaching, birth and postpartum support, lactation help, mental health care and even herbal supplements.
Roots4Change has helped roughly 90 mothers since its founding, and is funded primarily through contracts with health care providers, said Quesada Centeno.
The new building will offer just over 1,000 square feet.
Located at 701 E. Washington Ave., it offers not only two private offices with 554 square feet of open space and high ceilings, but access to Madison’s various Downtown amenities and visibility — to those looking to partner with Roots4Change for philanthropic reasons and prospective clients, said secretary and doula Marciela Martinez Munguia.
An open house for the new space is being planned, and the move is slated for the beginning of June.
The 2021-23 state budget requires WEDC to allocate $200,000 each year of the biennium for the cooperative feasibility study grants, said spokesperson David Callender, adding that more awards are planned.
The Madison Cannabis Community Cooperative received $5,200 from the program.
“Cooperatives can be an especially valuable tool for rural Wisconsin allowing residents to get the goods and services they need but that the market doesn’t otherwise supply,” said Missy Hughes, WEDC secretary and CEO in an email statement. “These grants will allow businesses and communities, both rural and urban, to thoroughly research and plan so that these cooperatives thrive.”