A Strategy for Tackling the Income and Wealth Inequality Gap

Sam Jana

"Successful worker-owned businesses create long-term stable jobs and develop significant links to enable economic and social change."

"Successful worker-owned businesses create long-term stable jobs and develop significant links to enable economic and social change."

     The U.S. exhibits a deeper divide among the rich and the poor when it comes to income and wealth inequality

than any other major developed country. Today, in terms of income inequality, close to 40 percent of the U.S.

population works long hours for very low wages that do not meet their day-to-day needs, while the top 10 percent

of earners take a disproportionate share of the nation’s income. The top 10 percent have also captured 76 percent of

all wealth (net assets) in the country. Finding common ground to help bridge this gap is important for the security

of the country, both economically and socially.

 

     During the spring and summer prior to arriving at Johnson, I interned at Project Equity, an organization based

in Oakland, California, that focuses on strategies to mitigate wealth inequality in low-to-middle income

neighborhoods of the Bay Area. One such strategy is to incubate and scale the worker-owned cooperatives business

sector. These businesses are owned and managed by the workers, each with equal vested interest in the future

success of the company. They operate under democratic governance; i.e., non-hierarchical decision-making, fair

labor practices, and equality. Worker-owned cooperatives are still aimed at maximizing profits like any other for-

profit business, but they also prioritize ethical treatment, respect, and access to information and education for

employees (the owners). Coming from many years of corporate business experience, where the method of operating

is rarely non-hierarchical or democratized, I’m moved by the worker-owned cooperative model and its potential to

fight marginalization while fostering sustainable business practices.

 

     In the U.S., there are now over 400 cooperatives in varied sectors, including retail, medical services, web

services, tech support, and even robotics. Cooperative Home Care Associates in New York City is the largest such

business in the U.S., operating in the home health care space. It has over 1,000 worker-owners, 90 percent of whom

are women of color. They enjoy higher wages, regular and reliable hours, health insurance benefits, and a share in

the company’s profits.  Outside the U.S., Mondragon Cooperative Corporation, based in the Basque region of Spain,

is perhaps the most successful example. Established in 1956, this corporation is a holding company with over 120

entities operating all over the world in industries such as banking, insurance services, manufacturing of consumer

goods and industrial components, as well as B2B services such as consulting and engineering. Mondragon

Corporation has over 80,000 worker-owners with revenues topping 11 billion Euros. Over the past 50 years,

Mondragon has brought economic stability by creating wealth in a sustainable way and by educating worker-owners

in both job skills and the democratic process. Growth of this sector in the U.S. can serve as a powerful bridge to

address both the income and wealth gap. Successful worker-owned businesses create long-term stable jobs and

develop significant links to enable economic and social change. They can revitalize neighborhoods and provide a

viable path to an improved economic position, especially in the hardest hit low-to-middle income communities.

The worker-owned cooperative movement is increasingly being recognized as part of the larger movement for

sustainable businesses and a new economy.