Employee ownership, living wages, and democracy in the workplace? If that sounds like some sort of impossible utopia, Trebor Scholz explains how platform co-ops promote all those things and more - for the benefit of workers as well as our future economy.
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". . . the workers. . . are sharing the governance and the ownership of this platform. They are deciding on benefits. They are deciding what customers are charged, and it's a truly democratic workplace."
"What we need is more variety in the economy. We need small unionized private businesses. We need employee ownership and we need that from cooperatives."
Transcript
Meet Esmeralda Flores. She is a home cleaner in New York City and like so many home cleaners, she is using a tech platform, an app to connect to clients - but unlike other home cleaners, she's making $25 an hour, which is twice as much as she used to make at her previous company - and she makes a living wage where there's no algorithmic boss at her a company that changes the pay or hours from under her feet - so she has some stability for her family and every week the workers at this company have a meeting to decide how to run this company. They decide on the operations Esmeralda receives training in, finance and management, and in conflict resolution, and it really makes her grow as a person and as a person within that company.
-So now you might be asking what kind of company is that? I've never heard of a tech platform that gives benefits like that. How do they do this? So the answer is that it's not your typical template form. It's what is called a platform cooperative, which means that the workers - the house cleaners - are sharing the governance and the ownership of this platform. They are deciding on benefits. They are deciding what customers are charged, and it's a truly democratic workplace - and I think that's really what we need more of right now. If you think of tech platforms denying workers living wages - if you think about them denying them the right to organize and expanding economic inequality in the process, I think platform co-ops are one way to change that. I know; I know - I know that for some of you, when you hear the word co-op, you immediately think of a white guy like me standing in a food cooperative in Berkeley selling you vegan cheese, right? -And I love food cooperatives, but they are not the only type of cooperative. A co-op is really just a group of people who have a shared need, whether that be vegan cheese or house cleaning - and they come together to address that need.
- And so that might be a business and sometimes it takes a lot of forms, but it's always about shared ownership and democratic governance. So co-ops are nothing new. You've heard about the consumer co-ops, as we know them today, have existed since 1844, when you know, textile weavers in the north of England came together because their pay was cut in half and their families were starving - so they decided to sell oatmeal and sugar and flour through a store known as the co-operative.
Today, cooperatives of agriculture, and not just food co-ops, are quite big. You may have heard of Land O Lakes or you know Ocean Spray are also platform cooperatives. Take the best from these two tried-and-true models, the 200-year old model of the cooperative and the much younger model of digital, and bring them together. So here's what makes some difference - they are made up of a group of people who get an equal vote in decision-making, and they are genuinely sharing that process - when it comes to, how much customers should be charged, how much workers should be paid, and also, whether or not data should be collected and what and to whom they are sold.
And there is another thing that makes them different which is that they are scaling equality. So take Esmeralda Flores. That's where she works in the cleaning industry, which has an annual turnover of 75%. So Esmerelda has been with Up and Go almost since its beginning, so for three years and one of the reasons that she stuck with the company is that she was paid more. So that is significant in a context of typical tech platforms, which would take between 25 and 50 percent commission which is an exorbitant amount for immigrants who make up the majority of the gig economy workforce. -So the women have decided to take 5% commission, which they use to run the platform and pay for credit card bills and 95% brought to the women, go to the workers themselves. And one reason that the company can do that - that Esmeralda can be paid so much - is that there is no fiduciary duty to the shareholders to maximize profit.
And here's another thing that makes co-ops different. It is said everybody at this company owns it together, right? So it's a shared ownership, which means that also the intellectual property of the software is owned together. That means that they can create a small network of companies, like a social franchise might, and scale up this company to then compete against large tech companies. -So lastly, consider that Up And Go is made up mostly of immigrants from Latin America and if they were a typical gig economy platform and they went out to look for Venture Capital funding then the research shows us very clearly that the chances of these minority women to find Venture Capital funding are very slim, right in the single percentile - meaning that these women would have never even been able to build a platform in the first place or add some much-needed diversity to the Tech Founders Club. -So today, there are hundreds of platform co-ops like Up And Go all over the world, and they work, right? They work in more ways than one. They work because they are more resilient in terms of crisis. They are more productive. They retain workers longer and often pay better.
I really believe that platform co-ops are a better, fairer alternative - and that's why a few years ago together with a few friends. I started the platform Cooperativism Consortium - try to say that three times fast - at the New School in New York City - and essentially what we do is we support platform cooperatives, digital cooperative projects all over the world. We are working with 500 projects and businesses in over 30 countries, but let me just give you a bit of a taste of this.
- But it's like two examples that are really close to my house. One is a co-op which is a driver owned taxi platform with some 3500 drivers that make between 10 and 30 percent more than the drivers on the largest driving platform. The passengers pay 5% less and already, despite this being a very new company, has already one of the largest worker cooperatives in the United States.
One of those is a food distribution center in Genoa, Italy - So, I know you might be wondering when you hear about Up And Go and the others, you might be wondering like, how is this not a total mess, right? So the entrepreneurs among you think that they’ve got a democratic workplace and the answer is well, you know, they do, but it's like everybody else is doing, which is they are hiring management, right? And they are hiring tech workers, but there's one big difference, right? They just set the rules of operation which are decided by all.
The rules said we actually decided by all people in this company. I've told you about platform mostly in the labor sector, and so Transportation might mobility and short-term rental, but they can also transform an entire sector such as care. The care sector culture and the Arts higher education and the data economy. I mean, just imagine if our data would be managed cooperatively, right? Right, Cooperative data, trusts data, cooperatives or mention, is social media Cooperative, where the users on the platform decide what is done with the data, which data are collected and to whom they are sold. So one, where there is no fiduciary duty to shareholders to maximize profits so that you can actually build in privacy and transparency because and really bring the benefit.
Back to those who actually generate the data. So I know we are here near Silicon Valley so I can see that, I'm sure for many of you, you will think, wow, well, I'm not so sure about this. I mean, it's not just never scale. Right? I've heard this many times and it doesn't write, it doesn't scale like traditional Silicon Valley companies. Well, it kind of does right? Up and Go sales increased by 97 percent from 2008 to 2009.
But that's really not the objective. The platform cooperatives are not about going public. They are not about maximizing profit. They scale differently this year more affordably because they are, you know, more the skimmer affordably than brick and mortar cooperatives. They scale by creating networks of companies that then compete against large companies, they scale more quickly because the coop can be anywhere in the world and they still democracy.
Because they can be decentralized through crypto networks and not checked. So that is why right? I want instructors to teach about this model in law schools and business schools. That's why when entrepreneurs right to start on instead of another traditional tech platform. And that's why I want incubators to include this model and also unions to start platform cooperatives. And that's why I want ethical social impact investors to consider them and create an amazing legacy of equality.
Now, I'm not here to tell you that this is, you know, this one model that will eradicate economic inequality forever. It's not right. But what we need is more variety in the economy. We need small unionized private businesses. We need employee ownership and we need that from cooperatives. We face big challenges, but here's what gives me a lot of hope. When markets fail and the safety nets of governments break, now people turn to each other, right? The people start to cooperate by forming food cooperatives, so that they can feed themselves during a crisis. They start to form platform cooperatives so that they can clean homes and still make a living wage. And when markets and governments for too long field to address structural racism and inequality people form institutions, right? Like the Black Panthers' free breakfast program for children and the AFL-CIO, the largest Federation of unions in the United States. So we saw democracy or the aspiration to participatory democracy spread across countries.
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