July | August 2017


 

 

 

 

 

Co-ops a Growing Form of Economic Activity

By Jennifer Burnett, Program Manager for Fiscal and Economic Development Policy
A form of business that is gaining popularity, but which often operates under the radar of economic development strategists and policymakers—is cooperatives. As legislators look to grow jobs in higher-paying sectors, the time for co-ops may have come.
Essentially, co-ops are businesses owned and run by and for their members. And they are more common than you might think. Co-ops include credit unions, which have at least 100 million members in the U.S. Utility cooperatives offer electric, water and telecommunication services. For example, electric cooperatives serve an estimated 42 million people across 47 states.
Some co-ops provide housing, transportation, health care and educational services. Retail consumer co-ops can look like your standard grocery store. Southern States, with more than 1,200 retail locations in 23 states, is one of the nation’s largest farmer cooperatives.
A 2009 study by the University of Wisconsin estimated at least 30,000 cooperatives operate at 70,000 places of business throughout the U.S. Those co-ops own more than $3 trillion in assets, generate more than $500 billion in revenue and pay more than $25 billion in wages.
Based on their unique structure, some studies suggest cooperatives may have a greater economic impact than their more traditional counterparts, including paying higher wages. That may raise the interest of policymakers looking to help low and middle income earners in their states get a boost.
After introducing House Resolution 3677, “Creating Jobs Through Cooperatives Act of 2013,” Congressman Chaka Fattah of Pennsylvania explained in a press release why cooperatives could lead the way in sustainable economic development and growth.
“Cooperatives are a special kind of economic stimulus,” Fattah said. “Cooperatives benefit the communities they serve while building opportunities for shared wealth. Cooperatives are truly vehicles for protecting the middle class and creating economic growth.
The resolution—which sought to establish a National Cooperative Development Center designed to increase economic development in underserved areas by promoting cooperative development—did not make it out of the House Subcommittee on Insurance, Housing and Community Opportunity. Fatah said, however, that co-ops deserve a closer look from policymakers.
“Co-ops bring communities tighter by encouraging residents to pool their skills and resources,” said Fattah. “They empower people to make decisions that will create opportunities that grow their communities and provide an added sense of belonging.” 
A 2012 study conducted by the National Cooperative Grocers Association found that for every $1,000 shoppers spend at their local food co-op, $1,604 in economic activity is generated in their local economy—or $239 more than if they had spent the same amount at a conventional grocery store. The same study also found the average wage and benefits packages offered by cooperatives are higher than those offered by conventional stores; conventional retailers paid $13.35 per hour, while cooperatives paid $14.31 per hour.
As state and local policymakers debate raising minimum wages across the country, some cooperatives have pledged to begin offering introductory wages beyond what is required by law. A Seattle grocery co-op, Central Co-op, made headlines last week by announcing it will offer an entry-level wage of $15 per hour. That places the store well above the median hourly wage for grocery retailers nationally, which was $10.28 in May 2013, according to the Bureau of Labor Statistics. Even for a high cost-of-living state like Washington, an entry-level wage of $15 an hour is significantly higher than the state median wage for similar positions and comes seven years ahead of a city ordinance that phases in a $15 an hour minimum wage.
“We are very proud to take a leadership position on wages within our industry along with our partners from the UFCW (The United Food & Commercial Workers International Union),” said Dan Arnett, general manager for Central Co-op. “Ensuring real living wages for all staff and exceptional benefits is a testament to our cooperative identity. Many will say we have taken a bold risk. I think we have simply shown the courage to live up to our community ideals.”
“It’s high time for cooperatives—a great idea that has emerged from and gained success in our urban neighborhoods as well as rural communities – to move onto the national radar,” said Fattah.
 
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