More U.S. Businesses Are Becoming Worker Co-ops: Here’s Why

Many businesses in the U.S. were founded as worker cooperatives. But a growing portion–as many as 40%–of co-ops in the U.S. are born out of traditional workplaces like A Child’s Place, whose owners decide to sell the business to their employees. As baby boomers, who own around 12 million businesses across the U.S., prepare to retire, around 70% of their companies are expected to change hands. Increasingly, children are not taking over businesses from their parents, so small business owners must look to sell or risk closing down and losing all their assets from years of investment.

But instead of selling to a private owner, there’s a real opportunity amid this “silver tsunami” to radically scale the presence of worker-owned cooperatives in the U.S. A study from Rutgers found that converting to employee ownership boosts profits by as much as 14%, and doing so does not come at a detriment to wages. Rather, it’s the reverse.

After A Yard & a Half converted to a coop in 2014, average wages have increased from $17.02 per hour to $19.29 per hour despite adding more employees, and revenue has grown to $3.2 million from $2 million. Worker co-ops are still a business, so the employee-owners have to learn the same management and strategy skills that enable companies to grow. The main difference: It’s the workers themselves that reap the benefits of that growth.

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