Worker cooperatives are businesses that are owned and governed by the people who work in them. Worker-owners have a voice in how the business is run and share in its success. Profits are typically distributed according to factors such as hours worked, job responsibilities, seniority, or compensation levels.
Worker cooperatives help create high-quality jobs, build wealth for workers, and strengthen local economies. They can be especially valuable for people who have historically faced barriers to business ownership and other economic opportunities.
Worker cooperatives operate across a wide range of industries, including food service, retail, manufacturing, transportation, and home health care. They are also among the fastest-growing segments of the cooperative economy in the United States, with much of this growth driven by immigrant, Latiné, Black, and other historically underserved communities. According to the U.S. Federation of Worker Cooperatives, there are approximately 1,300 worker cooperatives and democratic workplaces in the United States, employing roughly 16,000 workers.
Increasingly, worker cooperatives are being recognized as a practical strategy for expanding shared ownership, creating economic opportunities, and building community wealth.
Benefits of worker cooperatives:
- Workers have a say in how the business is run, instead of decisions being made only by owners or investors.
- Profits are shared with the people doing the work, helping workers build wealth.
- Jobs are often more stable, because the focus is on keeping the business healthy for workers and the community.
- Workers feel more invested in the success of the business because they are owners, not just employees.
- Money stays local, since profits are more likely to remain with workers and in the community.
- Ownership is more accessible, making it possible for people who couldn’t buy a business on their own to become owners together.
- Businesses can stay independent when an owner retires by selling to the workers instead of a larger company.
Examples of Worker Co-ops
Union Cab is a worker-owned cooperative in Madison, Wisconsin. Founded in 1979 by a group of taxi drivers, the company is owned and governed by its workers rather than outside investors. Today, Union Cab operates the largest taxi fleet in Madison, demonstrating how worker ownership can create stable jobs, quality service, and a strong local business.
Cooperative Care is a caregiver-owned home care company proudly serving Central Wisconsin for more than 25 years. Based on the cooperative model, our organization is built on the dedication, expertise, and compassion of the caregivers who own and operate the business. Today, Cooperative Care is made up of 50 skilled and committed caregivers who collectively provide more than 1,200 hours of service each week. Each team member brings unique talents, experience, and a shared commitment to delivering exceptional care that supports clients’ independence, dignity, and well-being.
Isthmus Engineering and Manufacturing
Isthmus Engineering & Manufacturing is an industrial worker-owned cooperative specializing in custom automation solutions and equipment. Although the U.S. manufacturing sector has faced challenges over the past several decades, Isthmus Engineering & Manufacturing has thrived and provided competitive incomes for its employees.
That business says its “employee-owned”. Is it a co-op? Maybe.
There are several kinds of employee ownership. The most common in the U.S. is an Employee Stock Ownership Plan (ESOP).
An ESOP is a retirement benefit that gives employees a financial stake in the company. Shares are held in a trust, and employees build up value over time. When they leave or retire, they usually receive the cash value of those shares.
But an ESOP is not the same as a worker co-op. In most ESOPs, employees do not directly own shares or have a meaningful vote in running the business. In a worker cooperative, workers both own the company and help govern it, typically with one worker, one vote.
So, when a business says it’s employee-owned, that doesn’t necessarily mean it’s a co-op. It depends on how ownership and decision-making are structured.
Resources
2021 Cooperative Governance Research Initiative: Worker Co-op Findings. UW Center for Cooperatives, 2024.
Worker Cooperatives in Wisconsin 2 Pager. UW Center for Cooperatives, 2023.
Board Training and Member Education: A Learning and Training Toolkit for Understanding Worker Cooperative Finances. UW Center for Cooperatives, 2018.
Worker Co-ops: FAQs about Employment Status. UW Center for Cooperatives, 2017
Worker Cooperative Definition. Democracy at Work Institute, 2015.
Case Studies: Business Conversion to Worker Cooperatives: Insights and Readiness Factors for Owners and Employees. Project Equity, 2015.
Successful Cooperative Ownership Transitions: Case Studies on the Conversion of Privately Heald Business to Worker Cooperatives. Democracy at Work/UW Center for Cooperatives, 2015.
Becoming Employee Owned: A Small Business Toolkit for Transitioning to Employee Ownership. Democracy at Work Institute, 2018.
Technical Service and Professional Services Providers for Employee Owned Businesses in the Upper Midwest. UW Center for Cooperatives.
Ensuring Your Legacy: Succession Planning & Democratic Employee Ownership. The ICA Group, 2016.
Think Outside the Boss: How to Create a Worker-Owned Business. Sustainable Economies Law Center and East Bay Community Law Center, 2016.
Worker Cooperative Case Study: Isthmus Engineering & Manufacturing. UW Center for Cooperatives, 2011.
An Owner’s Guide to Business Succession Planning. The Ohio Employee Ownership Center, 2008.
Startup Resources for Worker Cooperatives. Democracy at Work Institute.
In Good Company: The Guide to Cooperative Employee Ownership. Northcountry Cooperative Foundation, 2006.
Employee Ownership Structures. Democracy at Work Institute, 2015.
Creating Better Jobs and A Fairer Economy with Worker Cooperatives. Democracy at Work Institute, 2014.
Worker Cooperatives: Pathways to Scale. The Democracy Collaborative, 2014.
Immigrant Worker Owned Cooperatives: A User’s Manual. El Centro Humanitario/The Cooperative Foundation, 2012.
Sustainable Jobs, Sustainable Communities: The Union Co-op Model. United Steelworkers/Mondragon/Ohio Employee Ownership Center, 2012.
A Technology Freelancer’s Guide to Starting a Worker Cooperative. Network of American Tech Worker Cooperatives, 2009.
Worker Cooperatives in Wisconsin Two Pager. UW Center for Cooperatives, 2023.