This piece was originally published in the 2016 print edition of Model View Culture. We get frequent questions about the basics of tech worker cooperatives, so we're sharing this here!
by Jack Aponte
In late April of 2016, I attended the Aspiration California Nonprofit Technology Festival in Watsonville, gathering with other technologists, nonprofit workers, organizers and activists to exchange ideas on how to better work for social justice through technology. I lead a session about alternative careers in tech after hearing that students from the Everett Program at nearby UC Santa Cruz were keen to hear about possibilities for making a decent living in tech while still being grounded in social and economic justice. Since that’s a pretty good description of my fourteen years in nonprofit technology, I was excited to share my experiences and advice.
Our small group included two young Latinx women who, as they approached college graduation, were eager to figure out how to work in tech in ways that didn’t reflect the dominant culture of nearby Silicon Valley. They talked about social and economic justice, immigrant and women’s rights, anti-racism, and how they wanted to work those things into their careers. It was inspiring to talk with young women intent on blazing a different trail, and I was excited to offer some hope for a viable path: starting or working at a tech worker cooperative.
Worker cooperatives are businesses in which workers also own and control the business. In 2010, after years of working as a freelance technologist for nonprofits, I teamed up with other politically aligned techies to create Palante Technology Cooperative. Now a team of six worker-owners distributed across the country, Palante works with progressive nonprofits, providing consulting and support services for their IT, website and database needs.
Like Palante, most worker cooperatives incorporate a set of widely agreed upon cooperative principles established in 1995 by the International Co-operative Alliance; I’ll illustrate those principles below by describing how I’ve seen them applied at my work and in other tech coops I’ve come to know.
Voluntary and open membership. This value states that a cooperative should be explicitly open to all people who can contribute to the group and are willing to accept the responsibilities of membership, “without gender, social, racial, political or religious discrimination.” When we began to research worker cooperatives as a structure for our own new company, I was happily surprised to learn that this business model has anti-oppressive values built into it. As an Afro-Latinx and a queer and genderqueer person who was assigned female at birth and continues to be read as a woman in my day-to-day life, this felt like an especially good foundation on which to build a tech company. Few other industries demonstrate the extremes of inequity and discrimination based on race, gender, and other marginalized identities that exist in tech, so it felt especially important that we counter that in our own tech business.
In most cooperatives, new workers go through a transition period where they learn about the coop, gradually taking on more responsibilities and participating more in the decision-making process. At Palante this worker-to-worker-owner transition period spans nine months, with periodic evaluations and check-ins. If all goes well, at the end of those nine months the worker becomes an equal owner of the company.
Democratic member control. Worker-owners directly and equitably control the cooperative. In large cooperatives, democracy is often representative, with elected and regularly rotated members making major decisions and remaining accountable to the rest of the membership. At small cooperatives like Palante it’s direct democracy: one member, one vote on all decisions. This non-hierarchical structure is as rare in the tech industry as it is in business in general; most businesses concentrate power at the top of a hierarchical structure and make decisions with little to no input from the majority of workers who will be affected.
Like many worker cooperatives, Palante is also a collective, with major decisions going through a formal consensus process with the aim of reaching resolutions with which every worker-owner can comfortably agree. Our decision-making process defaults to a majority vote only after two unsuccessful attempts at reaching full consensus, with a cooling off period between attempts to allow folks to step back, reflect, and have smaller group discussions in the interest of finding common ground.
This is not always an easy process! Even in groups of individuals that are overall in great agreement and alignment, consensus can be a laborious, time-consuming and emotionally exhausting process. That said, the benefits greatly outweigh these challenges. Although no process or structure can fully overcome the societal inequities that are often exposed in times of conflict, consensus-based decision-making goes far towards ensuring that each person has a substantial say, and that decisions aren’t bulldozed by an unsympathetic majority or a forceful minority.
Member economic participation. Each member helps manage the financial resources of the cooperative in an equitable manner. Unlike traditional business structures, where the boss and other higher-level staff members often work less than lower-level employees while making more money, at a worker cooperative each member contributes an equitable amount of labor and receives a proportionate amount of the collective benefit. Compensation can take many forms: wages and salary, health and other forms of insurance, vacation and sick time, family medical leave, sabbaticals and expenses. At Palante every worker (non-owners included) receives the same hourly wage, vacation and sick time, and health benefits. All types of approved work are paid at the same hourly rate, regardless of how much income the work brings in or whether the work is billable at all; everything from sending invoices to running payroll to sales to technical work itself is paid equally, demonstrating that all of the work is important to the cooperative.
Worker-owners are also entitled to patronage, a share of a cooperative’s profits after all expenses (wages, insurance costs and other benefits, corporate taxes and insurance, purchases and financial reserves). Patronage is divided equitably between all coop members; at Palante, each worker-owner receives patronage distributions in proportion to their share of the total hours worked by all members of the company.
Each worker-owner also contributes equally to the financial capital of the coop to help ensure adequate and stable financial resources over its existence. This often comes in the form of a buy-in, a financial investment each owner makes upon joining. Palante’s current buy-in is $3,000; each new worker-owner can establish an affordable payment plan so that the buy-in doesn’t pose a financial burden. Most worker-owners choose to use their first few patronage distributions for the buy-in so no cash comes directly out of pocket. Keeping the buy-in affordable is important because business ownership, like home ownership, is too often out of reach for people who can’t access large amounts of cash or substantial loans with non-predatory terms, disproportionately affecting Black and Latinx people.
Autonomy and independence. This principle asserts that cooperatives must be autonomously controlled by their members; if they do enter into agreements with other organizations or raise capital from outside sources, they must do so on terms that maintain members’ democratic and autonomous control of the cooperative. This is a sharp contrast to many startups and other companies that are beholden to their boards and stockholders--people who have invested capital but not labor yet still directly and indirectly dictate how the company makes decisions.
Since most venture capitalists and other typical investors are investing their money to make major bank rather than out of the goodness of their hearts, worker cooperatives face some unique challenges when trying to find funding. Palante’s starting costs were relatively minimal; as a coop that provides consulting services rather than creating entirely new software or hardware, we didn’t have to fork out lots of cash for equipment (this makes me wonder if prohibitive cost is why most tech cooperatives provide services rather than create products). We could do our work from anywhere, so didn’t have to rent in extraordinarily expensive NYC; we were working primarily with free and open source tools. Those of us who had been freelancing for nonprofits prior brought a fair amount of work in and were able to drum up more; this all added up to not needing any outside capital to get started.
Palante was lucky; avoiding outside investment meant we were beholden only to ourselves and our clients. However, many tech cooperatives do need an injection of initial money to get started. Luckily, as the US Federation of Worker Cooperatives (USFWC) has documented in “Financing Resources,” a growing number of financial institutions are familiar with worker ownership and have created programs to support them, including substantial loans and financial consulting.
Education, training and information. As an activist for social and economic justice, another feature that attracted me to the worker cooperative model is the explicit commitment to education and training. When we formed Palante it was important to us that the business equitably enrich each worker-owner for both collective and individual empowerment. We therefore devote a substantial amount of resources to professional development. We encourage taking the needed time away to read articles and books, practice coding, watch webinars and attend conferences. Not only do we pay for those resources, but we also pay the same hourly rate for the time spent on those activities that we do for any other form of work.
Cooperation among cooperatives. Palante works in close alignment with many other tech cooperatives across the United States, often ones who provide the same kinds of services to the same sorts of progressive nonprofits (there’s a good list of tech worker cooperatives and related resources at techworker.coop). Since there’s neither an infinite number of nonprofits nor infinite nonprofit dollars to go around, we often end up competing with those coops for the same jobs and resources. Despite that scarcity, I’m always proud to see how our tech cooperatives come together to support each other, sharing information and resources, referring jobs to each other, and generally doing all we can to see each other succeed.
This collective spirit is also reflected in the existence of a number of local, regional, national and international organizations that work to support new and existing worker cooperatives; these include the previously mentioned USFWC, the Democracy at Work Institute, the Network of Bay Area Worker Cooperatives (NoBAWC, cleverly pronounced “no boss,”) and the NYC Network of Worker Cooperatives.
Concern for community. Worker cooperatives are often described as having multiple bottom lines, with success measured on a number of metrics besides profit (see the “Worker Cooperatives” resource at Co-opLaw.org). At many traditional tech companies, profit is valued heavily over other metrics such as worker physical and mental health, political values, diversity and anti-oppressive practices; in turn, these other bottom lines suffer. At a worker coop, all of the multiple bottom lines set by the members are given attention.
Concern for community extends beyond a cooperative’s members; many coops have a strong focus on giving back to their neighborhoods and cities, nonprofits connected to their companies’ work, industry associations and more. At Palante, workers can dedicate paid work time to community projects, free workshops and resources; we support open source projects like CiviCRM and Backdrop; and we support the nonprofit organizations for whom we work through event sponsorships, donations of free work, and sharing lessons learned.
A better way
By building our cooperative upon these principles, supplemented by our politics and dedication to social and economic justice, worker-owners at Palante and other tech coops are able to shape our own deeply rewarding careers in technology, unrestricted by the constraints and bitter compromises that characterize more traditional careers in the industry. That said, forming a worker cooperative is no magic bullet for the challenges that all new businesses face. Even in a horizontally-structured collective it takes a great deal of diligence, commitment and time to keep the organization running equitably and non-hierarchically. The systems of power, privilege and prejudice that marginalize and exclude so many from the larger tech industry also affect tech coops, manifesting in interactions both between coop members and with clients, other companies, and other organizations.
Those systems also impact who winds up working at tech cooperatives, and who is able to choose the potentially lower earnings that come from working at a tech company with bottom lines other than profit. (See Gabrielle Anctil’s MVC piece, “Can Coops Revolutionize the Tech Industry?”) Since we’re not exactly making megabucks implementing open source solutions for frequently small and cash-strapped nonprofits, we’re also faced with challenging decisions regarding benefits and other business expenses; our desire to provide ourselves with excellent wages and benefits that reflect our concern for workers’ rights and well-being is always constrained by earnings and cash flow. And finally, being a business owner is just stressful. It’s a heck of a lot of responsibility, not only for your own financial well-being and professional success, but also for that of your fellow workers.
Despite the challenges, I can’t imagine a better job than the one I have now. As a queer womanish person of color, it is invaluable to work in a tech company intentionally structured in opposition to the systematic exclusion of people like me from the traditional tech scene. Our personal politics inform not only the internal nature of our company but also the nature of our outward-facing work, from our ongoing efforts to help our clients advance their vitally important missions for social and economic justice, to our commitment to open source tools designed with the needs of our movements and communities in mind. As in all things, the means by which we do our work have thoroughly shaped the end results; this wealth of empowerment and fulfillment is a direct result of the worker cooperative structure.