Policies for cooperation

Policy proposals to support cooperative enterprise.

Advocacy and convening

  • Blasi et al. (2013)
  • Stephens (2015)
  • US S.1538 (2017): “to establish awareness of, and technical assistance for, the creation of employee stock ownership plans”

Antitrust

Conversion

Cooperative conversion as an alternative to breaking up monopoly firms

  • Schneider (2016): “Too big to fail” banks

Immunity

  • Hanna (1948): U.S. case law for agricultural co-ops and Associated Press
  • Pasquale (2017): Suggests a strategy of “professional licensure, such as the state bar for attorneys or medical boards”

Codetermination

  • US Congress S.2605: Calls for worker representation on corporate boards

Conversion and buyout incentives

How could these incentives be applied to early-stage companies so as to encourage such companies to design their early growth with this as a possible option in mind?

Credit union lending cap

Many worker co-op advocates believe that if credit unions had a lower cap on their business lending, they would be more able to lend favorably to worker co-ops, stimulating development.

Deregulation

  • Molk (2014), 942, on how regulation benefits investor-ownership: “Several agriculture and insurance cooperatives organized at a time when lax regulation led to market contracting problems that made cooperative ownership attractive. Because of today's more rigorous antitrust enforcement and heightened regulation of insurance companies, these cooperative advantages have diminished”
  • Molk (2014), 952: Often, “regulators do not distinguish among ownership forms” and should, reducing regulation in targeted ways for co-ops, while ensuring the co-ops are truly patron-owned

Financing

Loan guarantees

  • Michael (2017)
  • Stephens (2015), Kerr (2015) on Minneapolis
  • Wisconsin Senate Bill 460 (2017)

Low-interest loans

  • Colorado HB17-1214 (2017): “requires the office to establish and administer a revolving loan program to assist transitions of existing businesses to employee-owned businesses”
  • H.R.3677 (2011-2012) proposed loans for co-op startups
  • McCauley (2017): Congressional bill would establish a U.S. Employee Ownership Bank “to provide $500 million in low-interest rate loans and other financial assistance to help workers purchase businesses through an employee stock ownership plan or a worker-owned cooperative”
  • Michael (2017)
  • Schlachter (2016) on Madison, WI
  • See example of the Rural Electrification Act
  • Wisconsin Senate Bill 460 (2017): “loans, loan guarantees”

Taxation

Many cooperative statutes involve tax policies specific to cooperatives, often involving the non-taxation of members' capital credits held by the cooperative.

  • Blasi et al. (2013): progressive capital gains taxation, provide tax abatement only to companies with broad-based ownership
  • Michael (2017)
  • Molk (2014), 947: Tax-exempt bonds “would lessen cooperatives' debt costs and decrease the amount of equity they need”; recommends allowing such bonds only in the formation stage to encourage market discipline later in the life cycle
  • Molk (2014), 948: suggests, in the early formation phase, “to give cooperative members a deferral on income tax on the first $X of a cooperative's profits retained by the cooperative for future operations”
  • USDA (2013) offers a guide to U.S. tax treatment of cooperatives
  • Wisconsin Senate Bill 460 (2017): “tax benefits”

Incorporation statues

Organizational structure

  • Kelso and Kelso (1986): The proposer of the ESOP model also proposes Consumer Stock Ownership Plans (CSOPs), especially for public works
    • See this summary at the Center for Economic Social Justice
  • Menzani and Zamagni (2009); Fici (2015): Laws enshrining the powers of the Italian cooperative associations, including self-regulation and mutual financing

Preferred contracting

  • Michael (2017)
  • New York City policy requiring reporting on city contracts with worker cooperatives, see also Kerr (2015)
  • Stephens (2015)
  • Wisconsin Senate Bill 460 (2017): “procurement preferences to employee-owned companies”

Sectoral mandates

  • Molk (2014), 954: As for lawyers and doctors, require that firms in certain industries be owned in a cooperative manner

Service delivery

  • Antonio (2004): Italian social co-ops
  • Conaty (2014)

Subsidies

  • Blasi et al. (2013)
  • Molk (2014), 950: subsidies “provide direct, visible support for starting new cooperatives and should thereby have an immediate impact on cooperative formation” and “can be used to encourage cooperatives in targeted areas where they promise the greatest gains. This flexibility is also a potential drawback” for fostering uncompetitive businesses.

Technical assistance

  • Colorado HB17-1214 (2017): “requires the Colorado office of economic development (office) to engage the services of a local nonprofit organization that supports and promotes the employee-owned business model to educate the staff at the office on the forms and merits of employee ownership”
  • US H.R.3677 (2011-2012) proposed a National Cooperative Development Center and grants to local cooperative development centers
  • Madison, WI, directs city funds to CBOs and unions to increase co-op development capacity (Schlachter 2016)
  • McCauley (2017): 2017 US Congress bill, the WORK Act, proposes proliferation of worker-ownership centers
  • Michael (2017)
  • New York City has directly funded co-op developers (Kerr 2015; Abello 2016)
  • - “This bill provides updates and revisions to current law to support the expansion of employee-owned enterprises or worker cooperative businesses.”
  • New York Senate Bill S5349A: “establishing an advisory panel on employee-owned enterprises within the division of small business services”
  • Stephens (2015) recommends city-sponsored cooperative incubators
  • US Congress S.1538 calls for “providing technical assistance relating to a range of business forms and strategies that promote or facilitate employee ownership”
  • Wisconsin Senate Bill 460: “establishing a center for employee ownership in the University of Wisconsin System”

Laws and bills cited

Works cited