Yves here. Naked Capitalism reader Josh Davis has been roused to Say Something about the bizarre California Assembly Bill 1319, which pretends to advance the interest of co-ops. But as Josh explains, no existing co-op would want to have anything to do with AB 1319’s federation of co-ops, since their envisaged co-ops don’t feature employee ownership or control! This bill is yet another vehicle for the continued oppression of platform workers, who have been starting to organize to get better pay and improved conditions.
By Josh Davis, Content Manager at Grassroots Economic Organizing (GEO)
The views expressed here are my own, and do not represent an official stance of GEO. Complaints, concerns, and general ire about what you are about to read should be directed to josh[at]geo[dot]coop. Thank you.
This last fall, voters in California voted to allow Uber, Lyft, DoorDash and other platform companies to continue (mis)classifying their employees as independent contractors. This was a major set back not only for the workers on these platforms, but also for the unions who would like to represent these workers, as federal law prohibits independent contractors from bargaining for a traditional labor contract. Now the unions (or at least one of them) are trying a different tactic, this time one involving “worker co-ops.”
On its face, Assembly Bill 1319 is a very strange creature. The bill would create a “Federation of California Worker Cooperatives” that would not operate like any other co-op federation I have ever heard of. The member co-ops of this state-created federation would not be allowed to determine their own policies for hiring, firing, compensation, or any other fundamental business decision. These policies would all be set by the federation, and would be implemented in the individual co-ops by management employed by – and answerable to – the federation. Member co-ops would not be allowed to select or hire their own management.
Sounds bizarre, right? The second cooperative principle requires that “members control their business by deciding how it’s run and who leads it,” while principle four states that cooperatives must maintain their “autonomy and independence.” How can either of those things hold if worker-owners are prohibited from hiring their own managers, or determining the most basic aspects of their business? The short answer is that they can’t. AB 1319 would, so far as I can tell, create co-ops that are not actually co-ops.
Of course, no existing worker co-op would ever agree to become a member of such a federation. How could they? What worker-owners would agree turn over their decision making to the three person board of a statewide federation? But AB 1319 – despite it’s pretensions to creating a federation for California worker co-ops – is not actually geared towards any of the currently existing worker co-ops, and it seems doubtful that the bill’s authors (mainly the SEIU, from what I can tell) expect any of them to join. Instead, this federation’s member co-ops are intended to be “cooperative labor contractors” (CLCs). These CLCs would be composed of platform workers and would negotiate with platform companies on their behalf…or rather, the federation of CLCs would negotiate on their behalf, as member CLCs would be prohibited from setting their own policies.
I have a number of problems with this proposal. The first is the one I’ve already mentioned: a “worker co-op” wherein the members do not control the the conditions of their labor, or the policies of their enterprise cannot rightfully be called a worker co-op.
A second point of contention is that, if enacted, this bill would seem to cement the existing investor-owned platforms in place, providing them with a veneer of legitimacy, rather than seeking to replace them with worker-owned platforms. As a courier for Caviar put it in a report on gig-worker reactions to the bill, “Why not just have the workers own the actual platform?” Why not, indeed? Furthermore, if successful, this CLC system would make the creation of platform co-ops (and taxi co-ops and the like) even more difficult than it is now, by placing workers seeking to create their own co-op platforms in direct competition with the CLCs and their investor-owned clients.
Thirdly, the system contemplated by AB 1319 would remove liability for paying wages from the platform companies and instead place it on the CLCs and the federation. The question this raises for me is why the responsibility for paying wages should be moved from the platforms, who are the actual employers, and placed instead on worker-owned businesses? Why take on a legal obligation that rightfully belongs to the platforms? The answer would appear to be so that CLCs can use this release of liability as a bargaining chip in attempting to obtain other concessions from the platforms. This seems like a large and risky obligation for workers to take on, without any up-front guarantee of receiving off-setting benefits.
Fourthly, there is the issue that practically no one ever talks about in discussions of Uber and their ilk: that they are not profitable businesses and have no reasonable plan for becoming such. Uber has lost billions of dollars every year since its founding. DoorDash lost $149 million in the first nine months of 2020, despite a pandemic that saw the market for its services greatly expand. Instacart finally managed to turn its first profit during 2020, netting around $50 million…but that came after losing $300 million the year previously. If only we have 6 more years of pandemic, they may be able to make up their loses of 2019! As for all the previous years’ losses, well…
All of these businesses have been dependent on endless amounts of investor cash (i.e. dumb money) and media hype (i.e. dumb journalism) to maintain themselves as long as they have. None of them has presented any reasonable way to become profitable that stands up to the least bit of critical scrutiny. To put it bluntly, these are not the companies that workers should be hitching their hopes to. It’s only a matter of time before even the dumbest of the dumb money figures out that you can’t make a loss on every transaction and somehow make it up on volume.
Finally, I’ll add what is perhaps my biggest critique of AB 1319, “The Cooperative Economy Act”: it appears to have been drawn up by people who are not themselves cooperators. While the SELC, DAWI, Project Equity, and A Slice of New York were apparently brought in to provide feedbackafter the bill had already been drafted, it does appear that the bill was conceived of and written by people outside of the cooperative movement. Being asked for feedback after the fact is far different from being involved in the genesis of a policy; and as the saying goes, “nothing about us, without us, is for us.” This bill, well intended though it may be, is not by cooperatives, and not for cooperatives, at least in my humble opinion. It uses our name, while discarding our values, and that’s not something I think our movement should support. If the SEIU, is serious about working in solidarity with the cooperative movement, and wants to advocate for government policies that affect co-ops, they need to involve us from the beginning, and on a much broader scale than they have here.
Believe it or not, I have other critiques of this bill as well (an initial board appointed by the Governor, a strange dual-employment status for worker-owners), but I’ll leave those for later. For now, I just hope that this post can serve as a jumping-off point for further conversations about this piece of legislation and others like it that I think we’re likely to see in the future. You may not agree with my take on this. You may think I’m confused, or overly critical, or failing to show adequate support for the SEIU. That’s all fine by me, just so long as we actually have a conversation about it – because failing to talk openly about these issues will not serve us or anybody else in the long term, even if the discussion results in some short-term discomfort.