When Is a Co-Op Not a Co-Op? When Vested Interests in California Want to Keep Platform Workers From Having Power

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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.

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  1. philnc

    Rick Wolff is going to _love_ this (I haven’t heard him or anyone else over @DAW comment on it yet), and not in a good way. Seems like it could be the TPP of worker regulation, with organized labor somehow along for the ride? Need to go dig up the latest text today after work and try to parse what it actually says, but going to forward the link to @DAW in the meantime for their comments.

  2. Rod

    These are the names and faces of the leaders of SEIU pushing this.


    maybe it’s just a spelling thing with them–greasy people like greasy words, ime.

    past tense: co-opted; past participle: co-opted
    appoint to membership of a committee or other body by invitation of the existing members.
    “the committee may co-opt additional members for special purposes”

  3. Larry Y

    I wonder who really wrote this legislation. Looks like SEIU was maneuvered or co-opted to give the proposal a veneer of pro-labor.

    Being California, this has the fingerprints of the corporate/tech Democrats and their assorted NGOS and think tanks.

    1. diptherio

      The report linked to in the article, and in my comment below, comes from the UCLA Labor Center and SEIU-Healthcare Workers West. From what I can tell, they are the brainiacs behind this bill.

  4. chuck roast

    Sounds like the state would set up a cartel. The weirdest cartel I ever heard of. The word “cooperative” is simply a veneer. How about “The California Co-Prosperity Sphere”. Unseemly from the get-go. Investors, owners and workers all share in race to the bottom. We are truly through the looking glass when something as awful as this surfaces as a subject for discussion. So, cui bono?

    I’m guessing that the SEIU is doing a shell game here. They create or corral some knuckleheads to write, carry and popularize this creature, and if it flies they will get their “dues” and the worker/owners will get the shaft. If things fall apart, they can say that they tried their darndest to improve the bill, but in the end they had to kill it in order to save it. Labor unions…enemies of the worker/co-operative movement everywhere.

    1. diptherio

      “Labor unions…enemies of the worker/co-operative movement everywhere.”

      Well, no actually. It’s not quite that cut and dried. There are actually several worker co-ops, like Collective Copies in Florence, MA, for instance, that are both (real) co-ops and union members. And there are orgs like the Cincinnati Union Co-op Initiative that are doing good work bringing the two “movements” (I hate that word, but don’t have a better one) together in actually encouraging ways.

      But some unions, yes.

      1. Matt Noyes

        I would add the UE, which organizes worker cooperatives like New Era Windows as well as employees of consumer cooperatives like Hunger Mountain Food Co-op. The past two Labor Notes conferences have also had sessions on unions, workers centers, and worker cooperatives. Just yesterday a story appeared about workers who unionized and then created a worker co-op.

        The “innovation” here is the application to cooperatives of bureaucratic, top-down models of worker organization created by union leaders who “don’t care a rat’s ass” about democracy. SEIU, especially UHW-West, has pioneered this model since the late 1990’s. Herman Benson, the most astute critic of their approach, called attention to it early on. https://www.dissentmagazine.org/article/hybrid-unionism-dead-end-or-fertile-future

        Cooperatives, especially if organized to weaken worker ownership and control, offer bureaucratically inclined leaders all the benefits of an employer-friendly union without the protections for member rights provided by union constitutions and that pesky LMRDA.

  5. diptherio

    Well, this is not what I was expecting to wake up to :-)

    Something I don’t mention in the article, is that you have to read this report from SEIU-UHW and the UCLA Labor Center to even figure out that this bill is aimed at platform gig-workers . The bill itself, taken at face value, is simply to create a worker co-op federation, full stop, and as of right now, there are no co-ops of gig workers in CA, or anywhere else (at least not to my knowledge). If I hadn’t gotten into a twitter conversation with some of the SELC staff, who pointed me to the report, I wouldn’t have been able to figure out what the familyblog they were trying to accomplish. As a couple of existing co-op federations mention in that twitter thread, we’ve never needed special legislation in the past to set up co-op federations, so why would we need it now? The only answer I can come up with is that creating it via legislation will get it more press that otherwise…and allowing the Governor to appoint the initial board helps ingratiate the Dems (or at least the gov) to the bill’s authors.

    Apparently, this is the SEIU’s attempt at getting some type of sectoral bargaining, though it seems like to make that work, they’d have to convince (at least) a preponderance of workers to sign-up with with one of these CLCs…which sounds like a stretch.

  6. diptherio

    Another thing to add that didn’t make it into the article. The bill creates a special position for “worker voice specialists.” I have no idea what that is, and have never heard of such an occupation before, but if I had to guess I’d bet that in practice it turns out to be a union staffer. Just one more bit of strangeness in this exceedingly strange piece of legislation.

  7. Mike Elwin

    Put this together with the unacceptable delivery workers’ legislation in NYC, the forced unionization behind the PRO Act’s quasi-employee status for independent contractors, California’s and other states’ forced reclassification of independent contractors. What do you have? A deeper strategy than just reclassifying independent contractors. Something along the lines of shared control of low-paid workers forced on them by unions and management?

    The common thread here is populations of mostly-ignored workers subject to legislation written by supposed supporters entirely without their participation.

    I view this through the lens of a lifetime independent contractor, so, yes, I’m a biased observer. But there’s clearly a national strategy to drag independent contractors into unions, kicking and screaming though we might be. Now a major union is going after another group of workers without their consent.

    This stuff is makin’ me suspicious.

    Nothing for us without us.

    1. lambert strether

      > The common thread here is populations of mostly-ignored workers subject to legislation written by supposed supporters entirely without their participation

      Standard liberal Democrat fare, in other words

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