Apple recently posted the largest corporate annual profit in history, clearing $53.4 billion in a recent 12-month period. Apple is an international technology sensation, organized as a traditional corporation and headquartered in Cupertino, California. It employs well over 100,000 workers. Forbes reports that if Apple were organized as a worker cooperative (and assuming an equal share of revenue), each Apple worker would have received over $400,000 dividend on top of their salaries in 2014.
The general concept of worker cooperatives is that rather than being owned by traditional shareholder investors, worker cooperatives are owned by the workers themselves. They receive salaries for their labor and a dividend at the end of the year from the company’s profits. Each worker owns one share in the company and therefore has one vote on all issues. Thus, no one can unilaterally make a decision that will affect the company. Everyone gets an equal right to control the company.
The first thing naysayers of worker cooperatives will say is “but, Apple isn’t a worker cooperative and worker cooperatives are unable to grow to the scale of a company such as Apple.” However, contrast Apple with a company from Spain named Mondragon, which was founded in 1956 as a worker cooperative. Mondragon now employs almost 75,000, and it most recently reported annual revenue was about $16 billion. Under its wage ratio structure, Mondragon’s field and factory workers earn about 13% more than comparable private sector jobs.
Yes, Mondragon is slightly smaller than Apple, but it’s a scale that demonstrates that employees can do better and companies can continue to grow. All companies face the same problem as they grow -- recruiting good people. Finding the right people to join the team is most important factor in whether a company is able to succeed at scale. Worker cooperatives have the ability to attract the best talent because they are able to provide opportunity for ownership to the employee. A capable person is incentivized to join a worker cooperative because they will own a piece of the company, instead of simply earning a flat wage.
Worker cooperatives are not for everyone, but they do have some advantages over more traditional business forms.
Fans of this business model point to several advantages:
True engagement by employees in the business;
Enhanced focus on safety and work conditions;
Increased worker income in good years, leading to increased spending in the economy;
Job protection in bad years; and
Increased tax income for governments, as the increased amount of income subject to personal income tax would likely render more yield than current capital gains taxes imposed on traditional shareholders.
Every business model has its strengths and weaknesses. To learn more about worker cooperatives and to explore which business form makes the most sense for your company, make an appointment with us today.
This article is a service of Satin Legal, Inc. We offer a complete spectrum of legal services for businesses and can help you structure your operations for success. One of our primary services is a Business Protection Strategy Session, in which we guide you through the right choice of business entity, location of business entity, start up agreements, intellectual property protection, employment structuring, and insurance systems you need to start your next business and succeed right out of the gate. Call us today to schedule a time to have a conversation!