Let’s Pass the Workers’ Cooperative Law in RI: Guest MINDSETTER™ Stewart

Tuesday, June 27, 2017

Guest MINDSETTER™ Andrew Stewart

 

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RI State House

Summertime on Smith Hill is a drag for everyone involved and I wish our legislators a speedy recess. However, there is one key piece of legislation that it behooves me to request some activation from those who I otherwise would prefer to leave respectfully in peace and it is for the creation of workers cooperatives in House Bill 6001 and its parallel Senate Bill 676. 

If our elected officials can please streamline the passage of this legislation there are many people across this state who would be overjoyed and able to begin to get to work.

What are workers cooperatives? 

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The United States Federation of Worker Cooperatives (USFWC) offers for definition “Worker cooperatives are business entities that are owned and controlled by their members, the people who work in them… The two central characteristics of worker cooperatives are: (1) worker-members invest in and own the business together, and it distributes surplus [residual profits] to them and (2) decision-making is democratic, adhering to the general principle of one member-one vote.” 

It is an economic arrangement that synthesizes the idealism underwriting aspirations striven for by small business owners and organized labor unions, two concepts which have otherwise been considered anathema for decades.

In a traditional workplace arrangement wherein you have an existing incorporated entity, the employees pool their resources and capital, buy out the ownership, and hire the boss to be one among equals with them, creating a democratic arrangement that is not just sustainable but, according to academic literature, has a higher rate of success than traditional small business arrangements that are inclined to failure within the first five years of operation. 

These are all well and good for reviving the local economy because it provides a stabilizing booster to the level of demand in Rhode Island in a bottom-up fashion as opposed to the clumsy, neoliberal top-down manner currently utilized by Gina Raimondo and the Commerce Corporation. Instead of throwing away millions on absurd and unmerited projects with low chances of success, such as Joe Paolino's efforts to get a state subsidy to convert one of his Kennedy Plaza buildings into a luxury hotel, the state can provide an infrastructural benefit to a system that has higher probability of success.

But it is in regards to how cooperatives can benefit those who find themselves relying on the 'gig' economy, part-time work, or simply are totally unemployed that this law would be truly amazing. Such individuals would be able to group together and create worker-owned employment agencies that could be contracted to employers. The schematic for such a novel business schematic is laid out by 'A Technology Freelancer's Guide to Starting a Worker Cooperative' authored by members of the Network of American Tech Worker Cooperatives (NATWC).

The Anti-Poverty Arrangement the State Needs

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This arrangement of workers would allow member-owners to create a small pool of employees who would be able to gain health insurance coverage under a small group healthcare plan through HealthSource RI that they would be able to augment this with a personal Health Saving Account (HSA). Furthermore they could use this assembly to formulate a retirement plan that could either utilize an IRA, a traditional 401k plan, or even create a pension plan if you build enough membership. 

Such an organization, if carefully formulated and developed in a way that centers its efforts on the poor, could prove to be the anti-poverty program that this state needs. The data we have on poverty is truly heartbreaking and needs to be understood within these contexts. A significant percentage of Black women in Rhode Island subsist daily on two fungible dollar bills a day. According to a recent report published by the Economic Progress Institute, “for every dollar of income in the median White household, the median Black household realizes just fifty-seven cents.” As of 2016, Black unemployment was 7.2% as compared to the white rate of 4.6%. Black underemployment is 1.7 times greater than whites, meaning underemployment for Blacks in Rhode Island is 14.8%. In education, 34% of whites have a Bachelor's whereas 19% of Blacks have graduated college. Over a 15-year period, black unemployment doubled white unemployment, reaching 157% in 2016. The median Black wage is 71% of the median wage of whites. These numbers indicate a kind of degradation caused by sustained systemic racism that should be the definition of a crisis. Worker cooperatives could provide the opportunity for much-required aid in multiple dimensions of this perilous and painful topic.

Speaking from my own perspective, I have now for over a year alongside my fellow freelancer Rob Duguay, one of the best music journalists in not just the Ocean State but perhaps on the East Coast, been trying to legally formalize the creation of such a business, the Rhode Island Media Cooperative. In this regard it would utilize the artistic talents of people in any venue that can be deemed media to generate a living for such people. South Providence, Pawtucket, and many other communities are chock full of aspiring rappers, singers, writers, poets, and artists who define a substantial labor surplus. This law would create an absorption module for this surplus and put them to productive, meaningful work on that which is their passion and joy, art, as opposed to boring 9 to 5 drudgery that wastes such talents. With the new fiasco of TrumpCare coming down the trail, it could provide a framework of relief for myself and many fellow workers who otherwise would be unable to find decent healthcare. 

These freelancer cooperatives are designed from the foundation to have quality controls and assurance of delivery that simply is not provided via Craigslist. And whereas the Koch brothers and corporate Libertarians of the world posit a utopian notion of freedom before creating a business environment only favorable to them and their cronies, worker-ownership materializes these possibilities with a system that prevents abuse from the start. Furthermore, such an enterprise, when applied to domestic and agricultural workers, would effectively and with complete legality work around the historical and undeniably racist exemptions of the National Labor Relations Act that has been the bane of workers of color over the past eight decades. Worker-owned housecleaning and farm hand agencies would improve services for clients and quality of life for maids, butlers, cooks, doormen, and fruits/vegetable pickers while reducing costs for both.

What?

Yes, if such a freelancer cooperative were to develop a large enough number of worker-owners, they would be able to utilize tax credits and other legislative elements that are seen as favorable to big businesses. Overnight a paradigm would be shifted to create a genuine type of economic freedom for working people.

So please, let's get these bills turned into law as soon as possible so I and my fellows can get to work!

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Andrew Stewart is a member of the Rhode Island Media Cooperative, an organization created for freelancers by freelancers which you can join for free.

 

Related Slideshow: Winners and Losers in Raimondo’s FY18 Budget Proposal

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Winner

Criminal Justice Reform

Per recommendations from the Justice Reinvestment Working Group, the Governor is proposing nearly $1 million in investments such as the public defender mental health program ($185,000), improved mental health services at the ACI ($410,000), recovery housing ($200,000) and domestic violence intervention, in her FY18 budget. 

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Winner

English Language Learners

Under the heading of “promoting 3rd grade reading,” Raimondo proposed adding $2.5 million to make English Language Learning (ELL) K-12 funding permanent.  The Governor’s office points out that RI is one of four states that doesn’t have permanent funding.

The suggestion was one made by the Funding Formula Working Group in January 2016, who said that “in the event that Rhode Island chooses to make an additional investment in ELLs, the funding should be calculated to be responsive to the number of ELLs in the system and based on reliable data, and include reasonable restrictions to ensure that the money is used to benefit ELLs — and promote the appropriate exiting of ELL students from services.”

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Winner

Car Owners - and Drivers

Governor Raimondo wants to reduce assessed motor vehicle values by 30% - a change that would reduce total car tax bills by about $58 million in calendar year 2018. Speaker of the House Nicholas Mattiello, however, has indicated that he might want to go further in its repeal.  

In her budget proposal, Raimondo also put forth adding 8 staffers to the the Department of Motor Vehicles to "address wait times."

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Winner

T.F. Green

The “Air Services Development Fund” would get an influx of $500,000 to “provide incentives to airlines interested in launching new routes or increasing service to T.F. Green Airport.” The Commerce Corporation set the criteria at the end of 2016 for how to grant money through the new (at the time $1.5 million fund).

Also getting a shot in the arm is the I-195 development fund, which would receive $10.1 million from debt-service savings to “resupply” the Fund to “catalyze development & attract anchor employers.”

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Tie

Minimum Wage Increase

An increase in the state minimum wage is part of Raimondo’s proposal, which would see it go from $9.60 an hour to $10.50 an hour.  Raimondo was unsuccessful in her effort in 2016 to bring it up to $10.10 — it was June 2015 that she signed legislation into law that last raised Rhode Island’s minimum wage, from $9 to 9.60.  

The state's minimum hourly wage has gone up from $6.75 in January 2004 to $7.75 in 2013, $8 in 2014, and $9 on Jan. 1, 2015.  Business groups such as the National Federation of Independent Business however have historically been against such measures, citing a hamper on job creation.  

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Tie

Cigarette Tax

Like the minimum wage, Raimondo is looking for an increase - in this instance, the cigarette tax, and revenue to state coffers.  Raimondo was unsuccessful in her effort to go from a tax of $3.75 to $4 last year. Now she is looking for an increase to $4.25 per pack, which the administration says would equate to $8.7 million in general revenue — and go in part towards outdoor recreation and smoking cessation programs.  

The National Federation of Independent Business and other trade groups have historically been against such an increase, saying it will hurt small businesses - i.e. convenience stores. And clearly, if you’re a smoker, you’re likely to place this squarely in the loser category instead. 

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Loser

Hospitals

As often happens in the state budget, winner one year, loser the next. As GoLocal reported in 2016, “the Rhode Island Hospital Association immediately lauded the budget following its introduction, and addressed that while it is facing some reductions, that it "applauds" this years budget after landing on the "loser" list last year.”

This year, it falls back on the loser list, with a Medicaid rate freeze to hospitals, nursing homes, providers, and payers — at FY 2017 levels, with a 1% rate cut come January 1, 2018. 

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Loser

Online Shoppers

The taxman cometh — maybe.  Raimondo proposed an “Internet Sales Tax Initiative” — which would purportedly equate to $34.7 million in revenues.

"Online sales and the fact that online sellers do not collect sales tax has created a structural problem for Rhode Island's budget — our sales taxes have been flat," said Director of Administration Michael DiBiase, of the tax that Amazon collects in 33 states, but not Rhode Island. "We think mostly due to online sales, we’re able to capture the growth. The revenue number is $35 million dollars — it improves our structural deficit problem. It’s an important fiscal development."

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Loser

Long Term Care Funding

The Governor’s proposal recommends “redesigning the nature” of the State’s Integrated Care Initiative, by transferring long-term stay nursing home members from Neighborhood Health to Medicaid Fee-for-Service and repurposing a portion of the anticipated savings (from reduced administrative payments to Neighborhood Health) for “enhanced services in the community.” “The investments in home- and community-based care will help achieve the goal of rebalancing the long-term care system," states the Administration. 

Cutting that program is tagged at saving $12.2 million; cuts and “restructuring” at Health and Human Services is slated to save $46.3 million. 

 

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