On Contact: Worker cooperatives
On the show this week, Chris Hedges discusses worker cooperatives with Niki Okuk, activist and founder of the worker cooperative Rco Tires.
Okuk founded Rco Tires in 2012. They've since recycled more than 300 million pounds of rubber, diverting 70 million gallons of oil from landfills, and with 16 employees, making it one of southern California's largest sustainability plants. Rco Tires creates alternative uses for trash tires, turning them into new products. Because of Okuk's progressive hiring and management practices, the cooperative provides stable jobs for local black and Latino residents who struggle to find employment because of past criminal convictions or their legal status.
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Chris Hedges: Welcome to On Contact. Today we discuss the building of worker cooperatives with Niki Okuk.
Niki Okuk: All start-up businesses are precarious. And that is certainly true and so few of them are able to survive. So, one of the key ways that worker cooperatives can grow can happen at the time of transition for an already established business. So, very often you have owners who are getting ready to retire. Their kids are not interested in taking over the business. So, that is an excellent opportunity to guarantee the longevity of that business by selling it to its employees. And as employees already understand the operations of the business, they usually just need to be brought up to speed on sort of more broader financial background and are able to then own and operate the business into perpetuity. We also believe, of course, in incubating new businesses, especially here in South LA where there’s definitely a shortage and for that, you know, we are working by building organizations that are capacity building first, right? That allow folks to learn about how to participate in democratic structures, and horizontal decision-making in order to create the framework that we’re going to need. As I mentioned, the ecosystem, right? And then we go back to thinking of Arizmendi and how the creation of Mondragon started with just a priest a few students, because you needed to really understand the principles of a solidarity economy so that we could start building those businesses based on those principles. People think, I think, at first, like, “Oh, it’s very complicated, there’s so many meetings and subcommittees.” But in reality, all of this work and very complicated structures are ready, right? The corporations that we work in, the way that we fit our human life into what our almost inhuman structures of work, is already a very complicated calculation, we’re just really good at doing it because we’ve been forced to here. However, we realized that we--there are great models to learn from all over the world that can allow us to create more humane structures for work.
CH: With the seizure of the economy, and the political system by corporations, and global speculators, along with the decimation of labor unions, workers that seek a living wage, union protections along with the share in the profits made in their neighborhoods are forming worker-owned companies. There are currently some 465 known worker coops operating in the United States, employing some 6,500 workers. These cooperatives are being set up in rural and urban communities. The majority of worker-owners are organized by women and people of color. Those normally shut out from the rules that would grant them power in a traditional workplace. The average worker-owner makes $19.67 an hour, almost three times the federal minimum wage of $7.25 an hour. On top of that, worker-owners receive an average of $8,241 at the end of each year as a cut of their company’s surplus profit known as patronage. Worker-owners tend to be involved in other aspects of community organizing and their businesses are often more attuned to the needs of the communities they serve. In 2011 Niki Okuk, armed with a business degree from Columbia University, founded Rco Tires, a tire-recycling business that create green collar jobs and focused on hiring formerly incarcerated workers. She argues that worker coops are the mechanism by which we can regain control of our economy and ultimately our political system. Joining me to discuss worker cooperatives is Niki Okuk. So, Niki, this--I’m very close to Ralph Nader and he argues, like you do, that resistance will be built from the ground up. And that’s really, I think, what you’re doing. Let’s talk a little bit about the--it wasn’t a worker coop although it was run as a worker coop, I think legally it wasn’t. But talk a little bit about your first foray into a worker coop.
NO: Yeah, sure. So, I founded Rco Tires after reading Van Jones book and thinking, “I need to make green collar jobs in my community.” But very quickly, you know, I realized that, you know, it wasn’t actually the environmental impact, which was outsized certainly for a company of our size. But it was the impact that we are making in the lives of the folks who are working there because so often, you know, our economy will discount, and demonize, and dismiss, you know, workers of color, especially ones that are formerly incarcerated or have challenges with their papers. And we found ways to create decent and dignified work. We, very early, on chose to unionize our shop in order for the workers to have a voice in how our business was operated. And it, you know, it led to some great exposure to the worker-ownership models that are happening across the country and across the world, right? And it really seeded what is now becoming a growing movement in South Central Los Angeles to build businesses that have a component of worker and community ownership.
CH: And, yet, you have some pretty powerful enemies. Corporations are, in essence, about monopolies. They have fixed legislatively and legally all sorts of mechanisms to punish small businesses, worker-owned cooperatives. They certainly don’t want to see the rise of this movement. Talk a little bit about the obstacles that are placed in front of worker coops.
NO: Yeah, certainly. I mean one of--one of the ones that plagued us was the competitive real estate landscape here in Los Angeles with rising rents and mass gentrification. We were displaced from our warehouse space multiple times. But, you know, also we found that, you know, in seeking out customer base, we found many customers who did not want to work with, you know, a unionized shop. You know, were not interested in working with businesses that were, like, black or women-run businesses. You know, so, we find ourselves, you know, building what we believe is, you know, an economic utopia for ourselves however surrounded on all sides by predatory capitalism. Even now, the downtown Crenshaw community that I’m working with is in the process of purchasing a large site. And the sellers, despite us having an excellent offer and a great plan, would not even entertain our bid. So, by presenting a new model, we present hope that I think, in also presenting a new model, we are presenting a--an explicit challenge to the models that they have told us are inevitable.
CH: You’re also punished--I mean, you, in particular, were punished because of your active support of black lives matter, which ended up affecting the business. Can you explain what happened?
NO: Oh, yes, certainly. My business, I had not necessarily sought to publicize my political views but I think that, you know, my customers knew that I was, you know, pro-immigrant and pro-black, and when there was some news broadcast of me at a Black Lives Matter protest it got circulated very quickly amongst my customers and folks were--it was also at the time of the Trump and Hilary election and folks were saying, you know, “You’re a feminazi, you’re a unionist, you’re a communist, you’re anti-white.” You know, all of these things, just because, you know, I was advocating for the rights of women, and people of color, and workers.
CH: And how did it affect the business?
NO: Yes, we eventually had to close our doors after we lost a good chunk of our customers.
CH: Do you think it was due to your political activism?
NO: Yeah. I believe in large part it was due to that. And, you know, we struggled on for a while despite customers leaving. But, you know, I recall very distinctly calling one and saying, “We haven’t heard from you a while.” And they said--I said, “Is it about the price?” They said, “No, Niki, it’s not about the money.” Right? And so that’s when you know that it’s not--it’s not about the money, it’s not about the service, it’s not about having a superior product or being a competitive business. And I watched that same playbook rolling out right now, you know, as I mentioned with the--with the Crenshaw community led effort to cooperatively own and operate one of our large commercial sites. No matter the fact that, you know, we come with the resources and the qualifications, we find that they say, no, in fact it’s not about the money, right? It’s about redlining, it’s about wanting to continue to popularize and this view that somehow development in our communities can only come at the cost of workers, and at the cost of housing, and at the cost of people of color, that that is the only way forward when we know in fact that there are alternatives.
CH: And this is about it’s a housing complex and what you’re fighting is gentrification, they want to make it luxury or high-end apartment units and you’re offering a bid, if I have that right, to make it accessible to workers’ low income housing, is that correct?
NO: Right, and to build a worker-ownership cooperative hub in Los Angeles, you know. We know that these models of worker-ownership and solidarity economy and sovereignty can work in places like Mondragon and in Italy and in places in Latin America, right? Where they’ve built ecosystems for cooperatively-owned businesses. However, in the United States, where so few people understand what cooperative economics looks like and what it means and they don’t participate in it in their local daycare or their local grocery store, that means that we have to create the ecosystem in order to incubate the businesses that are going to allow us to have a sustainable economic future in our community, both with housing, but also with the type of businesses and services we need and using the ones that we want to work in and own and really to see the rooted wealth that will grow over time in our communities if we can stop our displacement and then stop big box storage from moving in and extracting wealth from our neighborhoods.
CH: And, yet, the turn of the 20th century, we had a huge settlement movement in cities like Chicago, cities like New York that quite effectively created worker-owned enterprises, community houses, all of which was decimated. So, it’s not like this isn’t in our historical memory.
NO: Yes, certainly and it’s been such a part especially of black culture in the United States. There’s an excellent book called “Collective Courage” that call--that really, you know, covers the decades of black cooperatives coming together and pulling our resources in order to, you know, first buy freedom but then buy land and build businesses and build communities when we could not have access to traditional financing, or banks, or, you know, family inherited wealth. And so this is--this is such a deep part of our culture but it does have to be rebuilt and it does have to be defended because at all corners, we--at all turns we find ourselves confronted with folks who do not want to entertain the model.
CH: Well, and throughout American history, when blacks have successfully built economic models, they’ve been the victim of white violence, Ida B. Wells, the pioneer in terms of lynching, documented that those were lynched in black communities were not people who had, in any way, had accosted or been sexual predators towards white women, they were grocers and doctors and people who the white community felt was taking away economic income that they wanted.
NO: Yeah. No, and that’s so true in both the black community and now very much with the immigrant community, you know, this idea that we pose some sort of existential threat to America. When in reality it has been so much of our land, and our work, and our labor that has built the wealth here.
CH: And let’s talk about the mechanisms of how to build a worker cooperative. I mean, just lay out the kind of ABC for those who are interested and explain how it’s done.
NO: Yeah, certainly. So, all start-up businesses are precarious. And that is certainly true and so few of them are able to survive. So, one of the key ways that worker cooperatives can grow can happen at the time of transition for an already established business. So, very often you have owners who are getting ready to retire. Their kids are not interested in taking over the business. So, that is an excellent opportunity to guarantee the longevity of that business by selling it to its employees. And as employees already understand the operations of the business, they usually just need to be brought up to speed on sort of more broader financial background and are able to then own and operate the business into perpetuity. We also believe, of course, in incubating new businesses, especially here in South LA where there’s definitely a shortage and for that, you know, we are working by building organizations that are capacity building first, right? That allow folks to learn about how to participate in democratic structures, and horizontal decision-making in order to create the framework that we’re going to need. As I mentioned, the ecosystem, right? And then we go back to thinking of Arizmendi and how the creation of Mondragon started with just a priest a few students, because you needed to really understand the principles of a solidarity economy so that we could start building those businesses based on those principles. People think, I think, at first, like, “Oh, it’s very complicated, there’s so many meetings and subcommittees.” But in reality, all of this work and very complicated structures are ready, right? The corporations that we work in, the way that we fit our human life into what our almost inhuman structures of work, is already a very complicated calculation, we’re just really good at doing it because we’ve been forced to here. However, we realized that we--there are great models to learn from all over the world that can allow us to create more humane structures for work.
CH: Great. When we come back, we’ll continue our conversation about worker cooperatives with Niki Okuk. Welcome back to On Contact. We continue our conversation about building worker cooperatives with activist Niki Okuk. Let’s talk about Mondragon, you mentioned it. This is quite a successful worker cooperative movement in Spain. But it is an amazing phenomena and one that I think you hold up as a model. So tell us what it is.
NO: Sure. So it was actually during the Spanish Civil War, right? This community was very short on resources, as they say, had been like bombed into the Stone Age. And we’re thinking about how they were going to rebuild their community. And it was through sort of the pioneering efforts of a local priest and some young students that they started building this. And the first seed funding actually came from, you know, passing the hat in the community, which is something that we are also doing here in Downtown Crenshaw now. And through that passing the hat, you know, they purchased a--I believe the first one was a lantern or a heater, small heater factory. And moved it to their community and owned and operated it as worker-owners. Now, that first project has now grown into sort of a multinational, you know, industrial company that employs up to 80,000 people. And they build everything from bicycles to semiconductors. They have their own university. They have their own hospitals. Of course, they have. corporative housing and grocery stores, right? So it’s an entire community this now built around the worker--with the worker-ownership model and the businesses that are--that are operating there and selling goods all over the world are owned by the people who work in them. And so it’s from that model, you know, that there’s others like in Preston, right? In the UK, they chose to use an anchor institution and say that the city government was the one--only going to be purchasing from locally owned and cooperatively owned businesses. And they’ve learned now that they can recycle dollars, that they can build generational wealth, that they can create more sustainable businesses that are not sort of--that are not, you know, subject to the winds of global predatory capitalism, you know. Mondragon has been shown to be incredibly stable. They’ve had very low unemployment rates despite the last two major recessions that we’ve experienced in my lifetime. And so it’s those types of businesses that we believe that we can--we can seed and build here in the United States as well.
CH: How do you take on big box stores? So my--much of my family comes from rural Maine, Walmart moves in and they destroy the small businesses, the hardware store. They pay subsistence wages. They are union busters. They can underprice the local stores because they have the resources until they go out of business, and then, of course, they make that profit back. All the money is extracted out of the community. How do you confront that phenomena?
NO: Yeah. And then as soon as things get tough, they get going, right? So here in Los Angeles, we recently passed hero pay and in the food desert, that is South LA, Ralphs and Kroger have decided to close their stores. So now, we will no longer have any grocery shopping within miles of sort of the Crenshaw area. And, you know, we fought off Walmart and others, too, as they were looking to come into our neighborhoods for just this reason because here you have, especially after the uprising, the Rodney King uprising, so many of our storefronts were burned out. And, you know, the only businesses that stayed were our own businesses, businesses that our communities built and nurtured and sustained through all of these years of underinvestment in redlining in South Central. And now, when they see an opportunity, we have these large big box stores who want to come in, buy big real estates, say that they’re bringing something great to the community, but in reality, they pay, you know, they’re pulling out business, all of our small businesses. Pay our, you know, our mom and pop worker-owners, like, you know, minimum wage, subsistence wages, and then extract all of those--all of those funds to their--to their shareholders. So, you know, we’ve staged a lot of--a lot of fights for sure to keep those types of businesses away from our community. But at the same time trying to build an alternative, trying to build up these businesses that we believe will actually create jobs and sustenance. You know, very often, I think that our last few attempts at this have been concessions, you know, where a big box store would come in and say, well, what if we guarantee this many local hires and what if we guarantee this many local contractors will build the site, you know? And if we do this and if we do that, can we come? And at this point, I think, you know, the community has really put their foot down and said we’re not going to accept those types of concessions any longer. You’re simply not welcome.
CH: Aren’t the two mechanisms that are vital to fight against these global corporate forces, one, unions, but two, essentially cooperative banks, because banks are part of the problem. You mentioned redlining, but they have the ability to choke off funds on behalf of these corporate interests who they serve.
NO: Yeah. Certainly. And then I think of a great sort of example of that is just the recent funding that was available to small businesses through our--through our stimulus payments and our PPP loans, and things like that. You know, they so often favored white businesses, right? There’s entire studies now put out trying to decipher why black and brown businesses were not able to access any of that capital that was, you know, sort of pumped into the economy to try to back it up. And it was just, we don’t--we don’t have access to those banking relationships, you know. We have a historical context of being under invested and disenfranchised, and therefore don’t have sort of, you know, the balance sheet, right? You have to, like--to get an SBA loan, you have to put your home--you have to put your home on the loan. And if your community doesn’t have a high ownership rate, then you will very likely have a small business loan rate. So it’s also building the financial resources that we need. And there’s some great partners that have certainly come forward, you know, with the project, with the Rco tires project and other worker product--worker-ownership projects, and most recently, we’ve got some excellent resources like The Working World, the Seed Commons. We’ve got shared capital here in Los Angeles. We’ve got the La Union Cooperative Initiative. We’ve got the Co-op Lab. We’re just building a, you know, a more and more worker ownership resources. So, I recommend everybody take a look at workerownership.com--or.org. Sorry. In order to learn more about some of the resources that are available to these businesses, because relying on traditional financing and capital ultimately will not--probably not work. You’ll be denied, but ultimately not serve our purposes.
CH: One of the things that a lot of people who don’t spend any time in marginal communities don’t understand is that because of redlining, because people are trapped within those communities, rents are, in fact, quite high, first of all. And second of all, loans--to get loans, the interest rates are usurious and predatory? And that is, of course, another kind of mechanism to keep the poor, poor. Can you talk about those two forms of financial control?
NO: Yeah. Certainly. So, I mean, every--I think all of the parents and grandparents in my neighborhood have some story of how, in order to buy their house, they had to send a white friend to go purchase the house, and then they had to actually pay more than other folks were offering, you know, all cash or something like that in order to be allowed to buy homes where they were--where there were racially restrictive covenants or simply practices. And the same--the same is true now. As I mentioned, you know, when I owned and operated Rco Tires, I was--I was constantly looking for finance, and trying to access capital. But again, like, without generational wealth very often to back you up, the rates and terms at which this is available to you become usurious very quickly. And then even just today as I mentioned with the downtown Crenshaw effort, we’ve got the community coming together, raising a huge chunk of money, putting forward a bid on them all. The first bid was rejected. We’ve been offered in fact more. Our latest highest bid is, you know, like three to four million more than the next highest bid and yet they will not consider our offer. So this happens again and again, you know, this idea that we have to be more competent, better financed. They asked to see our bank statements, which they did not ask if any of the other developers. And it reminds me so much of the fact that my children and I, and my husband were walking down the street. We decided to look at an open home. And the woman, the real estate agent came out into the yard and crossed her arms and said “It’s a million dollars. It’s a million dollars.” She was telling us that we could not even come in and see the “open house” because we did not--she did not believe that we would have qualified to purchase it. Now, I can’t afford a million-dollar home, but I’m pretty sure that there’s plenty of us who are allowed to walk into open homes and look at them without being run off the lawn with their small children.
CH: It’s called racism.
NO: It’s just--it’s never ending it feels like.
CH: Let’s talk about generational wealth just to close in the last two minutes. Because I’ve heard you speak about that. And it’s an important point that because of the marginalization of black families that we often consider it a small kind of, you know, we may not--we may come out of the middle class. And so what we can reach back and rely on our parents for may be small, but when you’re a poor family, that is a huge divide. And it really means the difference from being able to start a business and not start a business. Just to close in the last minute and a half, talk about generational wealth and how it cripples people of color, poor people of color.
NO: Yeah. Absolutely. I mean something as basic as having, you know, your parents knowing that your parents have stable housing and that, you know, their rent is not going to be raised and they’re not going to get evicted, can give you that security that you say, okay, I’m going to take a leap of faith. I’m going to start a small consulting firm with me and my two computer science friends from school, right? That type of stability. If that doesn’t exist, then you just immediately go out and take the first job that’s available to you. And I’ve been really inspired to see that some of the donors that are coming forward on downtown Crenshaw are saying in fact that they realized that they have an inordinate access to wealth because of generational inherited wealth, and so much of that while having been, you know, extracted historically from these communities that for them, it is an opportunity to really--to return it. And I think that it’s going to take that time--that type of work in our country, both for healing, but also for an economic, sort of revival and recovery that’s going to be just an equitable, that’s going to create the opportunities for an economy that has participation and has the outcomes that we are all really hoping and dreaming for.
CH: Great. That was activist Niki Okuk on worker cooperatives. Thanks.