Recent Op-ed on cooperatives in Maine

Here is an op-ed piece I recently had published in the Bangor Daily News:

 

CONTRIBUTORS

Here’s what the Maine economy is missing: more employee-owned businesses

 

  • Susanne Ward, owner of Rock City Coffee Roasters and Rock City Cafe, is looking forward to transitioning the company's business model to that of an employee-owned cooperative.
Posted Nov. 09, 2016, at 11:18 a.m.

Maine’s economy faces “significant challenges,” to use a common euphemism. Newspapers across the state lament the decline of manufacturing, various disconnects between needed and available educational opportunities and the continued mixed bag that tourism offers as an engine of growth. Outmigration, stagnant wages and a “graying” population are the norm in many communities.

We hear of economic fixes, but they don’t seem to do much. Whether attracting more manufacturing via tax breaks, trying to grow our own innovation economy, attempting to create a better system of higher education or nurturing home-grown business, there are flickers of hope here and there but a lack of critical momentum.

There are no silver bullets out there, but in a new report produced by the Cooperative Development Institute, a New England-based business assistance organization, we argue that cooperatives and employee-owned businesses can be the change the Maine economy really needs. We show how this business model could grow Maine’s economy, reverse demographic decline and foster widely shared prosperity.

We envision a Maine economy in 2030 that is a much more diversified, with the linchpins of this emerging economy being businesses owned by groups of consumers, workers, producers and independent businesses.

In this economy, traditional investor-owned firms and sole proprietorships still outnumber cooperatives, but the cooperatives are critical in providing an economic, social and demographic spark that builds widely shared prosperity in Maine. Selling to employees becomes a common business succession strategy, anchoring businesses in communities. Skilled craftspeople, software writers, artists, farmers, machine tinkerers, new Mainers and hosts of others see cooperative formation as an attractive, viable and familiar business possibility. Most importantly, we believe this prosperity would reach much deeper into the areas of Maine that have struggled the most.

Returning to 2016, there are, of course, already cooperatives in Maine. Credit unions, employee-owned businesses, and electricity, food and fishing cooperatives are scattered across the state, and the report profiles many of them.

But the transformative nature of an economy anchored by cooperative and employee-owned businesses remains to be realized in Maine. It is time to recognize this potential. Cooperatives can create tremendous efficiency within a business and across cooperating businesses. Employee ownership, whether as a worker cooperative or an employee stock ownership plan, in particular provides an incentive for businesses to invest in their workers and workers to invest in the business, thereby increasing productivity. The possibility of being an owner can attract key talent, and it can turn a perhaps-unenviable service job — think the classic “flipping burgers” — into a viable career track with real possibilities of financial upward mobility and the status that comes from business ownership.

Cooperatives exist to meet the needs of their owners, not outside shareholders, so they are much less likely to leave a community to save a few bucks on labor costs, cheaper wood fiber, or at the whim of a distant boardroom. Cooperatives build social capital and increase community engagement, and they are directly associated with poverty reduction and positive social outcomes, particularly for economically marginalized groups.

One example we can look to is Finland, a nation similar to Maine, with its peripheral and rugged geography, long winters, historical economic reliance on natural resources and agriculture and a small, sparse and homogenous population. In the early 1990s, Finland was at a crossroads, facing economic challenges similar to Maine’s. Today, it has the greatest concentration of cooperatives of any country in the world, and Finland is among the top 10 nations on every measure of economic and social progress. This is not a coincidence, and it did not happen by accident. Rather, it was the result of conscious policy choices.

Maine has the potential to replicate this kind of success, but we must take steps to promote and nurture what we call a “cooperative ecosystem.” We need to set goals and priorities, legislate supportive policies, incentivize investment capital and provide education in entrepreneurship and cooperation. Our report proposes an agenda that would build a cooperative ecosystem of public, private and philanthropic institutions, policies, incentives and finance. While our proposed path is ambitious, it is achievable, and it would go a long way toward building a prosperous, equitable economy where all Mainers — young and old, new and longstanding — can fulfill their needs and aspirations.

Davis Taylor, Ph.D., is a professor of economics at the College of the Atlantic in Bar Harbor. He is a member of the board of directors of the Cooperative Development Institute.