The ways we organize and value work are not preordained. They are determined by historical precedents, labor policies, regulatory and legal regimes, education level, available technologies, and social and cultural norms and ideals. Over the past several decades in the United States, income earned through the labor market has been the primary mechanism for achieving economic security and prosperity. Increasingly, however, wage-based work fails to provide financial security for many American families. Good jobs with living wages and health and retirement benefits are becoming far more scarce as income inequality increases. This growing income inequality is mirrored by a deeper and more fundamental inequality: wealth inequality. While income inequality reflects differences in annual salaries or other income from the labor market, wealth inequality refers to differences in net worth–a household’s total assets. Today, the top 1% of households hold approximately as much wealth as the bottom 90%.
In light of these economic shifts, a research team at IFTF set out to investigate how the structure of enterprise exacerbates inequality in the United States and how a future of more equitable business practices and a more humane economy might look. To do this, our research team conducted 25 in-depth interviews with 29 individuals who started or run Equitable Enterprises (EEs) or organizations that support them. We define EEs as forms of business that distribute their gains more equitably than most mainstream corporations do. EEs include various forms of cooperatives (co-ops), community enterprises, limited-profit companies (L3Cs), employee stock ownership programs (ESOPs), nonprofit organizations, and mutual benefit arrangements, in addition to some traditional for-profit businesses whose practices enrich and empower workers and other stakeholders to a greater degree than traditional corporations.
When we began this project, we anticipated that we would be able to paint a detailed picture of a typical EE. However, we found that there is no such thing, but rather an impressive array of definitions and approaches to EE work. We found that EEs come in a variety of forms in terms of legal structure, size, mission, location, and industry. In some cases, “old” models of EEs are thriving alongside emerging business models that rely on newer technologies. For example, we interviewed Tim Huet, co-founder of the Arizmendi Association of Cooperatives. His group of cooperative businesses has existed for decades in the Bay Area and is comprised of several relatively small (20-50 worker-owners) businesses, mostly popular local bakeries. The Arizmendi cooperatives provide worker-owners with an owner’s stake in the business and a democratically-run workplace. These types of businesses, while relatively rare in the United States, have existed since the Industrial Revolution. But new forms of cooperatives have emerged recently which are specific to the 21st century. We spoke with Erik Forman, co-founder of the Drivers Cooperative, a platform cooperative owned by drivers that competes with Uber and Lyft in New York City. The Drivers Cooperative distributes more profit to drivers and allows them to participate in governance, and thus shape the culture and trajectory of the business. But unlike the Arizmendi cooperatives, the tech-enabled Drivers Cooperative hopes to employ as many drivers as possible and reshape the industry in a more fair, equitable, and participatory way. Comparing these two organizations helped us think about how cooperatives might evolve further in the coming years.
In IFTF’s report,”Enterprise Reimagined: Insights from Equitable Enterprise Leaders,” we draw attention to these often-marginalized business forms in the hopes that they will become more mainstream in the future. But imagining a future economy that is more humane and a future private sector that is more fair and equitable requires us to look back as well as forward. Throughout the research process, we looked for current and historical models of equitable enterprises and studied the ways that they have evolved and changed over time. This progression helped us imagine how these organizations might change in the future and how they might influence our society and economy.
In addition, we decided to approach EEs as a process, rather than as some fixed, ideal entity, in order to avoid predeterminations about what they should look like and also to acknowledge the constant evolution (past and future) of organizations. This allowed us to include in our sample organizations with explicit missions to mitigate economic inequality and those with other primary goals that incorporate principles, practices, or values that might counter economic inequality. So, in addition to asking “what will enterprise look like in the future?” we asked “what will leaders of enterprise do now and in the future to try to make enterprise more equitable?”
Our hope is that in addition to shedding light on existing, but marginalized, business practices, this work will contribute to shaping a desirable future. If you’d like to read more, you can access the full report here.