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Detroit's Center for Community Based Enterprise has an innovative approach to improve work culture — make employees the owners 

click to enlarge The C2BE Team. - SAMUEL COREY
  • Samuel Corey
  • The C2BE Team.

The nonprofit Center for Community Based Enterprise is headquartered inside Detroit's First Unitarian Universalist Church in the Cass Corridor, with a membership that is mixed in age, gender, race, and professional backgrounds. For all of their differences, the group's members are united by one clear goal: making the lives of workers — and the working world — more sustainable, and inclusive of needs and desires.

As such, they operate to bolster and facilitate worker cooperatives, a work format in which internal democracy and pay equity is prioritized. The result is higher pay (at least $15 per hour), increased power from employee-owners, and an emphasis on the value of workers' inputs — not just their outputs.

"If you have worker control and division of proceeds, or allocation of profits based on labor rather than cash investments, that I think is the nature," says C2BE's operations and project oversight manager, Michael Friedman. "It gives people a sense of meaningful work."

C2BE began in 2007, with founder and executive director Deb Olsen simply discussing the concept of worker ownership with others in the community. "Most of what we did was try to educate people," says Olsen. At that time, they didn't get much attention. That soon changed. Today, C2BE has partnered with about 30 operations and receives foundation money, which helps the nonprofit transition organizations to worker cooperatives or improve their worker equity.

C2BE now hopes to be the "Mondragon of Detroit," in reference to the world's largest worker cooperative, which nets sales of 15 billion euros and employs thousands in Spain.

In order to make this a reality, they have been working with a number of Detroit entrepreneurs who want to establish their own equitable and democratic businesses.

One example is Raphael Wright. Growing up on the city's east side, the King High School alumnus now hopes to economically improve Detroit in a way that is both equitable and democratic. His solution is to start a worker cooperative grocery called Neighborhood Grocery, where the community's input is used to create something that is of the community, by the community, and for the community.

"From the gate, I want [community members] to help me build this store," he says. "What does it look like? What is on the shelves? What food are we offering to prepare? How many jobs are we going to create? We dictate all of that."

Wright, diabetic since 19, wants to give residents proper nutrition — something his neighborhood has lacked for a long time. The nearest grocery stores to the 48224 zip code on the east side are Trader Joe's and Kroger, both existing in the neighboring, wealthier suburb of Grosse Pointe.

Already having crowdfunded $50,000 to start his business, Wright plans to start an "equity crowdfund," where community investors can own a share of the business. Wright says this idea is modeled after many immigrant communities that have prospered in the U.S. by pooling money together to provide low-interest loans for newcomers starting businesses. If those individuals don't turn a profit, he explains, the community takes over the business, leaving the newcomer debt-free.

"In cases where you default, it's not really a default," he says. "Everyone just becomes the owner."

C2BE has been helping Wright open a worker cooperative, helping him get grant funding.

In a year, Wright plans to buy land for the store and officially open for business. After becoming stable, Wright will use this model as an inspiration for other neighborhoods in the city.

"All healthy communities work in a nucleus, and they understand their problems, and they tackle them in a strategic way," he explains. "Worker-owned businesses or cooperatives include everybody in the decision making. Everybody takes the same risks, and we all share the reward."

In order to be consulted by C2BE, an organization needs to be willing to "work collaboratively," says Terry Lewis, C2BE's financial and business strategist. Specifically, she says, businesses need to provide "worker equity," be willing to work with other cooperatives in their field, pay their workers a living wage, and they need a business model. Once the organization becomes profitable, C2BE receives a cut of their funds over the subsequent five years.

Notably, worker cooperatives are not the only model C2BE supports. They also promote the usage of Employee Stock Ownership Plans, which are better suited for larger organizational structures, and Employee Ownership Perpetual Trusts, which are less expensive and more flexible than ESOPs.

Since its founding, C2BE has been tapping into various industries around Detroit, collaborating with artists, craftsmen, grocers, and artisans.

"One of the dope things about C2BE to me is that everyone here is a pretty awesome node to crazy networks," says C2BE's cultural programmer, Bryce Detroit.

C2BE is hoping to leverage the idea of worker ownership, diffusing the tension long in existence between workers and owners.

"We exist because this game is stacked and it's rigged. Period," says Detroit. "We are here to show that there's a whole different way of playing, and by grounding yourself in this new way, then you can, if you choose to at some point, interact with this thing at some determined way."

Playing a different game, however, doesn't mean communism. In worker cooperatives, employees maintain their own roles, but are empowered to democratically voice their opinions, are paid proportionately to their inputs, and have equity in the company. Externally, worker cooperatives could not exist without the capitalist ecosystem.

And worker cooperatives are unique from their corporate cousins in another important way. They are designed to invest in their communities.

click to enlarge Lee Gaddis. - COURTESY OF LEE GADDIS
  • Courtesy of Lee Gaddis
  • Lee Gaddis.

Community investment is exactly what excited Lee Gaddis, founder of Gaddis Gaming, about worker cooperatives and C2BE.

A former teacher at the now-closed after-school program, Youthville, Gaddis began sharing games with kids to simultaneously entertain and teach history. At Youthville, Gaddis focused on teaching through science fiction and war.

"History is war," he says. "We're earmarked by the wars we fight. So I think a lot of history can be taught that way."

At the after-school program, Gaddis had kids playing war games. In doing so, he noticed that war games not only taught kids history, but also strategies they could use in real life to save money, buy homes, and plan for the future.

"By creating the games that I did, I learned that you have [a limited] amount of resources to achieve this objective," he says. "So through that, you're improving a person's analytical thinking skills because they have to think ahead."

One day, Gaddis and his gamer friend and a former Hour Detroit magazine editor, Susan Howes, came up with the idea of creating a gaming table called TabbleTopper, which allows gamers to adjust their table to the exact size of the board game they're playing. After the idea began generating revenue, Gaddis and Howes wondered how they could invest their money back into the community.

Gaddis began meeting with the C2BE back in 2008 with hopes of scaling his business and developing the Detroit community without support from millionaires.

"I was sick of Dan Gilbert and Mike Ilitch and Roger Penske and all these guys getting fatter off of my tax dollars," he says. "Instead of going down and begging them for anything, I asked, 'How can we build wealth here?'"

(Gaddis notes that he has no problem with rich people making money. He just doesn't want them getting corporate welfare from taxpayers.)

Since 2008, C2BE has provided Gaddis and Howes with legal and financial aid, and a structure to help them create a cooperative. His operation, Gaddis Gaming, now sells the TableTopper, military miniatures, and a board game called G.U.A.R.D.S.

In the next two years, Gaddis Gaming hopes to train about 30 workers in Detroit and open his own facility there, manufacturing everything from the TableToppers, military miniature figures, and new war board gaming products. Every worker-owner, Gaddis says, will have their own role in the organization, but the decision-making process will be democratized.

"Everybody has a financial incentive to stay engaged in the process, to come to work on time, to make sure the best product goes out the door," he says.

Any decision regarding hiring and firing would be made by a majority of the collective. After one year of an apprenticeship or "vestment period" making $15 per hour, a vote will decide whether the new employee is hired. After the hiring, the new worker-owner will receive pay commensurate with their responsibilities. This model, Gaddis says, can build wealth and a quality lifestyle for every worker-owner.

"My commitment to building wealth in the community is being able to show people another way that businesses don't have to be 'you work your fingers to the bone and all the money goes to the CEO,'" says Gaddis. "That doesn't have to be the way corporations are structured. There's no reason for that at all except for greed."

Worker cooperatives, like Gaddis Gaming, run on the idea that within any moneymaking venture "my success is tied to your success."

"If we redistribute wealth to the people creating the wealth in the society, that allows us to then raise the standard of living for everybody," says Gaddis.

Worker equity and democracy aside, worker cooperatives are appealing, according to C2BE members, because of the impending "Silver Tsunami," when a large number of Baby Boomer-owned businesses could vanish once the owners retire. This is because, unlike past decades, Baby Boomers don't tend to sell their businesses to their kids. The jobs they supported then get lost in the shuffle.

"We have a potential 400,000 jobs at stake in southeast Michigan from retiring Baby Boomers, and about 80 percent of people who end their business or retire don't create a succession plan," Olsen says.

The Center for Community Based Enterprise is trying to show people that transitioning companies from a corporate structure to one that includes worker equity is not just morally sound, it's also financially smart.

"This is not charity work selling your business to your workers," explains growth and communications director James Lesko. "There's tax implications that can work to your advantage, and the sale price can be the same sale price as you would get from someone else."

The nonprofit consulting group hopes not just to facilitate organizations to become worker cooperatives, but also to push larger corporations to create more equity in their company.

One would probably not recognize it now because of America's individualistic and "me personality" culture, but communalism and worker cooperatives have strong roots in the U.S. In his master's thesis, then-student Christopher Wright, now a professor at University of Massachusetts, explains that worker cooperatives and collectivist projects were often started by artisans and craftsmen in the U.S. during the early 1800s after failed attempts at striking for fairer wages. This ethic continued into the 20th century.

"Under FDR, farmers were in areally bad shape," says Olsen. "They created a number of programs to protect farmers because it was thought that we needed farmers because we needed food." Today, she says, cooperative development programs exist through the USDA for communities under 50,000 people.

Even through the 1960s, cooperatives were leveraged in a myriad of industries, including "schools, law collectives, communes, underground newspapers, and cooperative housing" in an effort to empower black people and the counterculture movement, according to Wright. Although a lot of these movements fell into disuse, their success has survived through food cooperatives today.

Now, a revival could be rising, albeit slowly. According to the U.S. Federation of Worker Cooperatives, in 2016 there were an estimated 357 new worker cooperatives across the U.S., netting a total of about $428 billion. The USFWC itself now holds about 4,000 members. According to Senator Bernie Sanders' office, in 2017 there were about 10,000 employee-owned businesses across the U.S., fueling 10 million worker-owners.

In cities across the United States, worker cooperatives are becoming increasingly mainstream. According to Crain's Detroit Business, policies incentivizing the use of worker-ownership have been adopted in cities like Austin, Cleveland, Madison, Minneapolis, and New York.

Bryce Detroit of C2BE explains it this way:

"For me, this is a time of great transition from old social, political, cultural infrastructures that were designed to narrowly support a small fraction of the population," he says, "[and] into infrastructure and systems and institutions that are intentionally designed for people to be self-determined in how they enter and plug-in and co-create within that space."

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