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Workers’ Cooperatives - Jobs & People Over Profits: Guest MINDSETTERS™: Nesselbush & Maldonado

Saturday, June 17, 2017


Sen. Donna M. Nesselbush

There is exciting business news brewing in the Rhode Island General Assembly. Imagine a business model that places as much priority on growing and retaining meaningful jobs as it does on profits? Enter...workers' cooperatives, an idea introduced to Rhode Island by Fuerza Laboral, a Central Falls non-profit organization dedicated to leadership development and workers' rights. Workers' cooperatives, a business model that actually existed during the great depression, would exist alongside S-Corps. C-Corps, LLC's, LLP's and other business entities. Although we live in a hyper-capitalist society, workers/investors could opt to operate their business as a workers' cooperative.

Workers’ cooperatives are businesses that are owned and democratically operated/governed by the employees, with each employee serving as a part-owner of the business. Because the owners are also the workers, co-ops concentrate as much on creating lasting and meaningful employment and good, healthy working conditions as they do on generating profits for the owners/workers.

This is an innovative and proven business model that is taking hold across the country. Currently, 13 states have enacted this legislation, including our neighbors, Massachusetts and Connecticut. Another 15 states, including Rhode Island, are deliberating this innovative business model this year in legislatures across America. That's why we have sponsored 2017-S 0676 / 2017-H 6155aa; it would allow workers and investors to form workers’ cooperatives here in Rhode Island, electing said form of business entity.

The heart of this legislation is aimed at empowering workers. Owners are often the hardest workers, most invested in the success of the company. The members of workers' cooperatives seek to contribute to the local economy, strengthen community life, show initiative and escape poverty, all in an effort to pursue the American dream of success, security and prosperity for themselves, their families and their communities.

While some companies move when the tax or regulatory environment is more favorable in another state, workers cooperatives are more likely to remain loyal to their state of origin, since the owners/investors/workers all live and work locally. If one of the several wishes to move on, the others often remain, creating stable economic development.

Rep. Shelby Maldonado

Workers’ cooperatives have a track record of creating and maintaining good jobs, generating wealth, improving the quality of life, and spurring local economic development for the owner/operators and their surrounding communities.  Workers’ cooperatives also have been shown to have relatively low business failure rates and the ability to survive during economic downturns.

The workers also learn about democracy and the American way! By giving each employee-owner a voting share equal to her/his investment in the company, each employee-owner has direct control over the working conditions, wages and profits. In fact, the profits go straight to the employee-owners.

Workers’ cooperatives are typically lean businesses with high efficiency and employee motivation. The employee-owners play meaningful roles; they not only do their jobs, but they also collectively determine the future direction of the company. This, in turn, often leads to higher productivity and better overall business performance.

If their business is performing well and the employee-owners have more money in their pockets, the community and the local economy prosper.  

It is no secret that Rhode Island’s economy has been struggling for far too long.  When other states have bounced back from bad economic times, Rhode Island’s economy has continued to struggle. Rhode Island should embrace any innovative model with a potential promise to boost our economic recovery. Workers’ cooperatives are thriving in 13 other states, and are proposed in 15 more. Let's hope Rhode Island joins the workers' cooperative bandwagon. 

2017-H 6155aa passed the House of Representatives and 2017-S 0676 awaits consideration by the Rhode Island Senate.


Sen. Donna M. Nesselbush is a Democrat representing District 15 in Pawtucket and North Providence

Rep. Shelby Maldonado is a Democrat representing District 56 in Central Falls.

Heiny Maldonado is the co-founder and Director of Fuerza Laboral.


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

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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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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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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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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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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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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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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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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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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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