Fire your boss
Bay Area businesses that give employees control.

By Rachel Brahinsky

THE RECENT FIRING of employees at 24th Street's Real Food Company is yet another sign of how tough and unpredictable it can be to make a living working for other people.

So it's reassuring to remember there are people who have managed to secure some measure of control over their job conditions. Even in George W. Bush's America, worker-owned businesses are still hanging on, and in some cases doing quite well.

Not surprisingly, the Bay Area is home to one of the largest concentrations of worker-managed enterprises in the country. Some cooperatives (or collectives, which are slightly different but part of the same family of employee-run businesses) emerged when private owners decided to sell; others, like bike messenger co-op Cupid Courier Collective, developed when messengers who were fed up with working for corporations decided to become their own bosses.

The most high-profile local company to switch over to worker control this year was the Lusty Lady. The North Beach strip club, famous home to the nation's only unionized exotic dancers, went cooperative last spring after its owners announced their plans to shut down the place. The closure announcement came just one month after the dancers completed a round of tough negotiations for better pay.

In between shifts on a recent workday, dancer Donna Delinqua (not her real name) told us the co-op idea came out of staffers' desire to keep the club running and to have a say in how it's run. Now an elected board of worker-directors and several employee committees make all business decisions. Having just completed their first fiscal quarter in command, the worker-owners (including dancers and support staff) are keeping their heads above water, and at the end of the year any profits will be distributed among co-op members.

That's not to say it's easy. "People like the idea of a radical direct democracy.... but the practice of it takes a lot of work," says Delinqua, who is on the board. "Members don't frequently come to board meetings but are frequently upset with our decisions. We're at that stage where people feel secure, which can breed apathy."

Another challenge for co-ops these days, longtime advocates say, is the lack of a broader social movement that deems co-ops a priority. Back in the heyday of the U.S. worker co-op movement in the late 1960s and '70s, they were part of the struggle for civil and women's rights and racial equality – and thus had a wide network of support.

Partial control

Even without a mass political movement to buoy interest in co-ops, Cory Rosen of the Oakland-based National Center for Employee Ownership counts about 100 of them in the Bay Area. And there are another 100 to 150 partly worker-controlled businesses (controlled by staff members through an Employee Stock Ownership Plan, or ESOP). ESOPs started gaining favor in the mid 1970s.

In the East Bay, Zachary's Chicago Pizza adopted the ESOP model this year, which means long-term employees at the consistently crowded joint were given shares in the company and began to have a greater say over operations. In time, owners Barbara Gabel and Zach Zachowsky will sell off the majority of the company's shares to its employees.

While it's a step toward worker control, Zachary's ESOP structure is very different from the co-op management of the Lusty Lady (or Rainbow Grocery, Good Vibrations, Missing Link bike shop, and other Bay Area co-ops and collectives). The business has retained its top-down structure and is run by a panel of 16 managers. The rest of the shareholder employees have the right to weigh in on major decisions – like whether to liquidate or sell – but won't be responsible for day-to-day operations. Eventually Gabel and Zachowski will appoint a board of directors, which will have final say over hiring, firing, and benefits.

Nationwide, Rosen says, there are some 10,000 ESOPS and 2,000 co-ops. United Airlines has been an ESOP, and Southwest Airlines – "the only significant airline with no post-Sept. 11 layoffs," she points out – is a largely worker-controlled ESOP. That there are more ESOPs than co-ops might be in part because the ESOP structure is more compatible with operations at large companies, and because it doesn't necessarily require mass worker involvement. It can be difficult for a company of several hundred (or several thousand) employees to function as a co-op, given that democratic decision-making is an integral part of the structure.

Historically there has been some tension between advocates for full democratic control and top-down ESOP companies. In part, that has to do with labor relations. "A study in the 1980s showed ESOPs were neutral regarding unions," Rosen says. "But some companies use ESOPs like any other employee benefit – [to stop a union drive]." That's one reason why many workers prefer having a strong union contract to joining a co-op or semi-employee-run business.

There also has been friction between the labor and co-op movements, partly stemming from the same cultural and political clashes of the 1960s that split the peace movement from labor. But some Bay Area co-ops have kept their union membership, and their employees say there's no contradiction. "To me, having the co-op is sort of internalizing the union structure," says Delinqua, who helped found the Exotic Dancers Union several years ago as well as the recent Lusty Lady co-op. "It's symbolically important to maintain it."

Lincoln Cushing, librarian for the UC Berkeley Institute for Industrial Relations, says having a union can support the egalitarian goals of a co-op. "Often an organization will have good intentions," he says. Having a union "puts it beyond goodwill. It concretizes policies."

The labor movement has sometimes looked askance at such arrangements, noting that when you have a worker-owned shop, there's no one to negotiate with. Yet as Bernard Marszalek, who does sales and marketing for Berkeley-based printer Inkworks, points out, union co-ops (including Inkworks) walk a fine line, and they seem to like it that way. "Many people see us as owners. We see ourselves both ways – as owners and workers."

Additional reporting by Matthew Hirsch. E-mail Rachel Brahinsky at rachel@sfbg.com.