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Madison, Wisconsin, Is Investing $5 Million In Worker Cooperatives

The best part: the businesses will stay local, because co-ops don't up and move to cities offering more attractive incentives.

Madison, Wisconsin, Is Investing $5 Million In Worker Cooperatives

[Illustrations: donatas1205 via Shutterstock]

Beginning next year, the city of Madison, Wisconsin will invest $1 million per year for five years in establishing new worker-owned businesses, commonly known as worker cooperatives.

Madison Mayor Paul Soglin says that he got the idea from New York City's announcement last year to invest $1.2 million in co-op development.

"I'd read about what Mayor de Blasio had proposed for New York City when I was in the process of developing the 2015 city budget," says Soglin. "I simply went back to the office the next day and said: 'We're not going to be upstaged by New York City.'"

Madison has a long history of cooperative businesses. Union Cab, a cooperative taxi company with over 200 member-employees, was founded in 1979. The city is also home to a worker co-op coffee roaster, engineering firm, and bakery. Soglin hopes to capitalize on cooperative businesses' track record of success in his city to create more thriving local businesses.

The fact that co-ops stay in the city they started in is another reason Soglin is excited about cooperatives. When lured by benefits like tax incentives, corporations tend to pack up and leave once those incentives expire or disappear, tempted by the promise of tax breaks or cheaper labor elsewhere.

"With a cooperative you don't have to worry about a buy-out," says Soglin. "You don't have to worry about a CEO one day picking up and moving the company to Fargo. With a cooperative you can have confidence that the company and the wealth it generates is going to stay local."

Still, Soglin wants to make sure that all of Madison's residents benefit from this initiative, not just the already well-to-do.

"Building a great local economy is not reserved for white males," he says. "We're hoping this will be part of our economic development strategy in areas where there's food insecurity, where there isn't a concentration of jobs, and where significant numbers of households are below the poverty line."

As for how exactly the money is going to be spent, the mayor calls it an "organized free-for-all." The city government will entertain proposals for planning, research, grants, loans, and even forgivable loans. Soglin also hopes that this initiative will illustrate the potential of bottom-up economic development as opposed to traditional trickle-down economic wisdom.

"One of the benefits of a program like this is it gives us another opportunity to show that the economics of aggrandizing wealth in the top one percent is stupid," he says.

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