Owning the Means

An Exploration of New Orleans Worker Co-ops

Recently, to make ends meet as my rent increased and the prices of groceries and utilities have climbed, I have begun busing tables on the weekends. There are holes in my floors and holes in my shoes and a flock of cooing pigeons living in the eaves of my shotgun palace, yet someone must earn money, for the pigeons cannot.

I find myself in good company: Nearly everyone in this city has worked in the service industry in some capacity, the grinding engine of New Orleans’ economy, often only to leave work after a long shift thinking of bills and debts yet to be paid. It’s also true that in New Orleans it is all too common to see large and faceless corporations masquerading as local institutions—be it the “boutique hotel” affiliated with Hilton, the Airbnbs owned by local villain Sonder (villian to locals, that is—the company is based out of San Francisco), or the stylish restaurants that are part of larger restaurant “groups,” all the while reaping massive rewards from their exploitative relationship with New Orleans’ workers.

So when Jade Thanars, a service industry veteran, went looking for a second gig to supplement her income as a hairstylist, she was selective in her search. She didn’t want to work for a big business “where it’s super corporate and you have these overlords that have never worked these jobs before.”

Thanars heard a new bar and restaurant called Velveteen was hiring, and went in for an interview. While she was there, the owners explained that the stylish spot—on the corner of Bayou Road and Broad Street, formerly home to Pirogues—had been founded with the express intention of becoming a worker-owned cooperative. If her trial period went well, the position could lead to part-ownership of the business. She left the interview with a new job and literature on cooperatives that the founding owners, Amber Rowley and Brendan Gordon, had given her.

First, a primer. Worker-owned cooperatives are businesses that are, you guessed it, owned by the workers. Workers often pay a membership fee which is returned to them if they leave the cooperative. Aside from legal ownership of the business and its property, workers participate in decision-making and accrue “patronages”—i.e. profits, which are divisible based on a formula devised by the cooperative. Worker-owned co-ops may also follow the seven cooperative principles: voluntary and open membership; democratic member control; members’ economic participation; autonomy and independence; education, training, and information; cooperation among cooperatives; and concern for community.

In the past two years, Bellegarde Bakery (purveyor of the highly-sought-after picnic baguettes, and other glutenous delights) has joined the ranks of Pagoda Café, which is currently transitioning to worker-ownership, and Velveteen, a new business co-founded by a former employee of Pirogues. In the older guard, New Orleans East is home to VEGGI, a growers and marketing cooperative active since 2011, and Uptown resides C4, a tech support company (and ANTIGRAVITY advertiser) established in 2002. While these are only a tiny collection among the massive array of businesses in New Orleans, the recent swelling in number suggests a renewed interest in co-ops, and perhaps the promise of more to come.

For many trying to uplift worker-owned co-ops, the sphinx in the path of co-op proliferation is the lack of awareness of the cooperative model.

In Cooperatives of New Orleans, which looks at the history of co-ops in the Crescent City, author Anne Gessler argues that the social aid and pleasure clubs that have existed in New Orleans for centuries also fit into this cooperative framework, as well as mutual aid groups and even community gardens, which function as part of a cooperative economy focused on sharing resources rather than centering profit above all else.

There’s myths that cooperatives aren’t profitable, that they’re pet projects, that only white people use them, or that they’re isolated to consumer co-ops like grocery stores. But there are so many ways that you can do cooperative practices in businesses that create shared equity. And those models can be very successful,” says Tamah Yisrael. Yisrael runs a values-driven financial management and accounting company, and works with Cooperation New Orleans.

Cooperation New Orleans helps with loan applications for fledgling collectives, offers training, and conducts community outreach and education around cooperatives. They also have a loan fund run in partnership with Seed Commons, a national organization that provides collateral-free loans to community and worker-owned cooperatives.

“I think one of the biggest issues I find with our work is that business owners just don’t know this is an option,” says David Gray, who works for Project Equity, a nonprofit that helps established businesses (including Bellegarde) transition to employee ownership. Gray, a kind and patient worker-cooperative expert, spoke with me via Zoom after spending a long day in meetings. He says that many people he works with are interested in transitioning to cooperatives, but are not aware of legal pathways to do so. “They [business owners] think, how are their employees ever going to find the money to [buy them out]; or they might think, I don’t know how to structure this,” says Gray.

Surprisingly, in this gristle-and-bone strewn capitalist wasteland, there are ways for businesses to finance transitions from traditional ownership to worker ownership without burying the new owners in debt. “What occurs when the business owner sells to the employees, that business takes out a loan to pay off the selling, and the profits from the business pay down the loan. And so there’s oftentimes no requirement for personal guarantee. The employees are not financially liable and they don’t need to come up with the money,” says Gray. In fact, he reports there is often not a need for credit checks from the employees.

Bellegarde Bakery used Project Equity’s service to conduct a feasibility study on the bakery’s potential for longevity, profitability, and debt capacity, and the nonprofit connected them with Mission Driven Finance for the loan they needed to buy out the previous owner. The feasibility study ensures that the new cooperative has the resources to succeed post-transition.

Mollie Sciacca, the general manager at Bellegarde, described herself as “vaguely familiar” with cooperatives prior to Bellegarde’s transition. She got involved with the process during the feasibility study, then helped facilitate the conversations with the rest of her co-workers once the study found that selling to the workers was a viable option.

“I think the biggest thing initially was helping everybody to understand what was going on,” says Sciacca. The conversations apparently went well, as all five eligible employees signed on to become part owners. Two more are on track to become worker-owners next year.

Alex Valore, the lead bread baker at Bellegarde, says his part of the transition involved “a lot of practice and patience… trying to decide how we wanted to structure things and how we wanted to self-govern our own company.” Valore had thought of starting his own business, but like many service-industry workers, assumed that this was a distant dream. Now he is the part owner of a successful, established bakery that sells bread to clients all over the city.

While paying down their loan, Bellegarde is working towards meeting internal goals for their emergency fund and worker capital accounts. After that, the employee-owners can receive dividends based on the patronage formula they worked out with their accountants. “Everyone has this renewed sense of pride of ownership in their jobs,” says Sciacca.

A few miles downriver stands Pagoda Café, the beloved Bayou Road pocket-spot with a curling terracotta tiled roof, which is also transitioning to a worker-owned cooperative.

“I didn’t want to sell Pagoda to strangers,” says owner Shana Sassoon, “and I didn’t want to just shut it down [during the initial stages of the COVID pandemic] and profit from the real estate. I wanted to recognize the way staff has helped shape our business. I met with the staff and proposed that I was willing to reopen if there was interest in moving towards a worker-owner model, and luckily there was.”

Solomon, Nia, and Arielle Coleman (left to right) work a busy Sunday at Pagoda Café (photo by Dan Fox)

Sassoon got in touch with Cooperation New Orleans, who provided Pagoda with meeting facilitation, training on cooperative structures, assistance with their loan application, and connecting Pagoda with other cooperatives.

“For me, I’m doing what I love in the neighborhood I was born and raised in,” says future employee-owner Kenionne Marrero, who’s worked in New Orleans’ service industry since 2005. Marrero’s first job was working at the City Park Burger King location.

Claire Morgan adds that the transition has involved “Taking on responsibilities that our current owner was handling mostly by herself… figuring out who would be involved and how we wanted the business to operate.”

A few people have left Pagoda as the café has worked towards cooperative ownership—there are now five staff members on the transition team. Pagoda’s ownership transition will be legally completed at the end of the year—originally the transition team hoped to be done at the close of 2021, only to face severe setbacks following Hurricane Ida. Sassoon will stay involved in an advising capacity for a year following the sale, but without an ownership stake.

So much time, sweat, and money goes into starting a business: creating your systems, building your brand, creating relationships with customers. Converting to a worker’s cooperative is an amazing way to preserve what you have built up if you are ready to step away, but also if you just want to create more investment from staff in your workplace,” says Sassoon.

The loan that facilitated the sale to the new worker-owners will be structured as a property loan on Pagoda’s two buildings; the co-op will pay a monthly mortgage and manage the loan.

Only one block over, Velveteen started their cooperative from scratch. Founders Amber Rowley and Brendan Gordon started Velveteen together with the express intention of onboarding employees as new worker-owners. Funding their new venture, however, was difficult.

“Money would have helped,” says Rowley. Rowley’s mother was an early investor in the business, while Gordon used his savings and liquidated his retirement fund (a resource many people in this country are without) to fund the business and renovations to the space, much of which Gordon did himself. Rowley continued working outside the bar until Velveteen opened its doors, since the business had no income until that point. Rowley worked at Pirogues for two years until it closed during the pandemic.

“I’ve been interested in land grants, land trusts, and the collectivisation of community assets for a while,” says Gordon. In many ways, neighborhood spots like Pirogues are community assets. Their kitchens cook food when the power goes out, and they function as meeting places when there are vanishingly few spots to hang out for cheap (let alone free). Accordingly, Velveteen gives discounts to their regulars who carried over from the Pirogues days. “They call it ‘the clubhouse,’” says Rowley. Some of the regulars have been coming to the bar for years.

Though the new employees (Velveteen opened in spring: All of its workers are new) are not yet fully worker-owners, they are going through an accelerated process to become legal co-owners, with about eight employees on ownership track. In the meantime, Velveteen is attempting to practice direct democracy and holds regular meetings where staff vote on major decisions, including rate of pay. All staff earn the same wage, regardless of their role.

Chelle, who is in the onboarding process to become a worker-owner of Velveteen, bartends on a Sunday afternoon. (Photo by Dan Fox)

“Usually dishwashers make nothing,” says Aubin Leroy, who runs the Velveteen kitchen. Advancement in that role is rare, despite its inarguable necessity. “If you don’t have prep, you don’t have a line. And if the dishwasher doesn’t show up, you’re in a mess,” Leroy adds.

With long hours on your feet each shift, working through sweaty and stressful conditions to make money for the owner, many people with talent and passion burn out of the job. Leroy was previously considering leaving the industry. “Even if a place is paying you decently, it will never be your place,” says Leroy.

By contrast, Leroy says the horizontal model allows workers more freedom to advocate for themselves. “If we want to do something, let’s vote on it and do it. It’s everybody’s space. I can grow in the space and it leads to something… I think that’s important. As opposed to making the rich richer.”

Thanars, one of the new bartenders, adds, “I feel like it does work better. It makes people feel like they’re not being taken advantage of, [like] they’re being heard.”

Cooperatives explicitly have the goal of benefiting their employees. Yet, lest you think that the free market will doom such soft-hearted enterprises to failure, there is evidence that cooperatives can withstand stressors better than traditional businesses. One study showed that worker-owned cooperatives experienced fewer layoffs during the pandemic—instead, they reduced hours or worker pay in order to keep their employees, or redistributed funds. And there is some evidence that worker co-ops can have higher profit margins than traditional businesses—one small study showed that “in 2013, the average private firm had a profit margin of 5.9%, while the margin for worker cooperatives was 6.4%.”

A testament to the cooperative’s potential for resilience, New Orleans’ tech support cooperative C4 has been in business for 20 years. In 2002, co-founder Jeffrey Brite started C4 with a few friends. Like almost everyone interviewed for this piece, he had never worked in a co-op before.

“Most groups of friends work cooperatively together all the time. We were just codifying it in the hiring and business structure,” says Brite. “I was looking for alternatives to the current corporate system we have. We had already started as a business, but when the U.S. Federation of Worker Co-ops started, that was a big help.”

C4 is considered a founding member of the United States Federation of Worker Cooperatives (USFWC) and Anna Boyer, one of C4’s worker-members, serves on the federation’s board. Because C4’s product is technical know-how, the company did not require outside capital to get its start. “The primary expense was labor, and in those early days, our workers did not pay themselves very much or very often. This is a privilege that most workers could not manage today,” says Boyer.

C4 utilizes a non-hierarchical structure, where most decisions are made with a majority vote. Everyday decisions in the company’s sub-departments are decided by workers in that department, and questions that impact the entire company are decided by the whole collective. “The general philosophy we use for decision-making is that the group who is impacted by the decision gets to make the decision, and all members within that group have equal power,” says Boyer. Any member can raise objections and bring departmental issues to a company-wide vote, since all employees are part-owners and therefore share risk as well as profit.

As anyone who’s been in a collective can tell you, direct democracy can be tricky. “Early on, we had loooong meetings (like, we’d ruin your whole Saturday) every month to make a lot of decisions about everything,” remembers Boyer. But thankfully those days are long past. Meetings now are far shorter, and on a quarterly basis.

In Boyer’s time working for C4 and the USFWC, she says more and more people she encounters are familiar with cooperatives. Additionally, more funding options are available to start-ups. “A lot of lending capital available to cooperatives comes from investments from other successful cooperatives,” says Boyer.

Despite the growth of worker-owned co-ops, the industry remains small—the Democracy at Work Institute’s 2021 state of the sector report stated that the median size of the cooperatives in their study was six workers, and there are likely under 1,000 such co-ops in the country. Similarly, though the growth of unions in the retail and grocery sector has increased in the number of workplaces covered, union membership on the whole in the United States has overall continued to decline despite an uptick in support.

“I think it’s a history of an attack on the working class,”  says Rebecca Lurie, who runs the Community and Worker Ownership Project at the CUNY School of Labor and Urban Studies. 

Though Lurie sees worker-owned cooperatives as compatible with all types of labor organizing, they have encountered organizers who are hostile to the idea of worker-ownership, considering it antithetical to unionism. However, Lurie sees the cooperative economy as fighting for ownership for workers, rather than letting private equity “run the game.”

“We’ve now acquiesced all the running of things to the owners,” Lurie says, and sees a lot of laws governing unions in the United States as ultimately structured within a deeply unequal system.

From cooperative economies, workers stand to gain agency in their workplaces, in the face of intersecting oppressions. New Orleans remains a deeply unequal city, with a steep racial wealth gap; co-ops can allow people without substantial personal wealth or access to credit—particularly Black potential business owners, who face intense discrimination when applying for loans—the chance to become business owners who accrue equity in a way that workers without an ownership stake cannot. Cooperative members are also peers—Lurie mentions in the wake of a family tragedy, for instance, workers may find community in their co-owners that they would not in a traditional workplace (not to mention flexibility to take bereavement leave).

And there is grief all around us. To be even remotely conscious in these times means an awareness of living between successive catastrophes: viral, economic, and climatic. After one such apocalypse, the BP oil spill in 2010, New Orleans saw the creation of a new co-op, VEGGI. In 2011, VEGGI started as a vocational training program in aquaponics and sustainable micro-farming, targeting people in New Orleans East’s Vietnamese community who lost their fishing livelihoods.

“So many folks lost their jobs. We started as an urban farming initiative to get folks working again and bringing in consistent and sustainable income through environmentally friendly urban farming practices,” says Maddiy Edwards, VEGGI’s operations and marketing manager.

Thanh Nguyễn and Thăm Nguyễn (right to left) were the first farmers to join VEGGI Farmers Cooperative, and built the aquaponics system and greenhouse structures. (Photo by Madeline Edwards)

Eleven years later, VEGGI’s workers make delectable tofu and soymilk, and grow herbs and produce sold at New Orleans farmers markets and directly to restaurants. There are six growers in the cooperative; the farmers pay into the cooperative by paying one quarter of their profits, keeping the remaining 75%. The co-op’s share then goes to pay for supplies, bills, and other overhead expenses. With the cooperative, the growers have access to a well-known brand, staff to work the farmers markets, marketing resources, and land. 

“It is very difficult in the state of Louisiana to be an accredited cooperative. Probably the biggest hurdle is the state to recognize this type of model,” says Edwards.

The new worker-owners at both Velveteen and Bellegarde also mentioned that finding an attorney experienced in cooperative law and Louisiana law was challenging. In some countries such as Italy, Brazil, and Spain, cooperatives are managed with special laws, even (in the case of Spain) as a third sector, distinct from corporations and nonprofits, which allows for more favorable regulation that encourages cooperatives to form.

“Through COVID we saw what co-ops could do in lean times,” says Lurie. A 2020 survey of 142 U.S. cooperatives by the Democracy at Work Institute showed that 40% were involved with mutual aid networks. As the pandemic trudges on and the precarity of our position in an environmental sacrifice zone only increases, it is clear that strong communities are the most critical resource when crisis occurs.

While large corporations have lobbyists, cooperatives can work to advance their agendas locally. With members controlling their budget, a co-op might decide that they want to formally integrate community work by paying for time they spend organizing outside the cooperative, for things that ultimately benefit the collective and community. In our conversation, Lurie cites adrienne maree brown’s work Emergent Strategy: “what we practice at the small scale sets the pattern for the whole system.”

Worker co-ops create opportunities for people to build equity as business owners who wouldn’t otherwise be able to, to empower laborers in their workplaces, and practice direct democracy. Yet cooperatives are not perfect. They are businesses, and there is always the risk that the business will fail. For Boyer, the C4 collective member and board member of the USFWC, “a cooperative is not some utopia;” however, “it’s the economic option in our society that is the most fair for the most people.”

Cooperatives hold the potential to build power and equity among working people. They intrinsically build connections between people and empower them within their workplaces— perhaps if they flourish in New Orleans it can go beyond that too. Each passing day it’s tempting to despair at the crushing problems surrounding us, like encroaching water on all sides. Cooperatives and their ethos of community remind us that there are solutions, and what’s more, there are people around us who are implementing them.

As Lurie asks me, “Are we all gonna be workers, or are we gonna run the shit we got?”

illustrations by Deanna Larmeu