Why the US has so few worker cooperatives, and what it would take to have more

The United States has about a thousand worker cooperatives, employing about ten thousand people out of a labor force of roughly 165 million. France, with a fifth of the population, had 2,723 worker cooperatives employing 62,685 people at the end of 2024, by the count of CG Scop, the cooperatives' federation, and that is the like-for-like comparison. The broader numbers are starker: Italy's cooperatives of all kinds run about a fifth of the economy of Emilia-Romagna, one of its richest regions, and Quebec, with nine million people, counts 11,200 collective enterprises with 220,000 people working in them.

The rest of this track covered how the model works and two companies that run on it. To many readers who have gotten this far it will look like a fairer way to run a workplace, so the obvious question is why it's rare here, and there are three answers. The model is harder to start. The countries that have a lot of worker cooperatives built specific machinery for them, and the US mostly hasn't. And the machinery doesn't build itself, for a reason the history shows.

The easy answer

The investor-owned company is the structure you get by default when you file incorporation papers. It can raise money by selling shares to people who never have to show up, and it scales to hundreds of thousands of employees. The last post in the conventional companies track goes through how that structure raises money and scales. A structure that makes it easy to gather capital will spread in an economy that runs on capital.

A cooperative raises money from its members and from lenders and needs a lawyer who has done one before. It also grows more slowly by design. Given a blank slate, most founders take the easier path, and most never learn there was another one.

Where it works, and what those countries built

The countries with a lot of worker cooperatives built four specific pieces of machinery, usually after a cooperative movement had existed for decades and pushed for them. Enthusiasm on its own didn't do it. Italy wrote cooperation into its constitution in 1947; the law that matters most came 38 years later.

A legal path for workers to buy the company. Italy's Marcora law, passed in 1985, lets laid-off workers take up to three years of unemployment benefits as a lump sum, on the condition they put it into a cooperative that buys their employer, and a state agency co-invests alongside them. The agency, CFI, said in 2021 that it had backed 329 buyouts since 1985, and over the decade to 2017 its own accounting puts the return to the treasury at about eight euros for every one invested, in taxes paid and benefits not claimed. France's 2014 Hamon law required owners of small companies to tell employees two months before a sale so they could bid, an obligation France loosened in 2026.

A pool of capital that only funds cooperatives. Since 1992 every Italian cooperative has paid 3 percent of its profits into national development funds, which now hold more than half a billion euros for co-op startups and conversions. Quebec has a patient-capital trust and a credit union that specialize in collective enterprises.

Tax treatment that makes selling to employees the cheapest exit. In 2014 the UK exempted owners from capital gains tax if they sold to an employee ownership trust. Employee-owned firms, mostly trust-owned rather than cooperatives, grew from about 160 to about 2,800 since then and employ roughly 550,000 people.

An institution whose job is to make cooperatives happen. Italy's federations have staff who walk workers through a buyout, and Quebec has nineteen regional social-economy hubs, so that when a worker calls, someone answers.

On whether the model performs once it exists, the one clean comparison we have is France, where 76 percent of worker cooperatives survive their first five years against 61 percent of French companies overall.

Why not here, and what would fix it

What follows is what's missing and, in our view, what would fix it, ranked by return on effort.

Unemployment benefits in the US can't be taken as a lump sum, there is no notice requirement before a business is sold and workers have no preference as buyers if their employer goes bankrupt. Copying Marcora and Hamon would be cheap, and Italy's agency says the first one pays for itself.

The 2018 Main Street Employee Ownership Act made Small Business Administration loan guarantees available for cooperative buyouts, and it's the closest thing to Marcora on the books, although its implementation has lagged. Nonprofit Quarterly reported in 2019 that the rules had yet to be written, and the personal guarantee that lenders ask of individual worker-members, which the Act specifically allowed the SBA to waive, is still the norm as far as we can tell. Using that waiver is the second fix.

The US does respond to tax incentives for employee ownership. It has 15 million people in ESOPs, a form built by a 1974 law and a tax deferral, Section 1042, that lets an owner defer capital gains on a sale to an ESOP or a worker cooperative. But 1042 applies only to C corporations. That excludes the S corporations and LLCs most small businesses are, and an ESOP costs $100,000 or more to set up. Extending 1042 to pass-through companies and copying the UK's trust exemption is the third fix. The UK's growth curve since 2014 is strong evidence that owners respond.

Two places have built the institution. New York City funded a Worker Cooperative Business Development Initiative in 2014 at $1.2 million a year, later $3 million; the city had 23 worker cooperatives that year and now has well over a hundred. Colorado opened an Employee Ownership Office in 2019 that converts twenty to twenty-five businesses a year, and there is no reason every state couldn't have one.

The cheapest fix is telling people. A 2015 national survey commissioned by NCBA CLUSA, the cooperative trade association, found that 7 percent of Americans were very familiar with what a cooperative is. Once it was explained, 78 percent said they were more likely to buy from one, and a 2025 survey from the same association found 81 percent saying cooperatives provide value. That gap suggests most people have never been told the model exists. Very few of them are against it.

The part that's harder to say plainly

Every one of those five is a policy that exists somewhere and has a track record, so it's fair to ask why the US has none of them. Part of the answer is the easy one from above: the default is easier and nobody has to defend it. But there is a piece of history that suggests something more.

In 1915 Britain ran short of artillery shells, and the government's answer was to take direction of private industry. It declared factories "controlled establishments," capped their profits, regulated wages, built state-owned plants and ran the railways and coal mines itself. By the end of the war more than two million people were working under the Ministry of Munitions, and what workers did next suggests what they concluded from four years of state-run industry. In 1919 a royal commission on the coal industry, chaired by the judge John Sankey, recommended nationalizing the mines, on the chairman's casting vote. Guild socialists founded worker-run building guilds that built council housing. In Italy, in September 1920, about 400,000 metalworkers in Milan and Turin answered an employer lockout by occupying their factories and running production themselves for three weeks.

None of these arrangements lasted, and the way they ended is the point. Lloyd George rejected the Sankey report in August 1919 and returned the mines to their owners in 1921, who cut wages and locked out a million miners, and the building guilds folded in 1923 when their subsidies ended. In Italy the government waited for the occupations to end and the unions negotiated a settlement. Two years of fascist violence followed, ending with Mussolini's march on Rome in October 1922. The economist Clara Mattei's 2022 book The Capital Order argues that the spending cuts of the early 1920s in both countries were aimed at making workers depend on wages again, after a war that had shown them the owners weren't necessary. The standard account treats the same cuts as a response to war debt and inflation, and her reading is contested. What is not contested is that for four years industry ran under state direction rather than owner direction. An official commission recommended making part of that permanent and the government declined.

The same pattern shows up smaller and quieter today. Worker ownership moves decisions about pay, hiring, layoffs and whether to sell from people who currently make them to people who currently don't, and the people who make them now are, as a group, better organized and better funded. Nobody needs a conspiracy to explain the result, and we think it would be strange to expect neutrality. The record shows a commission recommending and a government declining, and it shows the 181 chief executives who signed the Business Roundtable's 2019 statement on serving employees, almost none of whose boards changed a governing document afterward, according to the Harvard law professors Lucian Bebchuk and Roberto Tallarita. We think the honest reading is that the people in a position to build the machinery have had little reason to, and the countries that have it decided to build it anyway.

The window

Project Equity counts about 2.3 million businesses owned by baby boomers, roughly one in six jobs in the country, and a 2025 US Bank survey found that only about half of owners over 55 have any succession plan. Without a plan, a business tends to close or sell to a competitor. The machinery that would make a sale to the employees the normal outcome already exists in Italy, France, the UK and Quebec, with results you can look up.