How Can Online Platforms Prioritize Worker Interests? Steven Dawson on Worker-owned Co-ops

What does it take to create business models that put worker well-being at their center, and what can platform economies learn from that history? How can we turn a lousy job into a better one?

Every Tuesday, Brian Keegan and I are privileged to facilitate the Berkman Cooperation working group, which brings together a Boston-wide conversation among designers, advocates, social scientists, computer scientists, and economists on themes of online cooperation. This week, we welcomed Steven Dawson, a veteran leader in the U.S. co-op movement. Here are my live notes from the conversation.

Steven Dawson is the co-founder of Paraprofessional Healthcare, the largest employee-owned co-op in the U.S. Together with Steven, we had a discussion about peer production and cooperative sharing economies through the lens of the concrete histories and operations of cooperative businesses.

Many years ago, Steven co-founded the ICA Group in Cambridge, one of the first organizations supporting worker owned co-ops in the US. At the time, there were very few co-ops in the US. Most of the interest was coming out of university towns: Cornell, Cambridge, elsewhere. Many of those were looking at Yugoslavian models of self management and co-determination, but very few of those conversations led to actual ventures. ICA worked to support the creation of actual co-ops at moments of plant closings, providing finances and technical assistant to start businesses and learn from experience how to create worker owned businessess.

Coming out of that experience, Steven came to work in the Bronx to create PHI. In the economy of the time, there were very few jobs and very few healthcare opportunities. In the homecare industry, jobs were pretty bad: poor training, poor supervision- precarious working hours, and few wages and benefits. Homecare was a new business model with very little startup capital, but they offered better work than their competitors. Steven and others worked to turn a lousy job into a better one — something that has become his life work. He and others weren’t trying to create a cooperative economy — they were trying to help low income women have a decent job.

Starting with 12 healthcare aides and a single contract, they worked to try to find ways to improve the job. Their funds come from public funding — Medicare and Medicaid– and they focused their efforts on things like improving wages, offering the first healthcare plans for people, and creating a training business within the company.

From those early days, training happened inside the organization, which allowed them to control the quality of the training and link it with employment. This training now enrolls around 600 women a year with guaranteed employment, and they have high graduation and employment rates.

Early on, the group realized that while they were doing better than others, they weren’t doing enough, and that they were limited by the public funding in their ability to adequately support their workers. Building on that realization, Steven and others created PHI, whose policy arm worked to take the learnings from co-operative homecare and leverage them into policy change.

Finally, Steven talks to us about the Independence Care System, a nonprofit that coordinates care for more than 6,000 low-income elderly and disabled people in New York City. This allowed them to expand the homecare work and who they could hire, making it possible for them to expand the industry.

These three organizations, PHI (the nonprofit development organization), Cooperative Home Care Associates (the for-profit worker cooperative and training program), and the Independence Care System (the care organization) are independent, but they also work in concert to build care across an industry in ways that are good for the people who receive care, and for workers. Writing to me after the conversation, Steven clarified the histories of these three organizations and how they work together. He explained:

While it is fair to say that I founded PHI and what became the ICA Group, as to CHCA, it is more accurate to say that I helped start CHCA through technical assistance and finance while at the ICA. The honor of founding CHCA belongs to my friends Rick Surpin and Peggy Powell (both of whom remain leaders within our system—Rick at ICS and Peggy at PHI).

Although home care and healthcare is growing, wages in healthcare have consistently dropped over the last 10 years. Steve describes two successes in New York State. The first was a minimum wage for healthcare workers, which helped 80,000 people go from roughly $9 an hour to $14 an hour. Across the US, homecare workers are exempt from minimum wage and overtime rules. Over the last five years, Steven and his allies have worked with the bureau of labor to reverse that law. These offer examples, says Steven, of ways that the co-operative model can work together to establish their part in an industry, find credibility, and influence an industry for change.

Steven wonders out loud what ways there might be lessons and opportunity to leverage lessons learned by Cooperative Home Care Associates in recent developments in the sharing economy.

At this point Mary Gray shares some of her inspirations. For the last few years, she’s been studying different pieces of platform economies, from translation to microtasks. She’s been wondering what it might mean to apply those lessons to industries and sectors that have yet to see the “uber” of their industry– and what it would mean to have the players of those industries keep workers needs central to that industry, keeping workers’ needs central to the business model. She’s been inspired by ways that workers in have driven things like scheduling, training, and policy.

Mary poses an initial question: what would it take to translate the lessons of Steven’s long experience and translate it to an online context? She describes work by Andrés Monroy Hernández and Justin Grimshaw who are thinking about the technology design issues involved in worker owned sharing economies.

Tim Davies notes that when we talk about worker participation, we often end up with very ambitious ideas about what participation might look like — even something simple like worker ownership or an annual vote on the board can be transformative. He asks Steven what kinds of participation workers have have in the cooperative.

How flat or hierarchical should organizations be? Steven argues that it depends on the type of business, the population you’re working with, and the scale. With 2,000 workers, you can’t sit around the kitchen table. Also, the type of work PHI does is very atomized and isolated. Workers are barely coming into the office once a week. Trying to maintain a sense of community is closer to an online model than a shop floor. The population of the group varies. Some people see co-ops as a way to exit the mainstream, but many people take on homecare work in order to enter the mainstream — and those are the people who work with PHI. Many of the workers have historical distrusts of employers, limited literacy, and an incredible degree of destabilizing challenges in their lives. Many workers are single moms, care for parents, and face issues with public assistance, people with unstable lives with limited work experience and less ownership experience.

In PHI, ownership is voluntary. There’s a 3 month probationary to determine if you’re doing your job well, and if you pass the period, you can become an owner. You put up $50 up front, and the cooperative puts up the other $950 for you to have a $1,000 share in the company, with voting rights, the right to be on the board, and access to dividends. Their goal is to have 70% of people to become worker-owners within the first year of joining. Why does it take a year? Many of the worker owners don’t believe in the system yet, and it takes them time to gain trust.

The organization has also tried to create internal career ladders– how much they’re engaged in the business relates to how interested they are in the governance. About half of their 120 administrative staff are former home care workers. The group also has a union, with a labor management committee structure that provides a degree of engagement with workers who want to work on problem solving outside of the board. Many of their board members come up through involvement in the union. This board has many people who are also workers, who have direct experience with the people that the co-op serves as well as their experience of work. Steven argues that the sense of accountability on this board is very real.

Tom Stites asks what benefits workers receive from being in a union that they wouldn’t have as members of the co-op? They get education opportunities and access to grievance procedures. The homecare industry in New York is already unionized, and the industry is very political, since companies are paid by the state. Rather than focus on management issues, the unions tend to focus on policy in Albany– by joining the SEIU, workers are able to grow the influence of homecare workers in state politics.

Steven is asked how the organization defends against control by some of the most experienced members: board members are election. He talks about their efforts for a balance of consistency and new board members. The industry as a whole experiences between 40 and 60% turnover, and co-operative home-care is mostly at 15%.

Tim asks how people vote. Steven responds that it’s a physical ballot.

What might the “uber” of co-operative homecare be? Would the flexibility of uber help or hurt in a homecare context? Steven reflects on conversations he’s had with Mary. There’s already a degree of flexibility in co-operative homecare. Workers can choose cases; they don’t have to take a case. If someone says I just want to work 25 hours a week, that’s respected. Among low wage workers, you are constantly managing the tradeoff of income that won’t lead them to lose their benefits. Caregiving online is a unique challenge; this is not simply a cold, distant service. This is very intimate, and there’s a huge amount of personal risk involved.

The space of online caregiving services is already getting crowded. The basic model is to maintain as much distance between the provider and the platform. That’s not a very good approach for home care, but that’s what many startups are trying to achieve: the presumption of quality with an independent-worker approach that distances the company from the worker and pushes the risk onto workers. Steven wonders if there’s a way to actually discard the independent contractor idea, maintain a commitment to workers, and actually scale the service more widely.

Mary Gray notes that the most important thing she’s found in her research is the degree to which workers collaborate. Workers often take on a great amount of quality control for a range of reasons. For workers who become most invested and stay around, workers don’t let each other exploit surge pricing issues, preventing someone from racing and hogging opportunities. When there’s too much work to be done, there’s nothing to be gained by hogging a single transaction. Workers will often call each other to share tasks, with the expectation that others will come in.

Yochai Benkler asks: how much variability do you see on the care among workers and clients? Mary describes how workers build their own load balancing in a system that’s not designed to offer that support. He asks Steven how much of the load balancing is handled the workers and how much by coordinating staff.

At PHI, each coordinating staff member manages around 70 to 80 people. The coordinators take in cases and then make decisions about who might be a good worker. There’s less worker to worker coordination in the case of PHI; they rely on the coordinator.

Brian Keegan notes that when we talk about the platform economy, one of those camps talks about scalability, while another rhetoric talks about rationality (surge pricing). In your context, have you tried to scale? Secondly, given that you’re working in a highly regulated market, do things like surge pricing not apply? Steven notes that PHI consciously grew slowly in order to control quality. Mostly it’s been a gradual growth; they also don’t have a lot of money, so it hasn’t been easy to take a financial leap. Furthermore, PHI contracts with healthcare organizations who direct blocks of clients to us. Instead of linking people with clients, we’re linking people with blocks of clients. We’re constrained by the competition and our relations to other contractors. One reason the organization has grown slowly is that there are relatively few payers who pay well. The organization could have grown larger, but they wouldn’t have been able to pay as well. Now, thanks to the policy work, because all payers are required to pay the same, the playing field has been leveled.

SJ Klein asks if this model has served as an example for other fields of work? Steven responds that they provide consulting services to more mainstream nonprofit or for-profit homecare industries. They help other organizations improve their training, peer mentoring, and team structure work. On the managed care side, no one has copied their model. SJ asks about childcare. Steven responds that there’s a group of childcare cooperatives in Philadelphia called ChildSpace. 

Samer Hassan notes that a lot has changed in 30 years. How do digital tools influence your work? Steven notes that the industry faces a digital divide — not everyone has a computer. Staff communications are Internet-based, but the workers are not formally coordinated through Internet technologies.

Tim Davies talked about the idea of a network of co-ops who could refer clients and support each other. That tends not to be happening across the co-op sector as a whole. He remarked that there might be an interesting space for co-op to co-op cooperation. Tim is now working on a project to document co-ops in the UK. Steven mentions a group called Co-op metrics, coming out of the consumer co-operative world to unify and benchmark accounting across the co-operative world, to help each other learn from each other. He also mentions work by the Democracy of Work Institute.

At this point, I felt pretty demoralized. Thinking about all the fancy features within platform economy systems, I could think of very few of the competitive advantages of a platform that actually support workers– ratings, dynamic labor allocation, and independent contracting all make a platform more efficient at the expense of workers. I put those concerns on the table and asked if anyone could meaningfully argue otherwise.

Mary argues that a platform could be designed to provide better support to the labor suppliers. That’s a real missed opportunity, she says. Steven does believe that for the homecare industry, worker ownership is very antithetical to what platform infrastructure is often designed to achieve. That’s why he would argue that in the end, that the platforms competing with PHI won’t be able to control for quality. If someone entered the market with more of a relationship with employees and quality control — and that would help you compete. If you offer any kind of training, the department of labor will come in and call them employees.

Mary noted that she could imagine a co-operative that could offer training opportunities. What would it look like to have that training built into what’s provided to workers at the platform level, she wonders. We tend to think of independent contractors as independent people. We don’t recognize the degree the deep amount of collaboration has on contingent labor.

One attendee introduces idea of rating systems, where healthcare recipients could offer well-structured feedback to the people offer help to them. Would this create a positive reputation that would last beyond one-time contact? The participant describes the coordinator as a possible bottleneck in the system that might be unnecessary. Are you worried about seeing coordinators replaced? Steven notes that there’s a different exchange going on for PHI– rather than working with individual consumers, their flow of clients comes to us through a large contractors, which requires centralization on PHI’s part to deal with them.

Tim Davies contrasts the responses taken by a worker co-op and a platform: in market style platform systems, they push the risk onto the worker. Worker co-operativism is about pooling risk between workers. If someone struggles as a worker, they come together to help that worker. He wonders: as a consumer in solidarity with other consumers and workers, I’m willing to have some kind of stake in this endeavor that allows people to compete while taking on that risk. Steven mentions the work of David Thompson, the major US co-operative historian.

Dean Jansen asks Steven if he has any advice for someone who’s thinking about forming a worker co-operative. Now, says Steven, compared to when he started, there are many mentorship programs available. As people think about creating new platforms and endeavours, it’s important to take advantage of that experience when starting a new initiative. Dean asks where to start. Locally, one place to look is the Boston ICA group, who work with a lot of social enterprises and worker owned companies. Another option is The Democracy at Work Institute, the nonprofit spinoff of the US Federation of Worker Cooperatives, who create peer structures of mentorship for new co-ops.

Oct 22, 2015: this post was edited to correct factual errors in transcription and include a statement from Steven Dawson.