Who Benefits From Co-op Member Labor?

Recent applications of Department of Labor minimum wage and related requirements to co-op member labor -- where members receive a discount on purchases in exchange for co-op work -- have highlighted longstanding risks and questions about such programs. I know from direct and indirect communications that many people are concerned, and some co-op stores are evaluating member labor in ways they haven't before.

Along with concerns over legal and tax liabilities, which are serious, I hope cooperators also are worrying about co-op purpose and the overall impact of their member labor program. Our businesses are cooperative societies with a larger purpose and should be operating in a fashion supportive of that. Member labor, like member equity or financial requirements, manifests the purpose and practice of a co-op in crucial ways. By purpose I mean, most generally, their mission of establishing and expanding cooperative ownership of resources; by practice I mean a service orientation as the basic means of realizing that mission while meeting members' needs.

When the cost or risk of maintaining member labor programs increases, these questions of purpose and impact come to the fore. Discussions of management and the mechanics of member labor are important also, but they need to follow or at least be accompanied by re-examination of more fundamental issues. In what follows, I will offer some criticisms of typical member labor programs as a way to encourage this kind of examination, and to provoke your further comments.

If member labor programs are well managed, they can be consistent with co-op goals and excellent service. Such programs can contribute toward reducing operating costs, and they promote solidarity and feelings of social purpose among co-op members. And members participating in a work program may do more shopping at the co-op than they otherwise would.

But the reality at many stores is that member labor is more expensive and less efficient, providing weaker customer service, than having staff performing the same in-store functions.

Who benefits from the typical member labor program? Not most shoppers or members, if by typical we mean an optional program that offers a discount on purchases in exchange for work in the store. And not the staff, if the co-op is typical also in having market and margin requirements which limit allowable labor expenses. Most members and potential members haven't the time or interest to schedule a weekly or monthly stint at the co-op. These people pay, through the pricing and discount structure, for the member labor program; and if the program involves in-store work, it results in less than professional service. In some co-ops, working conditions for a relative few appear to take priority over shopping conditions for most. And the staff pays for such programs at least twice: by the training, supervision, and corrective work that in-store member labor requires; and because staff wages are actively depressed by diverting a chunk of labor expenses away from paying those who are on the job every day. In some co-ops, 'volunteers" earn as much in discounts per hour of work as do the store professional staff!

Ironically, the heart of the Department of Labor restrictions on member labor, as applied in the case of La Montanita Co-op in Albuquerque, are consistent with my own recommendations to most co-ops, at least once they move beyond either the small or required member labor stage:

  • member labor should not be used for in-store operating tasks;
  • professional functions should be performed by professional staff or members on contract for the purpose.

Board committees and subcommittees, social and outreach activities, and other membership/marketing functions offer plenty of opportunities for skilled as well as unskilled contributions to the cooperative, whether one is truly a volunteer or is receiving a purchase discount in exchange for the work.

See other articles from this issue: #034 May - June - 1991