Say No to Uber-Platforms and Yes to Co-ops and Nonprofits
California Assembly Bill 626 was recently introduced by Assembly members Eduardo Garcia and Joaquin for the purpose of further expanding California’s homemade food industry. Currently, under the California Homemade Food Act, only certain “non-potentially hazardous” foods including breads, pies, fruit jams, and dried goods are allowed to be made in a home kitchen and offered for sale. AB 626 aims to expand the range of saleable foods to include all but the most risky foods and processing practices. This decriminalization of an already widespread practice has the potential to create thousands of small businesses, while at the same time protecting consumers by extending existing homemade food safety regulations to cover the full extent of production. There can be no doubt that this bill is an important and necessary regulation.
Beyond health and safety, however, policy makers must play a vital role in ensuring that the benefits of the market, which AB 626 will create, are realized by its participants – cooks, eaters, and community organizations – not third-parties seeking to capitalize on the new exchanges that it will allow. In the era of gig-economy platforms like Uber and AirBnB, it is easy to imagine the emergence of a handful of dominant technology companies that will seek to insert themselves between producers and consumers, charging a fee on every transaction. In other industries we have seen that the rapid growth of well-funded tech companies allows them to push out smaller market players, thereby gaining the leverage to raise transaction fees for both producers and consumers, as well as dictate standards that put de facto limits on the variety of products that can be brought to market.
The Sustainable Economies Law Center (SELC) has proposed that AB 626 include language that limits third-party intermediaries in this market to a restricted set of entities that which best represent the community of stakeholders, namely cooperatives and non-profits. The SELC argues that, while for-profit intermediaries have an incentive to squeeze both workers and consumers, non-profits and cooperatives serving as intermediaries do not; rather than being beholden to the needs of shareholders, these organizations set prices and terms of work as determined by the needs of direct stakeholders. The SELC also notes that under existing California law governing certified farmers’ markets, similar language to their proposal has been largely responsible for the recent flourishing of farmer-to-consumer transactions. The fact that California has seen a direct benefit from defending the frictionless character of transactions in this market implies the viability of this approach.
Given the Platform Cooperative Consortium’s experience with cooperatively-owned, web-based intermediaries, we can confirm that the SELC’s appraisal of Uber-like technology companies is correct. While the fees of for-profit platforms lie between 20-30% on average, cooperative platforms tend to need between just 2-5% to cover administrative costs. Platform cooperatives like Stocksy, a stock-photography cooperative that charges a fee of 3%, even return leftover funds to their members through dividend payments — in the case of Stocksy, over $200,000 was returned to member-owners last year. These more equitable pay structures can mean the difference between workers making less than minimum wage and making a true living wage.
Also, anecdotally, we understand that the homemade food industry in California is predominantly made up of women, many of them immigrants and women of color. The stark juxtaposition of the gender and racial makeup of these cooks, as compared to the executive staffs of tech companies – male-dominated with women largely relegating to support roles – adds another problematic dimension to the potential ‘Uberization’ of the cottage food industry. Worker governance and ownership, core features of cooperatives, necessarily upset these kinds of gendered and racialized inequalities: the demographic makeup of a cooperative always reflects its membership. With well-crafted legislation, policy makers have the opportunity to ensure that California’s homemade food industry not only protects those who need it most, but also sets a forward-thinking example for future food policy nationwide.
The Platform Cooperativism Consortium
The Platform Cooperativism Consortium (PCC) is an international coalition of over 40 organizations – platform cooperatives, cooperatives, universities, unions, nonprofits, technologists, and advocacy groups. We are united in our goal to support the ecosystem of the emerging cooperative platform economy through research, technical and legal assistance, and a loan fund. Our founding members include: The New School University (NYC), The Center for Civic Media and The Co-Design Studio at MIT (Cambridge), Oxford Internet Institute, Berkman Klein Center at Harvard (Cambridge), The United States Federation of Worker Cooperatives (NYC), The U.S. Solidarity Network, The National Cooperative Business Association, The ICA Group, The Freelancer’s Union, The P2P Foundation, The European Trade Union Confederation, The National Domestic Workers Alliance, and The Internet of Ownership, among others. Learn more about our mission and contributors on our website.
For additional information, please contact:
Associate Professor Trebor Scholz (Platform Cooperativism Consortium, The New School)