Heard off the Street: Economist touts employee-owned companies

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Political economist and historian Gar Alperovitz was in Pittsburgh last week, promoting the idea of rebuilding communities through cooperatives, employee-owned companies and other economic models that he believes would create a more democratic, equitable, sustainable economy.

“One of the things about employee-owned companies that people don’t focus on is that they don’t move,” he said. “There’s a lot of reasons why this new model makes economic and political sense.”

Mr. Alperovitz, who was the featured speaker at a three-day event celebrating Pittsburgh’s new economy, said many of the topics discussed during the event can be traced back to Youngstown, Ohio, in September 1977, when Youngstown Sheet and Tube announced it was closing its mill there. The news devastated the Mahoning Valley economy, putting 5,000 steelworkers out of work and marking the start of seismic upheavals that wrought havoc in the Mon Valley and other Rust Belt communities.

“Youngstown faced the problems other cities are facing now,” said Mr. Alperovitz, who was enlisted in an ill-fated attempt by the mill workers to buy their company.

Even though the effort failed, he said, it laid the groundwork for future employee buyouts, cooperatives and other forms of collaborative ownership that are helping to revive communities following the Great Recession.

“All of that is traceable to that fight,” he said.

Retired steelworker Gerald Dickey was in the middle of the fight. The No. 3 officer of a dissident United Steelworkers Union local at the Youngstown mill, Mr. Dickey was in charge the day the closing was announced. The union local president was in Washington for a conference and the vice president was on vacation, leaving Mr. Dickey to answer the phones when journalists called.

“I wasn’t smart enough to run from it,” recalls Mr. Dickey, 68, who lives just across the state line in Poland, Ohio. “It was like an atomic bomb dropped here.

Mr. Dickey, who had a 43-year career in the industry, including 12 years on the USW staff, retired three years ago.

“Nobody knew what to do. We were like really knocked on our cans,” he said.

Youngstown’s religious leaders responded to the crisis, calling in Mr. Dickey and other union leaders to figure out what could be done. Eventually, they decided that if the company didn’t want the plant, “Let’s own it ourselves,” Mr. Dickey said. USW headquarters in Pittsburgh opposed the idea.

Enter Mr. Alperovitz, whose reputation as a worker-friendly economist earned him an invitation to help with a study to determine whether employee ownership was feasible. The conclusion was that the buyout made sense — if there were capital to modernize the outdated mill. Religious leaders, union workers and other civic groups traveled to Washington, D.C., to call attention to their plight, appealing to President Jimmy Carter because of the importance of the blue-collar vote in upcoming elections.

The White House committed to loan guarantees of $100 million to $200 million — Mr. Alperovitz said there are differences of opinion about the amount. But the differences never mattered because no federal money was ever provided.

Slowly, worker enthusiasm died as the magnitude of the project sunk in and unemployed mill workers moved on with their lives, Mr. Dickey said. For him, the final nail in the coffin was the winter day when people standing in line for unemployment benefits kept commenting how it was the first time they ever saw snow on the roof of one of the mill's open hearth shops, a building that was always hot when the mill was running.

“That’s when people really gave up,” he said.

Mr. Alperovitz said that although the effort failed, the lessons that workers and others learned from the attempt eventually bore fruit. He cites the growing number of successful employee-owned companies and cooperatives in Ohio. Six years after the mill closed, union workers at Weirton Steel voted to purchase their company to save the mill. And USW leadership came around on the issue, becoming a supporter of a developing network of union-owned cooperatives in Pittsburgh, Cincinnati and other cities.

Today’s unemployed face the same kind of dead end that Youngstown Sheet and Tube’s workers faced. The New Economy conference — sponsored by the Thomas Merton Center, the University of Pittsburgh’s David Berg Center of Ethics and Leadership, and other groups — highlighted possible ways out.

Mr. Alperovitz said one solution is to convince universities and hospitals to purchase more of their supplies from the local community. That would create more jobs and a healthier, more stable local economy, he said.

His book, “The Next American Revolution,” explores alternatives to capitalism and socialism, models that he believes are not providing the answers. Citing the increasing concentration of wealth and other economic trends over the last 30 or 40 years, he concludes, “It’s not about politics. It’s about the system.”

“Nobody believes in Washington. But locally, you can do things,” Mr. Alperovitz said.

He said the debate over what can be done is still being shaped by what was tried in Youngstown nearly four decades ago.

“People have to come up with new ideas or things are likely to get worse,” Mr. Alperovitz said.

Len Boselovic: lboselovic@post-gazette.com or 412-263-1941.


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