Co-Op Economic Footprint: Multi-Sector Analysis Estimates Total Co-Op Economic Impact at $653 Billion

Article excerpt

Cooperatives occupy a unique niche in the economy of the United States. Co-ops are engaged in a broad range of businesses: electricity distribution to rural farms and homeowners, bargaining and marketing services for agricultural producers, and delivery of home healthcare services for the elderly, among many others. Cooperative businesses have provided an effective "bottom-up" solution for meeting needs imperfectly addressed by the market and have been responsible for many market innovations.

Nonetheless, no comprehensive national statistics about U.S. cooperative businesses exist to quantify and describe their impact on the U.S. economy and on the lives and businesses of Americans. To address this lack of basic information, the U.S. Department of Agriculture funded the Research on the Economic Impact of Cooperatives (REIC) study, which is being conducted by the University of Wisconsin Center for Cooperatives (UWCC). The project received matching support from the National Cooperative Business Association and the Wisconsin Department of Agriculture, Trade and Consumer Protection. UWCC and the University of Wisconsin-Madison also provided in-kind support.

The first phase of the study, completed in April, provides an initial snapshot of the size and scope of cooperative activity.

How big a footprint?

UWCC collected data summarizing four aggregate economic sectors and 17 subsectors that were defined by USDA at the outset of the project. The study identified more than 29,000 U.S. cooperative firms operating at 73,000 locations and owning more than $3 trillion in assets.

These co-ops directly accounted for more than $500 billion in revenue. Wages and benefits topped $25 billion and supported 853,000 jobs.

There are an estimated 118 million U.S. cooperative memberships, with individuals often being members in more than one co-op. When mutual insurance policy holders are included, that number rises to more than 351 million.

There are additional impacts from the direct business activity of cooperatives that ripple through the broader economy. A cooperative's costs include outlays that become revenue for other businesses. Wages, dividends and patronage refunds paid out by the cooperative become the personal income of individuals whose spending is the source of revenue for other businesses.

To gauge the true size of the economic "footprint" of cooperatives, these secondary economic impacts also need to be part of the analysis. The study estimates that total cooperative economic activity, including secondary impacts, account for nearly $653 billion in revenue, in excess of 2 million jobs, almost $75 billion in wages and benefits paid, and $154 billion in income.

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The commercial sales and marketing sector encompasses cooperatives that provide agricultural marketing, processing and supply services, biofuel refining companies, consumer cooperatives that buy wholesale on behalf of consumers, arts and crafts cooperatives that supply and sell the work of artist members, and other cooperatives that operate across a wide variety of economic subsectors. Across all economic-impact measurements, farmer cooperatives account for the substantially largest share of this sector.

Social and public service cooperatives include firms that provide a diverse array of healthcare, housing, transportation and education services. Housing cooperatives dominate this aggregate economic sector in terms of the number of entities, but economic impacts of housing co-ops were not reported. Assessment and tax practices for co-ops vary significantly by municipality, making it impossible to achieve data consistency. The healthcare subsector accounts for the largest share of employees and members within this aggregate sector. While this sector accounts for a tiny fraction of the economic impacts that were measured, the largest share of identified cooperatives--more than 38 percent--fell within this category. …