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New York's cooperatives hope to bridge the wealth gap

The United States economy rebounded strongly in the second quarter but many Americans are still struggling to make ends meet. The job market is improving but with many of these being low paying positions, some are looking at other options to lift them out of poverty.

NEW YORK: The United States economy rebounded strongly in the second quarter but many Americans are still struggling to make ends meet. The job market is improving but with many of these being low paying positions, some are looking at other options to lift them out of poverty.

In New York, job creation is up but poverty remains a real problem. According to the Federation of Protestant Welfare Agencies nearly half the city's population is poor or nearly poor. That is why some people have decided to make a change.

Rosa Palaqubay, an employee of the Apple Eco-Cleaning cooperative, said: "I was paid US$10 an hour, compared with the cooperative. Sometimes, I make between US$15 to US$25 an hour. It is a big difference." Before joining the Apple Eco-Cleaning cooperative, Rosa struggled to earn a decent wage. Now, after working for this cooperative for over a year, she said there are other perks besides the increased wages. With each member having a stake in the company, she said she has learnt new skills like helping to manage the company's finances.

Cooperative advocates said it is not just the employees that benefit. Wayne Ho, Chief Program and Policy Officer at the Federation of Protestant Welfare Agencies, said: "People who live in a certain neighbourhood can earn more money, they can spend more money in their neighbourhood, so worker cooperatives are good not just for the workers and the families but they're also great for the local economy."

There are currently about 25 workers cooperatives in New York with about 300 around the United States. In the cooperative, each worker gets a vote on company affairs with the idea that profits are then spread more evenly compared to traditional businesses.

Job creation may be up at post-recession highs but with so many Americans struggling to get by on the minimum wage, some experts think that initiatives like co-ops will keep generating interest. James Parrott, Deputy Director and Chief Economist at the Fiscal Policy Institute, said: "Given the outlook now, where it doesn't look like things are going to improve dramatically, I would expect that there would be a continued interest in worker cooperatives."

Parrott hopes that if cooperatives thrive, it will have a knock-on effect on traditional businesses too, forcing them to compete by raising wages and working conditions. 

According to ratings agency Standard and Poor's, the wealth gap is hurting US economic growth. With New York's mayor Bill de Blasio having pledged over US$1 million in funding cooperatives, many hope this can be a solution to the city's growing inequality. 

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