It's true that coops are less likely to choose to respond to change by radical workforce reductions, but that's rather the point -- the "need" for such a response isn't an objective fact of circumstance, it's a particular valance of the interest of equity owners vs. those of workers. When the equity owners are the workers, those interests are balanced differently.

It is certainly true that workforce reduction is just one possibility, but what I still wonder is when coops work and when they don't. Somehow it seems to me that they only work when the business is not too scalable, but profit is directly related to work input.

The majority (by number) of worker co-operatives are places like coffee shops, where revenue is more closely related with the number of customers than work input.

Co-ops are a great structure when profit is directly related to work input, but that's not a requirement.

> I still wonder is when coops work and when they don't

I haven't read it yet, but this might be of use.

http://www.geo.coop/story/why-some-worker-co-ops-succeed-whi...

Since co-ops vary so widely, there's no single answer to that question, but it's obviously something that co-ops take into account in their articles of incorporation or equivalent. In some co-ops its exactly like a corporation (ie, your boss fires you). Others have more involved procedures, but there's always a procedure. In some it will be a moot question, since worker pay is often set up as a formula based on net income. If net income goes negative, nobody gets paid.

A worker coop would strive hard to avoid taking that action. In NA corps, this is among the first actions to take. The actual historical case, I reference is Mondragon, who has virtually no layoffs in its entire history.

What they do is shift workers from non performing sectors to performing ones.

They have economic cycles in Spain, and within the org itself, like the rest of the world but they deal with it more equitably.