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Look to Cleveland

There’s something exciting happening in Cleveland, and it doesn’t have to do with the Rock and Roll Hall of Fame. Although the city has been largely in the news recently for how badly it’s been walloped by foreclosures, that’s not the whole story.

There’s also Evergreen Cooperatives.

Evergreen was started by the Cleveland Foundation and a consortium of large institutions in Cleveland’s University Heights neighborhood. Its premise is fairly simple and startlingly ambitious, and looks to be gratifyingly successful.

Here’s the idea: The hospitals, universities, and other large institutions in University Heights are surrounded by six dirt poor neighborhoods. Having these neighborhoods in these conditions is not good for these institutions—it hampers their recruitment of staff, students, and patients—and so in the name of enlightened self-interest, they’d like to do something to lift them up.

Now, whenever someone launches an effort to restore a neighborhood or fight the effects of poverty, someone will say “without jobs this will be meaningless.” And they’re right.

Where people go from there, however, varies widely, and all sorts of ineffective or unwise policies have been undertaken in the name of those elusive jobs.

Rather than subsidize footloose corporations or job training for jobs that may or may not be there, the Cleveland folks, with the help of some consultants from the Democracy Collaborative, took a much more pragmatic approach.

First, they decided they wanted to support businesses that would be in the form of worker-owned cooperatives. This has several economic development benefits: Without corporate overhead or an entrepreneur trying to get rich, they can be competitive even while treating their employee-owners well. Also, workers don’t vote to send their own jobs overseas. A former industrial city like Cleveland knows well that this is a benefit. And ownership builds equity for the workers, not just income, which is an essential step to breaking the cycle of poverty.

The other key part about Evergreen is that they started with demand. University Heights institutions spend $3 billion a year on goods and services, almost none of it in the neighborhoods. They sifted through these categories to come up with a list of niches that could be profitably filled by new worker-owned cooperatives and that fit the following criteria:

Has the potential to create at least 50 jobs.

Has the potential to be profitable enough for worker-owners to build up $65,000 each in equity in seven to eight years and to return some profits to a collective fund that will be used to start up new cooperatives

Can be the greenest business of its kind in Northeast Ohio, giving them a market advantage with clients who are trying to reduce their carbon footprint

Would not rely on only one client.

Would not take jobs away from another local business.

Would need no subsidy beyond somewhat below-market interest/patient capital for startup costs.

Oh, and the co-ops would do this while hiring only from the target neighborhoods, many coming through a training program that specialized in working with ex- offenders.

Pipe dream? Actually, no. The first three co-ops are starting strong. The first to open was Evergreen Cooperative Laundry. With many local nursing homes and the VA hospital looking to close their in-house laundries and outsource anyway, and another regional laundry possibly closing, Evergreen saw an opportunity in the millions of pounds of bed linens generated in their area. Their facility is state-of-the-art, using several times far less water and energy, and less harmful cleaners, than standard laundries. They got commitments from clients before even opening, which helped them get financing even in these credit-crunched times.

The second is Ohio Cooperative Solar, which installs solar panels on the roofs of these institutions, keeps ownership of the panels, and sells the power to the hosts. OCS gets the tax credits the nonprofit universities and hospitals and government buildings can’t take advantage of, and they get the green bragging rights and a hedge against rising energy prices. OCS has already revised its business plan to 75 employees instead of 50. Within a few years, these workers will own the largest installation of solar panels in the Midwest.

And Evergreen Cooperative Growers is putting the final touches on what will be the largest urban greenhouse in the country, growing local lettuce and herbs on a reclaimed brownfield for food service distributors serving the area’s institutions who are so eager to cater to the desire for locally grown foods they’ve told Evergreen they’ll buy “as much as you can grow.”

More are on the way, along with a credit union to manage the workers’ equity funds and the cooperative development fund. Evergreen is aiming for nothing less than the success of the 50-year-old network, the Mondragon Cooperatives in the Basque region of Spain, which in 2007 employed 100,000 worker-owners and had revenues of $24 billion.

The Cleveland model has something in it for all political orientations, and most importantly, it’s going for real effects, not just feel-good stories.

I hope the implications are obvious. Albany is famous for its own heavy concentration of hospitals and universities, not to mention the state government. How is the money they spend benefiting their city? Do they have local options for the things they need? Could they? With a champion and some startup capital, I wager the answer could be a yes easily as loud as Cleveland’s.

—Miriam Axel-Lute

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