A Co-Op’s Victory over COVID’s Economic Disruption
This sidebar is a supplement to Could Co-Ops Solve Income Inequality?
In early 2020, soon after COVID-19 struck the U.S., Cleveland’s Evergreen Cooperatives confronted the same difficult choices that most other American businesses faced. The way Evergreen handled these challenges, however, says a lot about how the worker-owned, co-op business model might be built to weather economic crises far better than the corporate model can.
Evergreen Cooperatives comprises three main ventures: Green City Growers, a commercial greenhouse operating inside the city; Evergreen Energy Solutions, an energy conservation contractor; and Evergreen Laundry, which handles laundry for various local institutions, primarily hospitals. While all three ventures made adjustments to avoid getting swept up in COVID’s swath of damage, the laundry operation’s response is perhaps the most revealing.
In March, when hospitals across the country started fearing they would soon be overwhelmed by a surge of admissions, Evergreen Laundry embarked on a hiring spree, so it would be ready to handle mountains of new laundry. In Cleveland, the surge never came, which was fortunate for Clevelanders but not so fortunate for the laundry service’s bottom line. “Suddenly we had all these new costs, but no new revenue,” John McMicken, CEO of Evergreen Cooperatives, told me.
Over the following weeks, as laundry work rose and fell, “everyone had to ride the rollercoaster from overtime to reduced hours, then back to overtime, then back to reduced hours.” At one point, 90 percent of the linens that Evergreen Laundry was taking in came from the beds of COVID patients. “People still wanted to work,” McMicken says. And work they did. Absenteeism at Evergreen actually dropped during COVID’s peak period, from the company’s typical rate of 3 percent to a stunning 1 percent. All the while, only four of Evergreen’s 250-plus workers tested positive for COVID; of those, all but one discovered they’d gotten it from family members, making it unlikely that the virus ever took hold inside Evergreen’s facilities.
As public health and its economic ripples accumulated, Evergreen found ways to pivot a little faster than many traditional businesses did. One example occurred during the pandemic’s early weeks, when people were panicking over the shortage in face masks, which had everyone so frightened in the early weeks of the pandemic. At that time, almost all of the masks on the market were (somewhat ironically) made in China, which couldn’t send exports; and most of those available were throwaway masks designed for one-time use. So Evergreen figured out a way to take in used masks and other Personal Protective Equipment—goggles, face shields, etc.—and sterilize it for reuse. (Evergreen is now storing that gear for about 40 hospitals in the Cleveland area, in the event the much-feared surge ever hits.)
Another arm of Evergreen Cooperatives, Green City Growers, also found a way to pivot quickly, and thus avoid the worst of COVID’s economic damage. For most of its sales, Green City, which is the largest commercial urban greenhouse in the U.S., has depended on restaurants and schools, all of which suddenly closed. The greenhouse’s revenues quickly dropped 75 percent. While other big food suppliers were still trying to figure out how to adapt to this ravaged landscape, Green City turned to big groceries, and convinced them to carry various new categories of produce.
Throughout the chaos—which among other things, required establishing temperature-testing procedures as each employee began his or her day—Evergreen managed to avoid laying off any employees. In fact, co-op managers decided instead to give workers hazard-pay increases. “It hurt our bottom line,” McMicken says, “but we knew our priority was taking care of our workers.” During April and May, the company went so far as to hire a caterer, who brought in hot meals twice a week.
If the collection of Evergreen’s (and Mondragon’s) experiences are any guide, maybe moments of economic crisis are the times when it pays most handsomely to make workers the priority (as well as fellow owners of the operation), and to build a culture that is willing to meet regularly, arrive at consensus, and change quickly when the need arises. In a white paper published in 2016, the Surdna foundation, an organization that fosters equitable, sustainable communities, arrived at much the same conclusion. Titled “Ours to Share,” the report found, among other things, the survival rate for employee-owned firms is better than traditionally structured companies. “And productivity is as good, if not better.”
For its part, Evergreen seems to keep proving this point. In the spring of 2020, when other companies were still reeling from COVID’s economic damage, the cooperative acquired a fourth venture (a high-tech energy consulting and construction business), and is on its way to buying a fifth: a local chain of coffee shops and cafés. One would think, if a company is willing to launch a collection of cafés in an era of social distancing, some unusual strength must lie somewhere behind its walls.
