response: November 2013 Issue

Hope, One Head of Lettuce at a Time

Evergreen Cooperatives builds businesses, creates jobs, then recruits and trains people to fill them in the Rust Belt.

Hope, One Head of Lettuce at a Time
A worker reviews solar panels he installed for Ohio Cooperative Solar

This is a story about hope. Not the feel-good theoretical, wishful thinking kind of hope but the tangible kind that comes when you have a solid paycheck for the first time, when the jail time you've done doesn't block you from improving your life, when you can begin to see a positive future for yourself. It's a real kind of hope for neighborhoods that have known decades of despair, crime, racism and entrenched poverty. It's the kind of hope for our cities and our country that offers a recipe for how we can grow a more economically and environmentally sustainable and just society together.

It's a kind of hope that's budding here and now in the Rust Belt. It starts with the rise and fall of an urban neighborhood.

The summer of 1966 was hot in many senses of that term. Muhammed Ali won the heavyweight boxing title. We had our first lunar soft landing. War was escalating in Vietnam. The Supremes released "You Can't Hurry Love." A sniper wounded James Meredith, a civil rights worker in Mississippi. Stokely Carmichael launched the Black Power Movement. And in July, neighborhoods in one U.S. city after another started to erupt in rioting. Omaha. Chicago. Cleveland.

Hough was one such neighborhood in Cleveland.

Hough began as a fashionable middle class neighborhood in the late 1800s, with single-family homes and white families. By 1960, however, it had undergone a complete demographic switch. The percentage of residents who were people of color went from 5 percent in 1950 to 74 percent in 1960. Case Western Reserve University's historical archives noted:

"Long before this racial turnabout, Hough suffered from an aging housing stock, a decline in maintenance and in the percentage of owner-occupied dwellings and overcrowding. Close to the predominantly black Central neighborhood, Hough had become a natural area for change when the city's urban-renewal programs displaced many African Americans in the mid-1950s. Realty companies fostered panic selling, and absentee landlords converted many single-family units into rooming houses and tenements. In 1956 the neighborhood was an uneasy mixture of long-time residents, whites who had recently migrated from Appalachia and blacks who had moved into Hough."

Urban renewal was promised for Hough in 1960, but five years later it had really not taken hold. In 1965, the Cleveland press reported the neighborhood was in "crisis."

Then came the riots, and a long time of languishing began. This drama was repeated in many U.S. cities, where abandoned, burned out and gutted buildings stood and stand even today as gloomy testaments to a bitter past or an archaic industry that has long ago become obsolete or moved off-shore.

Today's challenges

Cleveland, like many Rust Belt cities, is faced with imaginatively dealing with collapse. The 2010 U.S. Census numbered its population at 431,000-less than half it was in 1950. And the exodus is continuing. In terms of sheer numbers, Cleveland and Cuyahoga County was second only to Detroit and Wayne County in the number of people leaving between 2011 and 2012, the Cleveland Plain Dealer reported. Where it once boasted more headquarters of Fortune 500 companies than New York City, it is now home to only one. Formerly a hive of industry and a hub for Great Lakes shipping, its economy is a shadow of its former self.

Cleveland's unemployment rate is higher than the national average. Its 34 percent poverty rate is more than double the national average, and nearly triple the rate of its surrounding suburbs, according to U.S. census data. As businesses close, jobs shrink and people leave, the tax base crumbles, contributing to fiscal problems for the local government. Add a severe national recession and fewer federal dollars flowing to Cleveland and cities in general, you don't have a pretty picture.

Hough is located in an area in Cleveland known as Greater University Circle. The juxtaposition of wealth and poverty, opportunity and the shortage of it, is stark. The Economist magazine noted that some 45,000 people commute to that area every day to work and to enjoy prominent, world-class institutions for learning, healing and culture -the Cleveland Symphony and its Severance Hall, the Cleveland Museum of Art, the Cleveland Clinic, Case Western Reserve University and University Hospitals.

In 2005 the Cleveland Foundation marshaled some of these institutions, two visionary nonprofits and an array of other partners along with the city government to "remove the invisible divide" in four square miles of Cleveland through the Greater University Circle Initiative. The Evergreen Coops, launched in 2008, are a central part of their pioneering approach to turning around struggling neighborhoods and the city.

A lesson from Spain

When Cleveland Foundation staff called Ted Howard, the executive director of the Democracy Collaborative at the University of Maryland for help in devising a turnaround strategy, they started a conversation that "turns traditional economic development models on their heads." As Mr. Howard describes it, traditional models train people for jobs, but there is no guarantee that the jobs will be there after the training is finished.

Traditional models often involve cities and states attempting to lure corporations with the offer of big subsidies like tax holidays and publicly funded infrastructure as a way to attract jobs and new investments. However, unless the enticements come with strings (and often they do not), there is no guarantee how long the company will stay and how many or what kinds of jobs will be created.

Instead, Mr. Howard explains, Evergreen builds the businesses and creates the jobs then recruits people to receive training and fill them. (While generally true, some positions do require finding people with specialized skills and knowledge, the CEO of one co-op said.) The strategy focuses on starting new businesses that create jobs and wealth that stays in the local community rather than trying to lure existing businesses from some other location, which can be a zero sum game.

In establishing a network of worker-owned cooperative businesses, Cleveland is taking a page from the highly successful Mondragon Corporation, the seventh largest firm in Spain. Inspired by the ideas of a young Catholic priest, it began as an industrial co-op in 1956 in a city with tough unemployment conditions similar to Cleveland's. The corporation now consists of 256 companies, half of them cooperatives, and has some 82,000 employees and assets of about $43 billion.

Three co-ops and growing

Evergreen consists of three cooperative businesses and a holding corporation, the Evergreen Cooperative Corporation. Funders and managers hope to grow the number of businesses over time, with a goal of creating 10 co-ops and 500 living wage jobs for local residents within five years. While that time frame may be ambitious, early results are promising.

Evergreen Energy Solutions opened in 2009 to design, develop and install solar panels on commercial, institutional and governmental buildings and provide residential weatherization and insulation services. At last count, the company had weatherized more than 180 homes and installed three large scale solar arrays. The business became profitable within six months of operation and "exceeded our expectations," said Lillian Kuri, Cleveland Foundation program director for architecture, urban design and sustainable development.

Evergreen Co-op Laundry opened in October 2009. Located in a state of the art building that's gold certified by the U.S. Green Building Council's Leadership in Energy and Environmental Design (LEED), it provides laundry services to hospitals, nursing care facilities, hotels and restaurants, and it has an annual capacity of some 10 million pounds of laundry.

"I love what we do," said Laundry Operations Manager Medrick Addison about how he approaches job qualifications for local residents. "I hire the attitude and not the skills. I can teach them the skill."

And they have. Working at the laundry is an opportunity to learn life and job-specific skills as well as receive management training. According to Democracy Collaborative, as of July 2012, the laundry had 22 employees, 19 of whom are Cleveland residents, 19 are people of color, 18 had criminal convictions and 14 were formerly incarcerated.

Since the launch, some employees have moved into supervisory roles, and employees have selected leaders who are being trained for board roles.

The third co-op, Green City Growers, just opened in February of this year. It is a 3.25-acre hydroponic greenhouse-the size of three football fields-growing leafy greens and herbs and selling them to large food service companies and grocery stores. Its goal is to produce 3 million heads of a lettuce a year. By the time it opened, it was producing 60,000 a week.

Chief Executive Officer Mary Donnell explains that her co-op will donate 1 percent of production to a food bank for distribution in the neighborhood. She expresses pride in running what may be the largest urban greenhouse in a core urban area in the United States and one of the largest urban food initiatives in the country with 24 employees. Until Green City Growers, Clevelanders were getting all their lettuce from California and Arizona, thousands of miles away.

Ms. Donnell describes how employees gain equity in the co-op. Employees have a one-year probationary period during which they earn a living wage geared to Cleveland standards. At the end of that period, the co-op board of directors reviews the employee's performance reviews, recommendations from supervisors and members (employee-owners once they actually have some). The board makes the final decision whether to bring someone on board as a member. If the person wants to join the co-op as an employee-owner, she can start establishing equity share. He immediately gets benefits and a 50-cent an hour raise, which is kept in an account to build up to a $3,000 investment in the company. The worker also starts to accrue a "patronage account," which some estimate could reach $60 to $65,000 in 8 to 10 years. Ms. Donnell calls that figure "aspirational" and said, "There will be rules about how they can take that money out."

The co-op ownership structure is a bit different than a typical co-op. Employees will own 80 percent while the holding company will own 20 percent of the equity. This will enable local funders and the government to have a stake and say in operations and growth plans.

An important element in the Greater University Circle Initiative strategy is to tap the economic potential of anchor institutions. The area's two medical complexes and university alone spend about $3 billion annually. How can some of that spending-and the institutions' investment portfolios-be better directed to stimulate the local economy? Part of the Evergreen strategy is to try and tap these local institutions to become part of an early customer base as a way of establishing a demand for the co-ops' goods and services, to create an ongoing, consistent revenue stream. In turn, this helps more money stay in and circulate in the neighborhood and city. Channeling the procurement and investment by anchor institutions can stabilize and strengthen the local tax base. Buying local and buying from establishments-the co-ops-that consciously work to minimize their carbon footprint also can enable the anchor institutions to meet their own goals for lowering their carbon footprints and possibly lowers their expenses.

Mr. Howard, a member of Evergreen's board, says the strategy for identifying possible businesses is to look for opportunities in the growth sectors of the economy- "health care, our aging population, local food and sustainable energy, many of which are recipients of large-scale public investment," he said. The Democracy Collaborative holds that developing the financing and management capacities that can take this effort to scale, that is, to move beyond a few boutique projects or models to have significant municipal impact is critical.

A cure for what ails us

The fact that the Evergreen Cooperatives have taken root in some of the most economically and socially challenging conditions and are showing promising beginnings is especially noteworthy given national trends.

The Center on Budget and Policy Priorities reports that before our economy hit the skids in 2007, we had a greater concentration of income at the uppermost echelons of U.S. society than at any time since 1928. Income and wealth inequality is even more pronounced when racial-ethnic and gender identity are taken into account.

While the national economy finally looks like it is recovering, we are producing more goods and services with fewer workers-a net loss of 3 million jobs-and they are earning less. The U.S. median income has fallen since 2007. Moreover, the recovered wealth in the stock market has ended up in far fewer hands. As finance journalist Rick Newman wrote in the March 11 US News and World Report: "Wealth is back. Just not for everybody." Mr. Howard drives home this point by noting that the 400 wealthiest individuals in the United States own more than the poorest 190 million people.

The Evergreen Co-ops are one attempt to counter these negative trends, restoring a little more economic democracy and equality one head of lettuce, one bed sheet, and one kilowatt of electricity at a time.

Pamela Sparr consults on economic and environmental justice issues for nonprofits, including United Methodist Women.

Posted or updated: 10/31/2013 11:00:00 PM