Beyond socialism? A critical look at the ‘Cleveland model’

Until recently, Glenville — an African-American neighborhood on Cleveland’s economically depressed East Side — was best known for its 1968 rebellion against poverty and police brutality.

On July 23, 1967, a gun battle between members of the Republic of New Libya — who had purchased weapons for self-defense after repeated attacks by police — and white police left three officers, three RNL members and an African-American bystander dead. Mayor Carl B. Stokes temporarily removed all white officers from the neighborhood. With no evidence of who killed the officers, the state sentenced RNL leader Ahmed Evans to death. During his trial Evans was intransigent in maintaining the right to self-defense. His sentence was commuted to life imprisonment and he eventually died in the Ohio Penitentiary.

Today, Glenville still suffers, with 40 percent adult unemployment and an average household income of $18,000 a year. Boarded-up houses are a common sight. Police brutality remains a burning issue for Cleveland’s Black community — witness the recent murders of Malissa Williams and Timothy Russell in a hail of gunfire.

However, the neighborhood has acquired national fame as the site of the Evergreen worker cooperatives. There is widespread praise for Evergreen from liberal and progressive circles: author Naomi Klein; the labor-environmental coalition, Blue-Green Alliance; magazines like the Nation and Yes; and a new documentary on worker coops, “Shift Change.”

Evergreen began in 2009 when it opened an environmentally sustainable industrial laundry. Most of the several dozen “worker-owners” are residents of Glenville or surrounding neighborhoods; some have prison records or were long-term unemployed. Now Evergreen also runs a solar-panel installation company, Ohio Cooperative Solar, and a hydroponic greenhouse, Green City Growers. The consortium claims it will eventually create 500 jobs for low-income city residents.

In “The Cleveland Model,” an article which appeared in the Nation magazine in March of 2010, the Democracy Collaborative’s Ted Howard — on Evergreen’s board of directors — and Gar Alperovitz and Thad Williamson claim that there is “a great deal of national buzz among activists and community-development specialists about ‘the Cleveland model.’” Recently, in an April 12 commentary, Alperovitz even suggests that Evergreen is an example of “municipal socialism.”

Champions of the Cleveland model portray a cooperative enterprise with jobs paying a “living” or “above average” wage, with the possibility of owning a substantial equity share after eight or nine years. On Evergreen’s website and in the movie “Shift Change,” workers express huge satisfaction in being “worker-owners,” saying the experience has turned their lives around. The jobs are created when “anchor institutions” such as the Cleveland Clinic, University Hospitals and Case Western Reserve University engage Evergreen for laundry services and produce for their cafeterias.

However, as an example of socialism, the “Cleveland model” fails.

Average wages, no union protection

The wage of $10.50 an hour, with 50 cents deducted to pay for a share in the business, may be almost 150 percent of the federal minimum wage, but it is barely above the national average of $10.35 for laundry workers. The workers do not belong to a union. The CEO of Evergreen Laundry, Cecil Lee, “comes to Evergreen from Sodexo, a national management company known for providing services to the Healthcare industry, including laundry, food, and environmental services.” (evergreencooperatives.com)

Sodexo is notoriously anti-union. In 2004, Cleveland Clinic fired its in-house laundry staff and gave them the option of working for Sodexo. Cleveland Sodexo workers rallied in 2010 to demand higher wages and an end to “present-day sweatshop” conditions. (newsnet5.com)

Unlike the residents of Glenville, most of Evergreen’s directors and the CEOs of Ohio Cooperative Solar and Green City Growers are white. Isn’t something wrong with this model?

One even has to wonder if the “cooperative” is truly worker-owned. After three years, there are reportedly around 50 workers with a $3,000 stake in the company, which comes to $150,000. Who owns the rest of the shares? Evergreen’s website encourages investment in the Evergreen Cooperative Development Fund LLC, which provides “economic returns to Fund investors.”

Reminiscent of ESOPs

The Evergreen setup bares some resemblance to an older model known as an Employee Stock Ownership Program — ESOP. About 10 million workers in the U.S. are under these schemes. Typically, a distressed company convinces workers — with the consent of the union if they are organized — to take wage and benefit concessions in exchange for stock ownership. However, the stock is not given directly to the workers but is held in trust in an account.

While Evergreen did not emerge from the wreckage of a previously existing, now bankrupt company, there are similarities to an ESOP in that the workers’ “equity” — part of which they pay for out of pocket and part of which is dependent on the company’s profitability — is held in trust. One of Evergreen’s major partners is the Ohio Employee Ownership Council, which promotes ESOPs.

Writing on ESOPs in his seminal 1986 work, “High Tech, Low Pay,” Sam Marcy explained that they “are attempts to tie the workers securely to the chariot wheels of class collaboration.”

Evergreen’s long-term viability is dependent on the largesse of capital. An initial $750,000 investment came from the Cleveland Foundation, a 100-year-old institution founded by Cleveland Trust bank president, Frederick Goff. This grant leveraged $5,000,000 in financing from PNC bank. When PNC bought Cleveland-based National City Bank, it laid off 5,800 workers — most of them in Cleveland.

The laundry’s major customers, nonunionized Cleveland Clinic and University Hospitals, have hurt Cleveland neighborhoods. Over the years, the Clinic’s expansion has displaced homeowners and small businesses. In an internal study, UH found that fewer than 15 percent of its workers live in the city. Both enterprises have bought up neighborhood health facilities, and then closed them to eliminate competition.

What would happen if the workers assert their interests in a way counter to the so-called corporate community? What if they organize a union and demand a raise in pay?

The philanthropists could cut the purse strings. The “Cleveland model” could go down the path of the Cleveland Now! program. Cleveland Now! was initiated by Mayor Stokes a month after many rebellions that followed Martin Luther King’s assassination in 1968. Funds were drawn from corporate donors to support economic development, neighborhood clinics, community centers and African-American cultural programs.

But by 1970, Cleveland Now! had lost most of its funding. Carl Stokes’ second term was his last.

The title of Aperovitz’s recent article is “The Question of Socialism (and Beyond!) Is About to Open Up in These United States.” That conversation does, indeed, need to happen in a mass way.

Under socialism, however, the workers actually own the means of production — lock, stock and barrel. They don’t buy a piece of it from corporate philanthropists, the ones who became wealthy in the first place by exploiting and pauperizing the very working class to whom they offer crumbs of charity.

Socialists looking for a model would do better by rejecting “the chariot wheels of class collaboration” and instead draw inspiration from the revolutionary courage of fighters like Ahmed Evans.