Trouble at the co-op

By Austin Goodrich

On July 25, three assistant managers who worked for the La Crosse People’s Food Co-op (PFC) lost their jobs. All three had worked at the store for more than 10 years. 

The PFC attributed the position eliminations to the “current economy and sales,” along with the goal of matching department structure with the Rochester co-op. Less than a day’s notice was given to the employees whose positions were cut. 

The firing of these three employees along with the lack of notice has sparked outrage by both employees, co-op members, and the local community. However, this event appears to be the tip of the iceberg in a long history of increasing employee disempowerment at the co-op.

The People’s Food Co-op began as a food buying club, created in the 1970s by University of Wisconsin – La Crosse (UWL) students interested in “natural foods” and inspired by the cooperative model of business. The Rochdale principles adopted by the International Cooperative Alliance in 1966 provided an ideological basis for operations. These six principles were: open and voluntary membership, one member one vote, limited interest on shares, return of surplus to members, constant education, and cooperation among cooperatives.

George Nygaard, one of the founding members, recalled that individuals involved with the co-op early on were idealists looking to not only provide natural foods to local customers but also to respond to the consolidation power within the grocery industry. This consolidation of grocery stores in La Crosse is clearly shown in this image from local UWL graduate Kevin Hundt’s paper “La Crosse, WI, Groceries in Transition: Corner Stores to Car Culture”.

According to Nygaard, “a lot of the inspiration behind the start of the co-op was directly tied to the civil rights and anti-war movements of the 60’s and early 70’s”. The communal aspect of the early co-op might explain why business continued to grow as other corner grocers were closing up shop. From 1973 to 1990, the business moved location four times and tripled annual sales, all while relying on employees’ and member-owners’ input to make operational decisions.

Cathy Van Maren, a former board president for the co-op who became involved in the early 80’s says, “My involvement straddled the old system, where you paid a small member fee every year and got a discount for being a member who volunteered to the current system where members buy in to capitalize.”

Van Maren notes that changes in labor laws and interpretations created a schism from this old way of operations. 

“Before, many members were able to volunteer to ‘earn’ discounts, but labor laws changed and there were issues with volunteers – were they receiving fair compensation? Should the volunteer hours be reported as wages if they got a discount? Were they covered by insurance if they cut off a thumb while cutting cheese? So, the heart of the real member involvement had to drastically change, and that sort of created a separation between the co-op and the owner-members.”

In the 1980’s the co-op started receiving consulting from the National Co-op Grocers Association (NCG). The NCG, according to their website, is a “business services cooperative that represents 147 food co-ops operating over 200 stores in 38 states with combined annual sales over $2.1 billion.”

An emphasis on operational optimization and growth conflicted with the ideological values that initially inspired individuals to create the co-op. An early example of the conflict between growth and values was highlighted by the disagreement over the location for the co-op’s next expansion in the early 90’s. According to Van Maren some of the co-op members wanted to find a new, larger space that was “accessible for lower income communities and more amenable to owner-member involvement.”

“We favored the building that is now Dave’s Guitars. Others wanted to be downtown and ultimately the more expensive current site was chosen. This choice, to me, was like the real intention made clear – to become a boutique shopping experience for downtown professionals,” says Van Maren. “To me, it felt like we’d abandoned one of the main purposes of a co-op – to offer what people wanted and needed at an affordable price and with the consumers deciding how the business would run. The new downtown location required a lot of money to update and remodel. Debt meant higher prices.”

Growth at all costs

In addition to advocating for high cost growth, NCG consultants and some managers pushed to change the way the co-op operated. 

“Board members were not allowed to speak to employees, owner-members were not allowed to get contact information for other owner-members, the board was not to question the manager’s decisions,” says Van Maren. 

When she and another co-op board member tried to push back against a new board policy, “we had to go stand by the co-op doors to talk to people as they went in because, even as owners, we were not allowed access to other owners’ contact information.”

NCG initiated further changes, under accusations that the board was micromanaging operations. 

“The NCG consultants said the board was now supposed to give up keeping an eye on how things were going overall, no learning how employees were being treated from employees (this was before unionization at the PFC), no questioning how prices were set. Essentially ‘leave decisions to the managers and don’t rock the boat,’” Van Maren says.

These changes led to her decision to quit the co-op board in the early 90s. She felt that the new role of the board was to “rubberstamp” the decisions made by the manager under the watchful eyes of the consultant.

“It was very hard because the co-op had been pretty much my entire friend group,” Van Maren recalls.

No place at the table for workers

Roger Bertch, a longtime employee, assistant manager, and board member, gives a similar account of the transition of power within the co-op’s operations. Bertch worked at the PFC from 1993 to 2016. At the time that Bertch started working for the co-op, there was a transition from three co-managers to a single manager and the co-op had just relocated to the downtown location. During this time, co-op wholesale warehouses were consolidating, and larger retailers were getting into the natural foods market. Influenced by organizations like the NCG, co-ops around the country began to standardize products and organizational structure. 

According to Bertch, “the big transition occurred when the board went to ‘governance rule’ where the manager was responsible for meeting financial goals and anything additional the board rubber stamped.” Bertch was also one of the last co-op employees on the board. Soon after his arrival it was decided that employees would no longer be allowed on the co-op board. According to Bertch, “this took the communication away between the workers and board.”

Close on the heels of this decision came unionization for the PFC. In Bertch’s opinion, unionization wasn’t in direct response to employees losing the ability to be on the board, but instead due to the growth of the co-op without employees seeing an increase in wages along with receiving no benefits or insurance. The co-op had transitioned from a business where the members volunteered their labor and played a key role in making decisions, to a business where decisions were only made by the manager, guided by consultants, and approved by a board of non-employees.

According to Bertch, the co-op management took an adversarial stance towards the unionization and hired the union lawyer for La Crosse city employees at the time to take on the co-op employees trying to establish the union. Roger also notes that the management went as far as having salaried managers falsely testify as non-managerial workers, which was the purview of the union being established.

Although the union was successfully established by two votes, it has been met with resistance to this day. According to a current co-op employee, “to anyone who thinks the workers have any voice, think again. We have none at all. The union is constantly stonewalled in terms of bargaining and grieving. With the management it’s either their way or the highway.” The employee asked to remain anonymous.

Take Back the Co-op?

Consultants associated with NCG continued to push the managers and co-op board to expand. This expansion included moving to the more expensive downtown location, expanding and renovating the downtown location, and the Rochester Good Food Co-op merger in 2012.

Co-ops all over the country have experienced similar changes towards this top-down management approach led by influence from large associations. The La Montañita Co-op in New Mexico started the Take Back the Co-op movement in response. The La Montañita Co-op is also under the purview of the NCG. In a similar situation, consultants pushed the La Montañita co-op to acquire a second location in 2013.

The general manager at the time of the expansion decision, Terry Bowling, went from being the general manager to a development director for NCG. Coincidentally, the last two general managers for the PFC, Peg Nolan and Michelle Schry also went on to be development directors for NCG.

Django Zeaman from the Take Back the Coop movement writes, “Unfortunately, the consulting company advising our board has a troubling history of pushing co-ops to expand even when expansion places co-ops in financial jeopardy.” 

Which leads to the question: why are consultants and the National Cooperative Grocers Association bent on constant expansion, even when it can put co-ops in financial trouble? Zeaman explains that there are a lot of incentives for these organizations to push co-ops towards expansion. Expansion results in more opportunities to provide consultancy and other services to co-ops. In essence, it is always beneficial for the consultants to push for expansion.

People’s Food Co-op annual sales, taken from the co-ops annual financial reports.

The co-op attributes the recent position eliminations to the current financial situation. Total sales went from $24.4 million in 2018 to $22.9 million in 2019. Total net income for the co-op in 2019 was negative $634,419.

In April, the coop received a forgivable loan of between $350,000 and $1 million through the federal government’s Paycheck Protection Program, which was designed to keep companies afloat during the pandemic. Public records show that the money was used to retain 156 jobs.

Asked about the recent layoffs at the co-op, PFC CEO Lizzy Haywood says she will not comment “on internal policies and decisions.”

“Since the start of the pandemic our workers have received a crisis pay premium, and have 24/7 access to an employer-sponsored EAP for workers and their families,” she says.  “All of our safety measures for workers, including masking and redesigned work spaces, have been enacted quickly and often in advance of government mandates. PFC’s urgent response on behalf of our workers is the strongest of any essential services retailer in our region.”

Social media backlash to the co-op’s decision to eliminate three jobs.

The loss of three long-time employees has further unsettled the remaining workers at the co-op.

“It felt that with their firing we lost the last pieces of a co-op the community loved,” says one employee, who asked not to be identified.

The employee adds that the firings lowered an already fragile employee morale, “Being overworked in a hostile environment isn’t for the faint of heart. Add the termination of beloved coworkers and the responsibility of serving our community and you have hundreds of hopeless employees.” 

Employees who were interviewed for this article all said that communication between management and the employees is almost non-existent and sometimes hostile. 

“Folks overall feel distrustful of management. Unsure of potential retaliation and intimidated by their managers,” one of the workers says. “There are a large number of employees who feel directly bullied and even harassed by management.” 

The current conditions lead to some employees burning out and quitting. According to Bertch, “over my 23 years of working at the co-op I’ve watched many idealistic people try to change things for the better, which was met with the sentiment “get under the heel of my boot so I can squash you.” 

The union has a no-strike clause in their contract, limiting the options available for the workers to push for change. One employee believes that the only way to see positive change is if enough members get involved and demand it.

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