No Boss: Bay Area Worker-Owned Businesses Thrive During the Pandemic by Prioritizing Health Over Profits

Chaos filled the aisles of Rainbow Grocery Cooperative in the early days of March 2020, before Bay Area health officers issued shelter-in-place orders to slow the spread of COVID-19.

“People were freaked out,” said Gordon Edgar, the store’s cheese buyer since 1994. “They were treating it like a natural disaster.”

Customers crammed the 17,500-square-foot San Francisco cooperative, filling carts with toilet paper, flour and durable goods such as canned beans, fearing they would need to stay in their homes for months. Gig-economy proxy shoppers, eyes trained on shopping lists, moved erratically, bumping into other shoppers.

“There were people pulling two or three shopping carts and buying everything they could, to prepare for their survival,” said Cody Frost, a longtime member of Rainbow's marketing department. Through double-paned upstairs office windows, Frost could hear the crowd.

“A roar, a general roar, especially as the lines kind of creeped back further and further into the store,” he said.

Rainbow’s normally conscientious customers were freaking out, along with the rest of the world. These were the store’s highest-grossing days of the year, but there was no celebration: The store’s 230 worker-owners had already prioritized something besides money.

“We were looking around like, ‘This is just not safe or healthy,’ ” Edgar said. “We want to protect workers, we want to protect the community.”

Like other public-facing businesses during the pandemic, Rainbow faced the choice to operate in some form in danger to employees and customers, or to close its doors. But that decision wouldn’t be made at the top. Worker-owned cooperatives operate exactly like democracies: one person, one vote.

As a result, Rainbow's collectively agreed-on safety measures reflected the values of health and community: constant rearrangement of the physical space, gallons of hand sanitizer, department meetings moved awkwardly semi-online, and most of all, fanatical mask enforcement.

Democratic workplaces may be, in a general sense, unusually adaptable in the face of large-scale emergencies. Research and interviews with worker-owners found their businesses retained and created jobs, fostered community and kept workers and the public safe. They did not generate huge profits, but they created security for everyone in and around them.

“There’s no hierarchy, no management. We all share equal responsibility,” said Heather Farnham, a worker-owner at Arizmendi Bakery for the past 18 years.

At Candlestick Courier Collective, an on-demand bicycle delivery service, Christopher McCleary explained that as the group transitions to a co-op, “We have a lot more accountability to each other. And to the people we deliver to. And the people we deliver for!”

The vast majority of worker-owners attend meetings in addition to shift work; it isn’t always easy. But there’s no boss.

Customers and Workers Over Profits

Economic responses to the pandemic at worker-owned companies across the Bay Area included voluntary furloughs, adjusted pay scales, services such as low-volume shopping hours for seniors and other vulnerable customers, and outright temporary shutdowns.

Before the pandemic, worker-owned co-op Arizmendi Bakery's location in San Francisco's Inner Sunset had money in the bank — part of its standard cooperative practices. As a result, the bakery’s worker-owners voted to close, with full pay, for two months at the beginning of the state's stay-at-home order. Yet like their sister locations, which chose to remain open, the bakery's Sunset location is thriving today. In a traditional business, that money would likely have been sitting in the owner’s bank account (or in the form of a vacation home).

At Rainbow, worker-owners chose to offer a low-volume, late-night Saturday shopping option for customers too anxious to be in the store otherwise. That service, the store's senior hours, and an in-house-managed online curbside pickup service cost Rainbow a lot of money.

“People think grocery stores are making bank," Edgar said. "But we’re not."

At some points during the pandemic, San Francisco allowed for 50% capacity in grocery stores – but Rainbow’s worker-owners never felt safe with more than 25%.

“All that has really hit us financially,” Edgar said. “But I don’t think we would change anything we’ve done.”

Protecting Jobs

In March 2020, California had an unemployment rate of 4.5%. By March 2021, it had soared to 8.3%, according to the Bureau of Labor Statistics; meaning roughly 3,287,920 people had lost their job. But a common refrain in the Bay Area co-op community makes it sounds possible none of them were members of co-operatives.

“We didn’t lay anyone off,” Arizmendi's Farnham said, pride in her voice. “We retained all of our workers.”

It’s a theme among co-opers: Rainbow Grocery grew its workforce during the pandemic. Mandela Grocery Cooperative in West Oakland hired a customer who’d just been laid off from a nearby restaurant. In the South Bay, Kirk Vartan at A Slice of New York pizza co-op said the company likewise made no layoffs.

“We knew that we would come out of it still having a job ... that’s what we were focusing on, not the profitability or the bottom line,” Farnham said. “Part of a cooperative business is that you have this security. It was a really important aspect of riding out something so severe.”

Dr. Nathan Schneider, a professor at University of Colorado Boulder, is a scholar of co-operatives. His book "Everything for Everyone, the Radical Tradition That Is Shaping the Next Economy" came out in 2018; the “next economy” referenced is post-2008, not post-pandemic — but it could be.

“It’s been in moments of crisis where co-ops have struggled, but have also really been able to shine,” he said. “Co-ops have demonstrated their capacity to be more resilient, especially in downturns and other crises, than other kinds of businesses, because they focus on what matters in a way that’s just good for long-term health.”

Schneider’s research shows these pandemic behaviors to be standard among co-ops.

“Co-ops are less likely to do layoffs,” he said. “If you’re accountable to capital, of course, workers are expendable.”

A Blend of Interdependence and Autonomy

At a recent online panel discussion, Mandela worker-owner and Network of Bay Area Worker Cooperatives (NoBAWC) board member Adrionna Fike described a web of support among co-ops, not just around them.

“We got calls [from other co-ops] saying, ‘What are you doing, can we support you, can you help us?’ ” Mutual aid kept democratic workplaces resilient as they navigated the confusingly dangerous pandemic, she said. So did their cooperative practices.

Rainbow supported Mandela with supplies of hand baskets. Arizmendi asked Mandela to help distribute pizzas in West Oakland – and Candlestick Courier Collective delivers for Arizmendi and other co-ops.

“That freedom, that autonomy to say yes, let’s do this, because we’re the boss, or there’s no boss ... I’d say that’s been key to our creative fire," Fike said. "Autonomy. Creativity. That blend.”

At Arizmendi, Farnham’s version of community building extends outward from the bakery walls. In a time of unprecedented job loss and insecurity, the bakers worried about when to open, and how to transition from a self-service operation to a walk-up window – but they never had to worry about losing their jobs. This, Farnham says, is a selling point.

“Our customers, a lot of them understand that the dollars that they spend go right back to the workers, who they see and get to know,” Farnham said.

At Rainbow, that unprofitable new curbside service is wildly popular. According to Tink Moss, one of the program’s coordinators, “The customers are really, really excited and thankful about it.”

Recognizing a community need, the store plans to form an e-commerce department with an eye to continuing the curbside service.

“This is the best response to COVID,” said customer Deborah Baron, as she loaded prepacked bags into her car. “I come here all the time.”

Support From Local Officials

Bay Area co-ops had fairly positive interactions with local governments during the pandemic. Fike of Mandela Grocery said Oakland Councilmember Carroll Fife was helpful via local aid group Community Ready Corps, which purchased batches of prepaid gift cards from Mandela to support those in need and the store.

In San Francisco, city officials including Supervisor Hillary Ronen’s staff and the Office of Economic and Workforce Development were also helpful, Rainbow worker-owners said. Constant communication between the city and the co-op made it possible to keep up with fast-changing health directives.

Other programs encourage worker-owned companies, such as the city of Berkeley's ongoing partnership with Project Equity, a nonprofit dedicated to helping owners sell companies to employees. California is also among a handful of states that support cooperative enterprises via direct policy and budget initiatives.

“People are embracing the worker cooperatives again, and getting our reach, and our ability to serve people and be transformative in our communities,” Fike said.

Federal Paycheck Protection Program loans arrived, helped and were forgiven at Arizmendi — the company’s financial stability and its everybody-first attitude allowed use of those funds for payroll, as intended.

While local and state government support of the cooperative model is good, it’s at the federal level that policy change could really have an impact, according to Schneider.

“We can create financial infrastructure to make it so that worker-owners are on the same or better footing than investor-owners,” Schneider said. “We need to set our goals high. The constraints [to widespread worker-owned successes] are federal. When you open the door there, you can get exponential increases.”

The yet-to-be-implemented Main Street Employee Ownership Act, which passed in 2018, would improve access to capital and expand technical assistance for employee-owned businesses through the federal Small Business Administration.

What’s Next?

As California returns to a semblance of pre-pandemic normalcy after the state's June 15 reopening, Bay Area co-ops are ready to build community, create jobs and make more co-ops.

“We all figured it out together, and that was one of the amazing things about being part of a co-op during this natural disaster,” Arizmendi’s Farnham said, reflecting on the pandemic.

The bakery may be famous for pizza and pastries, but its sibling, Arizmendi Construction, plans to focus on secondary backyard housing units to address the shortage of affordable and below-market housing. Candlestick Courier plans to file papers to legally become a California cooperative corporation. And NoBAWC is restructuring as a nonprofit to get more funding and help more co-ops.

For Rainbow Grocery, the future means getting more shoppers in the store, but it also means extending support.

“How do we do more sponsorships and engagements with events and local organizations, as they’re kind of rebuilding and restructuring?” Frost said. “How are we going to be participating with our donations program?”

Overall, Bay Area co-ops weathered the pandemic with minimal layoffs and a range of creative responses to new business challenges. No bosses or owners directed their decisions, and in crucial terms, they worked.

“I heard from people at other stores where big swaths of workers went down with COVID,” Edgar said. “And that did not happen here.”

This story was produced by the City College of San Francisco Journalism Department and the Democracy and Informed Citizen Emerging Journalist Fellowship initiative of California Humanities.