By Peter Moore
Breitenbush Hot Springs in Oregon is organized as a worker-owned co-op. How that translates in the world of direct experience for those of us who live here can be wild and vivid. Most of those stories are never told (at least publicly) and suffice it to say, we have an amazing lifestyle! But inner experience can often be influenced by outer forces. The following story reveals a contemporary view of business life at these springs, right here/right now in the new roaring ‘20s.
As Breitenbush’s Business Director, I have my head into multiple issues of policy & economics & the culture of this place. And because we are getting good at data analysis (we have to!), we now see further into the future than ever before using a crystal ball conventionally called economic forecasting. Recently, while gazing into that highly rational divination tool, we spotted an economic tsunami of upside-down numbers building out there on Breitenbush’s event horizon.
Simply put: Expenses are rising disproportionate to Revenues. The explanation includes Oregon’s rising minimum wage (up 50% in 5 years), rising medical/liability insurance rates (up 10+%/year), and rising costs of goods & services (organic food, fuel, etc.). At the same time, Breitenbush now approaches full occupancy, thus income is tending toward flat, i.e. the same number of guests/year = similar revenue/year. One way to characterize the equation is: Flat income + Rising expenses = Rising costs to guests (based on raising rates).
And raising rates to guests is exactly what we’ve been doing. Rate increase is the obvious way to keep up with these inflationary pressures. Besides raising rates, other ways to address the problem include how to reduce expenses and alternative ways to raise income. More on those later.
There is an irony here. As a worker-owned co-op, virtually everyone’s work here is tied to minimum wage. And in a fair system, minimum wage would equal a living wage. But because minimum wage doesn’t equal a living wage in the USA, our co-op has, over the years, added significant benefits to the compensation our workers receive for their service. These benefits include a cadillac medical insurance plan, no rent/utility bills, free childcare for workers’ children, food free or at cost, generous parental & retirement benefits, free soap & toilet paper—basically everything a person needs to get through a day. PLUS minimum wage for hours worked. Our workers can actually save money working for minimum wage. That is not a claim many minimum wage workers can make in America, but it’s true for us.
This arrangement has worked well for our guests too because lower minimum wage = lower costs to visit the springs. But when minimum wage goes up dramatically, as is now happening, Breitenbush’s costs of doing business go up—way up. And as I said, we’ve been passing those increased costs along to our guests, and some of you are noticing. (I know as guests you’re noticing because I’ve been getting your emails.)
Another simplistic equation describing the above might be: the net effect of a rising minimum wage required by the state (a win for society!), coupled with Breitenbush’s relatively recent success as measured by occupancy (a win for our co-op!) = the current crisis du jour, causing existential angst for everybody.
I interpret all this as reality forcing Breitenbush to pivot toward being a more mature organization. Of course, our co-op is already mature in many essential ways. After all, the workers are in control of the business, not some executive class that makes the big decisions while skimming profits. We are a small, off-the-grid town that makes all its own utilities, maintains its buildings, provides its own security, plows the highway to get here and serves its guests and working families while keeping costs affordable to the many. We make the co-op model work in the “real” world.
How well it works will be revealed soon. To address the challenge of evolving our business in this “real” world, our board of directors recently created the Co-op Sustainability Committee (CSC), a small working group of us tasked with analyzing hundreds of ideas concerned with assisting Breitenbush’s profit/loss statement. These ideas, generated by Breitenbush co-op members themselves, range widely over the mental map of possibilities, from the noospheric to the neophobic, and include everything from adding a café (more income) to creating a kitchen where guests prepare their own meals (less cost to visit). We have a comprehensive process of community engagement going on and I cannot predict the outcome, but it’s creative and exciting.
In the next years we are challenged to manage dramatically rising expenses, fixed costs, and necessary increases in revenues that do not solely rely on raising prices to you, our guests. It’s a new dance as these roaring ‘20s unfold. We’ll keep you posted and I’m curious what’s happening along these themes in your center?
Peter can be reached at email@example.com, and welcomes your feedback.