In order to build wealth and create opportunities in and across America’s underserved communities, and reverse the troubling trends we’re seeing in our economy, we no longer find it defensible to focus on job creation alone. It’s clear that job creation does not itself equate to lasting economic change. And so, we must shift our focus to the creation of higher quality jobs — jobs that are good for workers and their families, good for businesses, and good for communities — enabling us to build an economy that works for everyone.
Each month, we bring you the latest roundup of news from the fight for quality jobs for working people.
Businesses Can Work For Our Shared Prosperity
It’s no secret that there are two ways to manage a company’s capital. Work for the short term and return your profits each quarter to shareholders and investors. Or, work for the long-term and reinvest your profits into your workers and innovation. That first idea, corporate short-termism, has been the subject of ongoing debate among leaders in business, government, and academia for more than 30 years, but hard evidence that short-termism genuinely detracts from company performance and economic growth has remained scarce.
Now, a new report provides systematic evidence that a long-term approach can lead to superior performance for revenue and earnings, investment, market capitalization, and job creation. Long-term firms added nearly 12,000 more jobs on average than other firms from 2001 to 2015. Had all firms created as many jobs as the long-term firms, the US economy would have added more than five million additional jobs over this period. Read more on McKinsey >
Creating jobs, though, isn’t a goal in and of itself if those jobs don’t offer full-time pay, living wages, or some basic benefits. In today’s economy, the prevalence of “good jobs” is diminishing. For much of the 20th century, workers at big companies were paid better than workers at small ones. An employee of a company with more than 500 employees historically earned 30%–50% more than someone doing the same job at a firm with fewer than 25 employees, for instance. But the pay gap between large and small companies has narrowed in recent years, and that decline is one reason for rising inequality in America. Read more on Harvard Business Review >
Between 1980 and 2014, the average national income per adult grew by 61 percent, but virtually none of that economic growth went to those in the bottom half of the income distribution. Over that 34-year period, the average pre-tax income of the bottom half of individual income earners grew by a paltry one percent. Those at the top gained substantially from economic growth as their incomes rose by 121 percent for the top 10 percent, 205 percent for the top one percent, and 636 percent for the top 0.001 percent. People aren’t oblivious to this trend, as Equitable Growth reports >
At the same time, many businesses are doing better than ever — and those businesses can and should do more to create high-quality jobs and improve existing jobs. What’s more, businesses can benefit from doing so. Companies can make money without attending to job quality, but that choice carries high social costs and growing reputational and business risks. Businesses that do not consider job quality are missing opportunities to strengthen communities and the local economies in which they operate. More directly their companies will suffer high turnover, dampened productivity, slumping quality, and eroded customer loyalty. Our friends at The Aspen Institute talk about how and why >
How Cities Can Help Their Small Businesses Thrive
Whether it’s a single block of stores in an idyllic small town or the business district of a bustling urban square, every vision of Main Street America has something in common: a panoply of small businesses, symbols of American opportunity and success. Now, a new report from the Economic Innovation Group suggests new business formation has hit historic lows. But there’s a silver lining – the report also looks at four cities successfully trying to help new entrepreneurs open doors and create more and better local jobs. Each of these cities is a laboratory, and other cities across American can replicate what’s working. Check out the report on Curbed >
Doubling down on the point, the downward trend in new small business formation has broad implications for America’s competitiveness while also negatively affecting American workers. New economic research demonstrates that the entrepreneurship deficit is tied to stagnant productivity, job loss, inequality and growth, which means lower wages and living standards for Americans. Now, our friends at The Kauffman Foundation have released a new report that reveals three megatrends that are fundamentally reshaping entrepreneurship in America. Read more on Kauffman >
One major and constant topic what affects cities, workers, and small businesses is the minimum wage. The federal minimum wage has held steady at $7.25/hour since 2009. In 2017 though, 19 states are raising their minimum wage at some point in the year. With some employees “fighting for $15” and others opposing wage hikes, it brings up an interesting point: how are small businesses affected by a minimum wage increase? According to a poll from Manta, 59% of small business owners are actually in favor of a higher minimum wage. Read why on Prime Pay >
We can’t talk about local small businesses thriving without talking about Amazon. Amazon increasingly dominates the retail industry and captures nearly one in every two dollars that Americans spend online. It sells more books and toys, and – by later this year – apparel and consumer electronics, than any other retailer, online or off. It’s also rapidly expanding into the grocery business. To make sure the economy works for everyone, public officials and communities must rewrite the rules to stand up to Amazon.
Most Amazon orders are still delivered by UPS and the U.S. Postal Service, but that’s rapidly changing. Amazon is taking over more of its own package delivery, using an Uber-like app to manage freelance drivers. It’s also turning to low-cost regional couriers that classify their drivers as “independent contractors” instead of employees. Amazon’s regional couriers require drivers to pay out-of-pocket for fuel and insurance. As a result, drivers at times earn less than minimum wage, according to drivers in California and Arizona who recently filed suit against Amazon to gain status as direct employees.
Amazon is often praised as a job creator, innovator, and economic leader. However, the dirty secret behind Amazon’s growth is that as it displaces sales at other businesses, it in fact destroys more jobs than it creates. Amazon employed 146,000 working people in the U.S. at the end of 2015, but at a cost 295,000 jobs at other retail businesses. Read more on Jobs with Justice >
How Companies Can Thrive And Improve Job Quality
For nearly 25 years, some American workers have had the comfort of being able to take leave from work to care for a new baby, a sick family member, or when they become sick themselves, without worrying about losing their jobs. The anniversary of the Family and Medical Leave Act is an opportunity to reflect on the crucial job protection this law provides. But we would be remiss to not also recognize the law’s significant shortcomings. FMLA does not benefit many American workers—40 percent of the workforce is ineligible—and millions of workers cannot afford to take the unpaid leave it provides. Read more on Huffington Post >
Every good leader thinks about growing his or her business. We develop long-term visions, assess strengths and weaknesses, and set specific goals. However, many leaders fail to place the same focus on helping employees grow. Employee development doesn’t just happen. Conscious leaders must help their employees grow by committing to development planning. Conscious Company Magazine has 5 steps to do just that >
Investing in what employees need to grow is important. But on a nuts-and-bolts, week-in and week-out matter, one of the biggest challenges commonly reported by workers, especially by lower-wage workers, is the fact that millions in the U.S. feel profoundly disempowered with regards to their schedules. With so many workers living on the edge of poverty, many workers are nervous to speak up about this basic fact of workplace life. A new brief on income volatility and unstable scheduling outlines important solutions for high-road employers. Read more on The Aspen Institute >
How Equity, Jobs, And Community Wealth Are Inextricably Linked
The racial wealth gap has been measured and studied for decades. One fact has remained the same: White families build and accumulate more wealth more quickly than black and brown families do.
The reasons for this are multiple and well-documented. They start at slavery and traverse the historical and deliberate exclusion of people of color from the economic institutions and government programs that helped white Americans build wealth and pass it on to successive generations. Segregation and redlining by banks made it impossible for many black and Latino families to secure mortgages, for example. The GI Bill, which helped establish an American middle class by helping veterans pay for college and buy homes after World War II, mostly excluded people of color. The results are stark. Read more on Code Switch >
The study referenced on Code Switch is from Demos, and it paints a picture that can’t be looked away from when we talk about solutions. It explores a number of popular explanations for the racial wealth gap, looking at individual differences in education, family structure, full- or part-time employment, and consumption habits. In each case, they find that individual choices are not sufficient to erase a century of accumulated wealth: structural racism trumps personal responsibility. In a nutshell:
- Attending college does not close the racial wealth gap.
- Raising children in a two-parent household does not close the racial wealth gap.
- Working full time does not close the racial wealth gap.
- Spending less does not close the racial wealth gap.
American enterprise has long been a gateway to the American dream for many immigrants. But much of it was also built on exploited labor. Enslaved African-Americans built Southern plantations. Chinese immigrant workers built the railroads. Latino migrant farm workers are the backbone that turned California into America’s agricultural powerhouse. This view of people of color as sources of “cheap” labor bleeds into our restaurant culture: Immigrant food is often expected to be cheap, because, implicitly, the labor that produces it is expected to be cheap. Read more on NPR >
Beginning this year, PCV has shifted its mission in order to move our economy to one where quality jobs are the norm—not the exception. CDFIs like ours must build consensus around a common definition of a quality job, undertake practical efforts to foster the creation of quality jobs, and measure results to understand what works.