Building An Economy That Works For Everyone
In 2016 the U.S. unemployment rate dropped below 5% for the first time in ten years, real incomes rose slightly for the first time in decades, and social impact investing finally entered the mainstream. Yet almost half of American workers are stuck in low-wage jobs with little opportunity for advancement, the number of small businesses is at an all-time low, and race and where you’re born remain some of the biggest factors influencing financial success in life. It’s a tale of two Americas, where far too many workers and communities are being left behind.
We’ve historically focused on supporting small businesses and investors to create jobs in underserved communities — but creating jobs is no longer enough to address rising inequality. As an impact investor, we realized we had to ensure our capital was first and foremost creating good jobs with living wages and benefits – so in 2016 we made an organization-wide commitment to support the creation of quality jobs both in our own work with small businesses and with the broader social sector. Our vision is to create stronger communities from the bottom up through making quality job creation the new norm.
What Is A Quality Job?
After conducting in-depth research and interviews with leading experts in labor issues, impact investing, and the small business sector, among other related fields, PCV identified five core components of a quality job. Given that the specific elements of a quality job vary by industry, business size, job function, and employee demographics, PCV synthesized a flexible definition. A quality job, according to the study, provides at least three of the following five key elements:
A living wage
A living wage is a salary sufficient to support a decent standard of living—or, at minimum, exceeds the median wage offered within the employer’s industry. A living wage remains out of reach to millions of low-income workers in the United States, and has not been effectively addressed by national minimum wage laws.
These improve health, and promote work-life balance among workers. These include paid leave, health insurance, and a retirement savings plan. Benefits are especially important to low-wage workers who are more vulnerable to the negative effects of ill health or other unexpected life events, yet are less likely to have access to employee benefits than higher income individuals.
Career-building opportunities help employees develop the skills, networks, and experiences necessary to launch a career or advance along a career path. These opportunities can include training and mentorship—both formal and informal—and avenues for advancement within the company.
Wealth-building opportunities enable and incentivize an employee to build the assets they need to manage financial emergencies and achieve long-term financial security for themselves and their families.
A fair and engaging workplace
A fair and engaging workplace that balances the priorities and wellbeing of employees with the needs of the business. Examples include offering flexible and predictable schedules, treating all staff with respect and dignity, actively soliciting employees’ ideas to improve the business, and helping staff understand how their work contributes to the business’s success.
Defining And Measuring Quality Jobs
Moving Beyond Job Creation seeks to answer two important questions at the center of CDFIs and impact investors’ efforts to create quality jobs: 1) What is a quality job, and 2) how can investors measure job quality?
The paper also offers practical steps for investors and others to take to incorporate the measurement of job quality into their existing data collection processes that would support their financing efforts aimed at creating quality jobs.
Creating quality jobs should not be viewed as a static goal, but rather as a continuous journey. Investors and the businesses they support should strive to foster incremental improvements in job quality, raising standards in deliberate yet meaningful ways for employees. Businesses and investors should also view the fostering of quality jobs as an ongoing process.
The incorporation of job quality as part of the deployment of capital in our communities has many benefits. Improving job quality for workers can help businesses in achieving better financial results and have a ripple effect on local economic growth.
This research is part of a two-year initiative supported by the Surdna Foundation to build awareness and advance the practice of quality job creation among CDFIs, the broader impact investing industry, policymakers, and business owners.
The Role Of Policy
CDFIs, foundations, and others are doing their part to begin building a better economy for workers and for businesses. But our jobs problem – driven largely by globalization and technological advances that reduce the need for human labor – is too large and complex for the social sector or individual businesses and investors to confront on their own. While businesses are the sources of job creation, government programs can incentivize investment that leads to more jobs and to higher quality jobs.
As the second set of research in PCV’s two-year initiative with the Surdna Foundation, Public Policy and Investments in Quality Jobs explores the potential for smart, targeted public policies to encourage private sector investments in quality job creation. The report examines in detail five federal policies and programs that could be adapted to create more economic opportunity and more quality jobs in communities that have been left behind by globalization, automation, or generations of discrimination.
Creating good jobs for working people in every community across America is one goal everyone can agree on. Doing so by making bipartisan government programs that are already working do even more for us is a recipe for success that all can support.
More Americans work in retail than in manufacturing or mining. As part of our vision to make quality job creation the norm, we believe that we must equip small businesses with the practical tools and resources they need to offer higher quality jobs in a way that balances their business needs and bottom lines with better wages and benefits for their employees. We know that small businesses want to provide good employment opportunities for their workers – but they are often uncertain of how to do so in ways that make sense for their business. We’re committed to enabling them to succeed – and believe a simple, practical quality jobs toolkit will help spur them to action.
Over the next two years we’re working with the Workforce Strategies Initiative at the Aspen Institute to develop, pilot, and publish a quality jobs toolkit focused on retail small businesses. The quality jobs toolkit has the potential to enable meaningful improvements in job quality in an industry that relies on a significant number of frontline workers and operates with limited resources — and once it’s proven out across the retail industry, we can adapt it to restaurants, health services, and on and on.