Strong Local Economies

It’s about jobs! For the last four years few issues have dominated media headlines, political debates, and water cooler conversations quite like the economy, or in particular, jobs. Why are jobs disappearing, where are they going, how do we get them back, and what does the future holds for the millions of Americans out of work and for the country’s global competiveness? For months, the national unemployment rate hovered around 10% until it began its steady decline over the last two years (the current unemployment rate is slightly under 8%). As the economic downturn shed millions of jobs, we also saw the shedding of opportunity and economic promise. Seemingly gone are the days of “good” jobs that would ensure families achieved a middle class lifestyle and, in many instances, opportunities for groups who were historically held back from opportunities to achieve the American dream due to discrimination and other types of societal injustice.

Three things quickly emerge when we examine the jobs issue more closely:

  1. The economy does not function in the same way for everyone. Throughout the recession, unemployment rates for African Americans and Latinos continued to be almost double and their wage earnings considerably less than national averages. During the economic recovery, the disparities have remained and in some cases, worsened. There were several months that saw unemployment rates among African Americans actually rise while the national average continued to decrease.
  2. During the recovery, we are seeing more low-wage jobs and the persistent erosion of middle class jobs. Some employers are demanding that more be done with less, a shift in the labor market that is disappointing and doesn’t bode well for many Americans struggling to make a living. There are signs of a resurgence in higher-paying sectors such as manufacturing, technology, and the life sciences, but these pale in comparison to the number of middle class jobs lost during the recession and the number of low-paying jobs quickly taking their place.
  3. The policies and practices designed to create jobs are weak and must be updated. The culture of governments using incentive-laden policies to attract employers and create jobs rarely produces maximum economic benefit for cities. Cities, states, and the federal government are operating under the regime of austerity. As a result, some policies and contracts that would have helped ensure that government spending circulate within the local economy, such as local hiring, sourcing, and contracting, are being eliminated in favor of a lowest-cost bid framework. Long-term potential for local job creation often loses out to the shortsighted practice of selecting the lowest cost bid.

In the end, it’s still all about jobs.

The new Strong Local Economies framework places job creation at the center of our work, in part as a response to the dramatic job loss that took place during the recent recession, and in part to address historic economic disparities faced by low-income people, communities of color, women, and immigrants. A year of strategy planning allowed us to become clear about the direction of our portfolio of grants, about which populations we seek to impact, and the necessary approaches required to help create positive change. Strengthening local economies and creating jobs are complex issues that call for an integrated response that includes supporting business growth and acceleration, reframing the practice of economic development, and acknowledging the need to improve job quality across low-wage sectors while creating access to industries that produce quality jobs. We are starting from a solid foundation. Through exploratory grantmaking, we tested new approaches and covered a wide range of issues that impact the economic conditions of the people we care about. This helped us to identify entry points into this important work and the various roles Surdna can play in the field. The Strong Local Economies program will lead with a jobs framework supported by three interconnected lines of work — Business Development and Acceleration, Equitable Economic Development, and Job Quality and Career Pathways.

Through our Business Development and Acceleration line of work we will focus on creating and strengthening small businesses so that they can create more jobs, help stabilize local economies, and eventually, grow. We are particularly interested in exploring employee-owned cooperatives, social enterprises, and other alternative business models that value people, the environment, and the quality of jobs on par with profits.

While employee-owned cooperatives are not a new concept, over the last few years the model has received renewed attention as an approach to addressing wealth disparities and job creation in economically distressed communities. The gains that the Evergreen Cooperatives in Cleveland and other cooperative businesses across the country have made encouraged us to pursue a deeper exploration of co-ops as a quality job creation model. Over the next several years, we will explore different types of cooperative business models, assess the overall job creation impact of the sector, and determine the policies and other conditions necessary for these businesses to thrive. Additionally, we will explore social enterprises and other alternative business models as job creators and viable alternatives to traditional business structures.

We are also concerned with the growth and sustainability of businesses owned by people of color, women, and immigrants. There is a need to address the reasons why these businesses grow at a slower pace, plateau quicker, and ultimately fail at higher rates than white-owned businesses. Over the next few years we aim to support the acceleration of existing businesses owned by people of color, women, and immigrants while addressing various policy issues, access to capital concerns, and business support networks necessary for these businesses to thrive.

Our Equitable Economic Development line of work aims to push sustainability and equity to the forefront of economic development practices, policies, and planning, resulting in more opportunities for minority business inclusion, local hiring, and the possibility of increased job quality through prevailing wage requirements. To do this, we will develop a substantial communications strategy that calls into question public contracting decisions and projects that provide little benefit to lower income communities or significant contracting opportunities for minority businesses. We will also support grassroots community organizing to win benefits for specific projects, develop partnerships with private developers and/or the public sector, and advocate for city-wide policies that increase local hiring and business participation.

Our Equitable Economic Development strategy calls for a deeper involvement in ensuring specific development projects result in equitable outcomes. Our first priority will be to establish a set of criteria for the projects we will ultimately choose to support, including: size of the project, projected jobs created, on-the-ground nonprofit capacity, relationship with local philanthropy, etc. Over the next ten years, billions of public dollars will be invested in development projects in cities like Atlanta, Philadelphia, New Orleans, Chicago, and others like them across the country. The ultimate impact of these projects (social, environmental, and economic) is yet to be determined, but we know if development happens in a more equitable way, our priority communities (lower income populations, communities of color, women and immigrants) stand to benefit tremendously. This year we will focus our efforts on identifying potential projects and developing the key relationships necessary for successful campaigns.

Lastly, it’s not just about any job. We would like to see the creation of more quality jobs, specifically those with family-sustaining wages and defined, accessible career ladders. We recognize that the current economy is producing low-wage and often low-quality jobs at a high pace, and not enough middle-wage jobs. We also understand that these low-wage jobs are often in sectors that offer an entry point into the world of work, or are the first rung on a career ladder that offers some promise for many growing up in low-income communities. As a response, our JobQuality and Career Pathways line of work strives to improve job quality in low wage sectors while creating new opportunities in emerging sectors with quality job growth. Over the next several years we will explore policy changes and “high road” business practices that can dramatically improve the quality of jobs and the economic conditions of workers across sectors such as paid sick leave and increased minimum wage.

We are also concerned with creating new on-ramps to emerging sectors of the economy in order to ensure that communities of color and low-income people are not left behind again.

Ultimately, the Strong Local Economies program is all about the creation of good quality jobs. And we are looking forward to identifying and supporting organizations across the country that are helping make this possible, through strengthening businesses, reinventing economic policies, and simply making existing jobs better.

Keep Reading:
thriving cultures