Philanthropies and impact investors allocate billions of dollars each year to initiatives that aim to strengthen communities, support family well-being and expand economic mobility. Yet even the most effective programs struggle to scale. And those that do aren’t fixing the bigger-picture issues holding people back.
Only 40% of American workers report having a good job – one with fair pay and benefits, stable schedules, fair treatment, respect and room to grow. When local economies are filled with work that fails to provide stability, dignity and opportunity, community well-being stays out of reach no matter how strong our programs are.
But it is possible to change this situation. It is possible to make “bad jobs” better. That is the clear finding of a four-year project by the Aspen Institute, backed by the Gates Foundation. It found that philanthropies can improve job quality by focusing on small businesses, channeling support through Community Development Financial Institutions and other trusted partners.
A win-win for small businesses and employees
The Shared Success demonstration showed that with the right advising, even resource-constrained small businesses will invest in better jobs. The initiative partnered with 11 CDFIs across the country to integrate job quality advising into small business support.
Small businesses have long been overlooked players in this area, on the assumption that they couldn’t meaningfully improve job quality due to resource constraints. But that assumption is wrong. In fact, the businesses participating in Shared Success made meaningful improvements to job quality that also boosted their business success.
In a survey toward the end of the demonstration, 92% reported making job quality improvements, such as improved compensation, benefits, supervisory practices and advancement opportunities, and 84% reported positive business outcomes as a result.
Messaging and support from CDFIs clearly made a difference. For example, 92% of businesses reported becoming more informed about job quality during the demonstration, and 58% credited their CDFI as the source of information. Further demonstrating the value of job quality advising, 85% of businesses surveyed reported plans to continue investing in job quality.
There are, of course, limits to what an individual small business can accomplish on its own. Other strategies can play a complementary role in improving economic mobility for low-income workers. For example, public investments in health care, child care, transportation and employment training can also contribute to making jobs better. But how employers design jobs is a critical piece, and we see that with the right advice and support, even small businesses can make jobs better.
For funders concerned about poverty, economic mobility and community well-being, job quality strategies are a practical investment — one that builds on infrastructure that already exists and can leverage relationships to move a focus on job quality as a business success strategy from novel to normal.
How funders can make a difference in job quality
Work through trusted partners. CDFIs in the demonstration didn’t create new programs; they integrated job quality advising into existing work. Funders can support similar intermediaries — not only CDFIs, but also chambers of commerce, economic development organizations and technical assistance providers — to embed job quality strategies into their core offerings, with training and peer support to further organizational learning.
Pay attention to language. How we talk about job quality matters. Research conducted in partnership with A-B Partners shows that leading with the “business case” alone doesn’t resonate with every owner. Business leaders are motivated by pride, commitment to employees, sustainability and community standing. Effective practice helps owners see the link between employee well-being and their own business goals.
Be patient. Organizational change takes time. The CDFIs in the Shared Success program needed room to experiment and adapt, and the small businesses needed time to plan, implement and see results. Multiyear timeframes are essential for job quality work.
Measure what matters. Funders should ask grantees about job quality among client firms, including where improvements are being made. Over time, clearer reporting systems are needed to document job quality gains and link them to program practice. Additional research connecting job quality to business performance and worker well-being is also needed.
For too long, we have accepted the false trade-off between small business success and worker well-being. Shared Success challenges that assumption. Better jobs are possible. They are good for workers, good for businesses and good for communities. And they are urgently needed. It is time to invest in making them a reality.
Maureen Conway is the vice president and executive director of the Aspen Institute Economic Opportunities Program.
Guest posts on ImpactAlpha represent the opinions of their authors and do not necessarily reflect the views of ImpactAlpha.
