In recent years, there has been much talk about the contribution by small businesses to job generation and economic recovery. At the FIELD program of the Aspen Institute, we work to support a segment of that sector: microbusinesses, or firms that employ five or fewer workers, including the owner. These are Main Street businesses — the mom-and-pop shops in your neighborhood: child care providers, beauty salons, and urban farmers, to name just a few. Collectively, they pack a punch: the Association for Enterprise Opportunity indicates there are 25.5 million microbusinesses in the United States, which together employ 31 million people. Previous studies we’ve conducted show that microbusinesses that receive assistance from community-based microenterprise organizations generate an average of 2.9 jobs, including the owner’s. But what are these jobs like? Are they good jobs?
To find out, our team recently interviewed almost 30 employees at microbusinesses that had received loans from Accion East, a microlending organization, the findings of which are located on a new microsite, gainfuljobs.org. One of the employees, 56-year-old Amelia, is emblematic of what we found. Amelia had a long history of low-quality jobs that didn’t provide many avenues of opportunity. Prior to her current work managing a small, local tax preparation office in Brooklyn, Amelia mainly held a series of dead-end factory jobs. During a particularly rough patch, she survived by babysitting and selling her native Nicaraguan food from home. Her economic situation began to change five years ago when she went to work for this local business.
The owner provided her with training. After a few years of hard work in the industry, Amelia was promoted to office manager. She is now responsible for training other workers, in addition to running sales, marketing, and general operations for the business. She has a steady job with decent wages, and has built marketable skills and self-confidence. The job revealed Amelia’s potential.
While there is no question that wages are a critical component of work, there are also other valuable aspects of a “good” job. Our colleagues at the Aspen Institute Workforce Strategies Initiative make this point by talking about the need to create jobs that both raise the floor and build ladders. Good jobs raise the floor by providing a basic level of stability through decent wages, benefits, stable schedules, well-structured responsibilities, safety, fairness, respect, and good communication. As Amelia found, good jobs also build ladders by helping workers to gain skills and relevant work experience. Our interviews revealed that in many instances, workers preferred jobs with these non-financial aspects to others with somewhat higher wages, because they supported family life, or educational and career advancement.
Increasing the minimum wage is a central way to raise the floor for American workers generally, and microbusiness employees as well. Previous research by FIELD found that roughly 50 percent of the jobs in the 1,103 microbusinesses surveyed paid wages at or above $10 per hour — just about the amount of the minimum wage hike proposed by President Obama. This finding echoes recent data gathered by the Small Business Majority, which found that 57 percent of the small business owners it polled supported an increase in the minimum wage.
Although wages and benefits are critical, it’s also important to recognize other aspects of job quality that are essential to supporting family life, and to enabling educational attainment and career advancement. Our research suggests that small businesses and microbusinesses play a valuable role in providing just the kind of jobs that our country needs.