President and CEO, Pacific Community Ventures
What problem is your organization is working to address?
One of the biggest challenges the United States currently faces is widening income and wealth inequality. Since the 1970s, economic productivity has increased while pay for most workers has stagnated. This has led to a decline in jobs that afford working people and their families dignity, financial security, and economic mobility. Without quality jobs and a more equitable society, democracy itself is at risk.
At Pacific Community Ventures, we envision a world of thriving communities where everyone has a fair shake. PCV is a nonprofit social enterprise and community development financial institution (CDFI), and our mission is to invest in small businesses, create good jobs for working people, and make markets work for social good. We’re focused on providing diverse small business owners in economically underinvested communities with the tools, resources, and incentives they need to create not just jobs — but quality jobs. We also provide impact investors with the research and support they need to make quality job creation a priority.
Can small businesses provide quality jobs?
Small businesses have an important role to play in advancing quality jobs. There are approximately 5.6 million small business owners in the US who collectively employ 32.5 million workers. The quality of jobs small businesses provide affects the lives of workers in all corners of the country.
Take the example of SMOKE Open Fire Cooking, co-owned by Latina entrepreneur Irma Robinson. SMOKE came to PCV in 2016 for a loan to expand the business’s catering service and open Southside, a local café. SMOKE was matched with one of our pro-bono business advisors, who reviewed its financial statements and recommended changes that allowed for better financial analysis and record-keeping. The advisor also helped the owners compare costs to industry standards, leading them to adjust some processes. In 2016, SMOKE grew revenue by 58 percent compared to the prior year. It also grew jobs from five employees in 2015 to 17 employees at the end of 2016. And these jobs offer living wages, career-building opportunities, and wealth-building opportunities. The company offers 16 hours per year of employee training outside of initial onboarding, reimburses employees for the cost of obtaining career-related credentials, and promotes internally, allowing employees to grow their careers. Based on its performance, SMOKE Open Fire Cooking received a second loan from PCV in 2017 to expand its restaurant. The owners opened a second Southside café at the end of 2017 and are scheduled to open a third location in August 2018. They are also planning to provide medical and retirement benefits to all full-time employees in June. As Irma has said, “We are so grateful to Pacific Community Ventures for giving us the loan we needed to get started when no other institution would. It has made a difference in our company’s future and to those who are a part of our organization.”
From an investment perspective, are good jobs good for business?
The investment community is now recognizing that businesses’ environmental and governance practices lead to better financial returns. Good social practices — including those that affect the health and welfare of workers — can lead to better returns as well. These returns may not occur in the first quarter, but over time, jobs with good social practices minimize reputational risk and unplanned turnover and can increase worker productivity.
I came to understand firsthand the link between job quality and business outcomes during my time as Chief Impact Officer at Fair Trade USA. The cocoa industry was experiencing product shortages because cocoa trees were dying. Workers were paid so little that they could barely afford to eat, let alone properly care for the cocoa trees. Industry leaders soon realized it was in their collective interest to improve the quality of jobs for cocoa workers. Not only was it the right thing to do, but, by investing in the people on the ground, the industry also boosted productivity and strengthened the sustainability of its supply chain.
It’s good business and good ethics to support good jobs, starting at the very beginning of the supply chain. Workers, businesses, and communities do not have to be at odds with one another — we can create jobs that work for everyone.
How is PCV addressing job quality?
Job quality has been a part of our DNA since PCV was founded in 1998, and we are working to take these efforts to the next level. We’ve launched a national initiative to engage foundations, CDFIs, and other impact investors — as well as policymakers, community advocates, government, and business — around the idea that, as a society, we simply must do better at creating jobs that are good for workers, good for businesses, and good for communities.
PCV has conducted field-leading research around quality jobs (Moving Beyond Job Creation, 2016; and Public Policy and Investments in Quality Jobs, 2017), and we’re now piloting Good Jobs, Good Business: a practical toolkit to help small business owners create jobs that boost the bottom line. The toolkit provides practical solutions and examples for boosting revenues and reducing staff turnover by creating jobs that pay higher wages, offer benefits, provide stable schedules, and help employees build both skills and wealth. For example, small businesses interested in boosting employee engagement can learn about custom metal form manufacturer Marlin Steel’s bonus program for its firm of 35 employees. Since implementing the bonus program, productivity has improved and profits have nearly tripled.
We’re planning to pilot the toolkit with small businesses in the retail sector. We think it will have tremendous impact, because not only do more than one in ten Americans work in retail — more than are in manufacturing, construction, or mining — but the industry also currently has a high concentration of low-quality jobs.
How do you support small businesses to create quality jobs?
We cannot simply ask small business owners to create quality job without giving them the tools, mentoring, and roadmaps to do so in ways that support their overall business needs. Small businesses want to provide their workers good employment opportunities, but they are often uncertain about how to go about it. They may also have limited time and resources to devote to improving job quality, especially compared to larger businesses.
There are several ways in which we are supporting small businesses that want to create higher quality jobs. PCV’s Loan+Advice Fund already offers diverse California small business owners fair and affordable capital by pairing each borrower with a pro-bono advisor to help them overcome challenges to growth. Now PCV’s advisors will also be able to use the Good Jobs, Good Business toolkit to help small business owners create higher-quality jobs that support their business’s needs. We are also experimenting with ways to incentivize small businesses to improve job quality. While we recognize there are limitations to how much small infusions of capital can change business behavior, we want to reward our businesses that take steps to improve their workforce practices. Interested businesses will work with one of our advisors to improve job quality, reporting job quality metrics alongside business financials. Those that demonstrate progress on one or more elements of job quality will qualify for financial rebates.
In addition to working with our own borrowers, through partnerships with other CDFIs, we’ll be piloting the toolkit with small businesses in their portfolios to expand our reach and learning. What’s more, PCV’s national BusinessAdvising.org mentoring platform already provides small business owners across the country with access to skills-based advisors. We’ll leverage this platform to include the Good Jobs, Good Business toolkit. Finally, we’ll make the toolkit available online for small businesses that want to use it on their own and continue to spread the message that prioritizing job quality is a good business investment. By the end of 2020, we plan to deploy the toolkit to 150 of our own borrowers through our Loan+Advice fund. We also aim to reach 500 additional small businesses across the country through our national mentoring platform, BusinessAdvising.org.
Why do quality jobs matter?
The decline of jobs that afford working people and their families dignity, financial security, and economic mobility is one of the biggest societal challenges of our time. We believe that, by working directly with small businesses and empowering impact investors to prioritize quality job creation, we can begin to reverse our country’s rising income and wealth inequality and create jobs that are good for workers, good for businesses, and good for communities across America.
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We are grateful to the Ford Foundation and The Prudential Foundation for their support of this work.