A New National Imperative: Promoting Economic Mobility Through Quality Job Creation

By Brenna McCallick and Tonusree Basu

Last week, President Obama delivered his State of the Union address and spoke at length about the growing income inequality in the United States. The availability of jobs was a prominent theme; the hour-long speech included over 25 mentions of jobs, wages or worker benefits.

The President cited several promising statistics about the recent job growth across the nation, such as:

• “Our economy is growing and creating jobs at the fastest pace since 1999.”
• “Over the past five years, [American] businesses have created more than 11 million new jobs.”
• “Since 2010, America has put more people back to work than Europe, Japan, and all advanced economies combined.”

On the surface, overall job growth is a positive indicator, but it belies a troubling reality. Low-wage and part-time work has been on the rise since the Recession, while full-time, higher-paying jobs offering benefits have declined.[1]^,[2]  Eighty-six percent of full-time, private industry workers had access to medical coverage through their employers in 2014, while only 23 percent of part-time workers shared in this benefit.  And according to recent estimates, almost a quarter of all U.S. workers are low-wage (23 percent), earning less than $11.90 an hour.  Of those workers, 82 percent earn poverty-level wages, or less than $10.75 an hour.[3]

To his credit, President Obama did highlight a few issues that would directly benefit the lives of American workers. Some proposed measures included raising the federal minimum wage, eliminating income inequality between men and women, providing better job training and placement programs for veterans and unskilled workers, and guaranteeing paid sick and maternity leave.

These are issues that impact all Americans and concern both Democrats and Republicans. As we face increasingly limited economic mobility and the widest income gap since 1928,[4] it is critical that we as a nation prioritize job creation. However, in this pursuit we must not overlook the issue of job quality.  After all, a living wage, benefits, and opportunities for advancement are crucial factors in lifting individuals out of poverty, enabling them to access housing, education, healthcare, and other essential services.

Impact Investing As A Key Opportunity

Economists argue that continuing to lower unemployment will require investing both public and private resources in supporting entrepreneurs in the creation of new businesses.[5] Impact investing is one such tool that unites public and private interests and capital to create positive social outcomes. Often discussed in relation to innovative social enterprises, impact investing also includes investments into more traditional businesses –especially undercapitalized small businesses – that employ residents of low- and moderate-income (LMI) areas.

Since 1998, PCV has promoted economic development in LMI communities by supporting small businesses to boost the creation of those quality jobs. We began as an equity fund investing in companies that served and employed LMI residents of the Bay Area, and have since evolved into a pioneering nonprofit CDFI. PCV is unique in that along with our lending and venture capital-style business advising programs, we also have a field-building research practice to advance impact investing as a tool to unlock more capital for LMI communities.

In October 2013, PCV joined with Enterprise Community Partners and the Initiative for Responsible Investment to launch a new project, the Accelerating Impact Investing Initiative (AI3). Through the AI3, we prioritize research and education to advance public policy that will drive private capital toward enterprises creating better social outcomes for all. In this work, we were proud to partner with the Surdna Foundation, a long-time supporter of initiatives that create sustainable communities and improve economic mobility in the U.S.

Taking The Conversation Forward

This year, one of PCV’s goals for this work is taking the national conversation about job creation forward, placing job quality at the center.  In addition to other policy priorities, our efforts will include identifying ways to ensure that quality jobs are an outcome of the development and implementation of policies that harness private capital for public benefit, and that impact investors track and report on job quality. We are delighted to announce that Surdna will continue to support us in this effort over the next two years.

2014 was a year of major developments for impact investing policy: we saw the introduction of the Social Impact Bond Act in Congress, and the publication of a set of policy recommendations from the U.S. National Advisory Board on Impact Investing, among other crucial advances. On the practitioner side, the field is moving with renewed force toward more targeted investments and standardized metrics for evaluating the social returns of investments. As one of the key objectives of these efforts, stakeholders on all sides of the impact investing ecosystem must understand quality job creation as an important part of social impact performance.

PCV looks forward to partnering with Surdna over the next two years to advance our shared goal of promoting economic development through the creation of quality jobs – jobs that pay living wages, promise advancement opportunities and offer the benefits every working American deserves.   Indeed, ensuring the availability of a quality job for every American is a social and economic imperative on which the nation’s long-term prosperity rests.