This spring, Living Cities is excited to share a curated blog series that profiles field leaders’ responses to questions about what it takes to prepare low-income people for quality jobs. These leaders represent financial institutions, foundations, non-profits, the public sector, and employers. This series will offer a diverse set of perspectives on workforce and economic development opportunities and challenges across the country, and is part of a larger effort to inform the future of our emerging efforts to increase the number of low-income adults prepared for quality employment.
The ongoing dialogue about how to better prepare all people for the modern workforce is critical for moving towards an economically vibrant country with increased opportunity for all. That said, most workforce discussions often ignore a critical aspect of the training-to-employment pipeline: job quality. At Fund Good Jobs, we tackle the issue of job quality through what we believe is the most critical piece of the equation: capital.
Fund Good Jobs is a non-profit investment fund that tailors investments in the range of $100K to $2M with a blend of debt and equity capital to maximize growth and the creation of good jobs. We believe that the best way to engage millions of unemployed and underemployed Americans is to create jobs are actually good quality.
We see three primary characteristics of good jobs:
- Living Wage Compensation that allows a person to take care of themselves and their family
- Benefits and Supports, like health benefits, retirement support system and financial planning assistance, that allows a person to create a long-term stable environment
- Supportive Work Environment that offers life ladders and access to mentors for continued professional mobility
As we work to support the scaling of small and medium-sized businesses, we have also identified three challenges business and civic leaders encounter when trying to create good jobs.
- Capital Gap for Good Job Creators: We consistently find that businesses actively working to create good jobs are facing a gap in the capital resources they need to accelerate growth. Acknowledging this need for capital, civic leaders looking to stimulate job growth should work to understand the sources of capital available to small businesses and leverage these resources to incentivize the creation of good jobs.
- Insufficient Practical Support: High-need, high-growth small businesses need proactive, practical, hands on support that goes deeper than current federal and regional resources. Public and Private technical assistance providers need to partner effectively to focus resources where they are needed.
- Broken Workforce Pipeline: Local workforce development efforts should expand their focus beyond placement to prioritize quality placement that will ensure that workers have access to long-term economic mobility. These programs often don’t intersect with employers or economic development leaders. There is a real need to bring employers, workforce leaders, economic development specialists, and training institutions together to fix the broken pipeline from training to employment.
We know that capital is not enough to guarantee that low-income people land good jobs. That is why Fund Good Jobs is working closely with its founding organization, Inner City Advisors (ICA) to scale the following initiatives in the Bay Area:
1. USING CAPITAL AS A TOOL
Capital is a critical component to effectively partnering with high-growth companies that are creating quality jobs. By using capital strategically, we can leverage it to ensure that jobs created are actually good jobs.
To this end, Fund Good Jobs created a pooled fund with the right sources of capital – such as philanthropic PRIs– allowing us to partner with mission focused stakeholders. With this fund, we invest directly in high-need, high-growth businesses with blended capital that allows us to invest flexibly in ways others cannot. Then, we build creative triggers into our investments to create financial incentives or “mission-related requirements” to ensure that businesses create good jobs. Triggers can include reducing the interest on loans, or requiring covenant reporting to ensure jobs created have health benefits, career ladders, and quality wages.
Investing in this way challenges the traditional notion of return and risk. We are investing in a new asset class - small businesses as good job creators. We have seen successful businesses grow with the support of ICA’s network before (including Blue Bottle Coffee, Revolution Foods, and Numi Tea), so we use capital as a tool to accelerate the good jobs impact; we know the strategy works. The asset class is one in which we believe more people will want to invest.
2. BUILDING THE QUALITY JOB CREATOR PIPELINE WITH PRACTICAL EDUCATION & ADVICE
In order to use capital as a tool, we must sufficiently build and prepare the pipeline of “Quality Job Creators.” That’s where ICA and Fund Good Jobs have been able to provide services unlike any other through Education, Advice and Access to Capital.
Imagine a Stanford MBA for the everyday small business owner, and the Y-Combinator for good-job-creating businesses. We partner with Michael C. Bush of the 8 Factors, Impact Hub Oakland and the Mills GSB program to provide practical education to hundreds of entrepreneurs. Once entrepreneurs have honed the strategy to grow their business, ICA can go deeper in providing practical services like financing, branding or HR management. We also constantly vet ICA companies for the best fit for Fund Good Jobs investments. We are well positioned to invest in the highest-growth, mission-aligned, good-job-creating businesses. That’s where our deal flow access is similar to the Y-Combinator in the tech sector - only our deals are 100% focused on the return profiles for good job creation. You know when you meet an ICA vetted company seeking capital that they are ready for it. That’s where ICA and Fund Good Jobs will continue to benefit as we share our learning and support the small business community. Our capital partners value this pipeline too. Together we can enhance the way capital moves for small businesses across all sectors, starting with banking and other growth capital providers.
3. STRENGTHENING THE LINK BETWEEN WORKFORCE AND ECONOMIC DEVELOPMENT
As workforce development agencies double down on their efforts to prepare low-income people for truly good jobs, we urge them to fix broken pipelines between workforce and economic development.
When it comes to growing small businesses, hiring and managing people are critical points of building a scalable business. They are the source of success. So to fulfill our mission of creating good jobs for those who need them most, we had to be strategic in supporting businesses with these hiring processes. And if you believe that everyone should have access to a quality job, you will prioritize investments in people who need them most: those who are formerly incarcerated, have low educational attainment, have aged out foster youth, and are military veterans.
Under the vision and leadership of Jose Corona, ICA has convened a public-private partnership to launch a talent management program at the intersection of workforce development and economic development. They bring a business lens to the traditional workforce system by ensuring that employers are engaged in the placement and investment in human capital. For example, Inner City Advisors has partnered with the Alameda County Social Service Agency and other workforce development partners to directly connect individuals to open positions at Fund Good Jobs companies. ICA’s talent management program acts like a staffing agency for the greater population and is able to connect people with the most significant employment barriers to quality jobs. ICA helps bridge workforce development and business growth so that trainees are directly placed and retained into good jobs.
Below is an image that will shed light on our partnership with ICA and vision for improving how low-income people are prepared for quality 21st century employment.
We can only increase opportunity for all if we focus on job quality. With that focus in mind, Fund Good Jobs is working closely with ICA to provide the financial and practical support that businesses need to grow. At the same time, we’re bridging these efforts with those in workforce development to ensure that low-income people with the highest employment barriers are able to benefit from this job growth. By supporting businesses that create quality jobs and then connecting them to workforce, cities and regions can increase the number of low-income individuals prepared for good jobs in the 21st century.
Sean Daniel Murphy is President & Managing Director at Fund Good Jobs.