Last week, Wal-Mart, the mass retailer, announced that it is giving a raise to its 500,000 entry-level workers, increasing their starting wage to $10 an hour. Coupled with the wage increase is an apprenticeship scheme that will provide specialized training, more flexible schedules, and better benefits. This is not only great news for the low-income Americans that Wal-Mart employs, but likely to have ripple effects for over 1 million low-wage workers workers at other companies, such as Target and Home Depot, as they are forced to raise their wages to compete for talent.
Wow. One act by one actor and the lives of more than 1 million low income Americans are improved. With 45 million people living in poverty and the nation fast approaching a time when the majority population will be non-white with significantly less income, wealth and education than the current majority, this announcement was a stark reminder to me that we can’t be satisfied with incrementalism. If we really want to make a dent in almost any important social problem, we need to focus on where the money is –the public and private sectors. While philanthropy plays a critical role providing flexible, risktaking capital, all of the Gates Foundation’s grantmaking adds up to only seven days of the federal government’s spending. Scaled change can only come when existing private and public sector resources are redirected towards achieving better results. That’s why we at Living Cities are focused on creating a new urban practice with public, private and philanthropic leaders in cities that is focused on doing just that with the goal of not only achieving dramatically better results for low-income people, but also of accelerating the pace of change.
Wal-Mart shows us all what’s possible from private sector action, but there are equally encouraging examples coming from the public sector. All over the country, especially in local governments, we are seeing an emphasis on results from our limited public resources. Results for America (RFA), a nationwide nonprofit, is helping cities and states to structurally shift towards evidence-based decision making. With their Moneyball for Government fellowships, RFA is building capacity in 11 cities so they can be more data-driven and outcomes-focused. Local governments are also using new financing mechanisms, like Pay for Success or social impact bonds, to redirect public dollars towards paying for outcomes, not outputs. These early tests, in places as diverse as Boston, Salt Lake City and New York, are structured to not only generate better results for the same amount of money but also attract private capital to these activities. Similarly, 57 cities active in the StriveTogether network are aligning existing resources to improve educational and opportunity outcomes for children, from cradle to career. Each community develops shared goals and indicators of success to use across programs and systems and regularly uses data to consistently implement and improve strategies through continuous improvement and collective impact.
Wal-Mart’s announcement really was a good reminder that those who are working towards large scale change need to keep their eyes on the prize –the billions already being spent by the public and private sectors without the results we want. Everything else can be a distraction.