Archives For January 2014


an insider reflects back on the war on poverty, part 3

GUEST BLOGGER: Carla Javits, President and CEO, Roberts Enterprise Development Fund

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Spurred by the 50th anniversary of President Johnson’s announcement of a ‘war on poverty’ – there has been more public discourse on the topic than we’ve heard in years.Predictably there have been a wide array of policy prescriptions with people across the spectrum from Senator Rubio to Maria Shriver weighing in.

My view: the unfinished business of the war on poverty is jobs. Specifically three issues:  creating more jobs, connecting jobs to people who need them, and wages and benefits that can take people out of poverty. 

I’ve been surprised that in the discourse of how to reduce poverty, there’s been so little discussion of not only job creation and access to jobs, but also the promising developments happening outside of mainstream government and social service programs – some of it replicating what’s been done at greater scale outside of the U.S.

Since 1997, the focus of REDF has been job creation and pathways to employment for those facing the greatest barriers to work. Founded by George R. Roberts, REDF developed a business approach to solve a social problem. That approach is social enterprise, businesses with a social purpose, that create jobs explicitly to employ people who are otherwise shut out. What we’ve learned in the past 16 years has been this – far more people want to work and are capable of it than is generally assumed; they only need the opportunity to transition back into the workforce.

Bill O’Reilly summarized that assumption when he said, “Every American can work hard, and if you do, you will make money. Every American can practice self-respect, and if you do, people will hire you. But if you are dishonest, embrace intoxicants, conceive children you can’t support, act in a crude, disrespectful way and generally believe that you are owed prosperity – poverty may well come knocking. And all the President’s men can’t prevent that.”

However, what O’Reilly fails to take into account is not only how many of us are vulnerable to these problems – including many who are working and not living in poverty; but more importantly, he does not acknowledge that many people come to a point when they are ready to change, but face a job market that is quite unforgiving when that moment arrives – especially for those with few connections to other working people. 

REDF has invested financially and provided business advice and consulting support to more than 50 social enterprises. As a result, 8,000 people in California who have been homeless or incarcerated, struggled with addiction or mental health illness have had a chance to work, and the social enterprise businesses have earned over $140 million in revenue. Private, for profit companies have procured goods and services from these companies helping them grow so they can employ more people, and have hired the most successful of the social enterprise graduates. Some have paired up with community colleges for skills-based training that has further increased their employability. 

These kinds of social enterprises are a little known but powerful outgrowth of policies implemented in the 1960’s and 1970’s, leveraging public policies, private initiative and other resources to create jobs and revenue streams. They exist in many communities throughout the U.S., from Los Angeles to Chicago, Denver to New York, Indianapolis to Atlanta and represent a wide array of businesses including landscaping, screen printing, construction, manufacturing, and building maintenance to name a few. All told they employ at least 150,000 people and generate billions of dollars of revenue.

To see all the organizations in REDF’s portfolio, visit our Invest page or to see our national network of social enterprises visit our Lead page.

Several for-profit companies have also taken steps to expand the employment of young people and adults who would otherwise struggle to enter the workforce. They have stepped up to create job opportunities and work with nonprofit social enterprises, workforce development and alternative staffing service organizations to hire and support people who would otherwise be excluded due to their background or lack of experience. 

These companies are motivated by multiple factors.  First and foremost they need prepared workers. They struggle with the costs, retention, and sourcing of qualified front-line staff. In addition, their top talent and many consumers increasingly demand a clear program of positive contributions to society in exchange for their loyalty. Lastly, those companies operating in sectors that are publicly regulated have to respond to the demands of officials and communities for local hiring. 

If we are to show that the wealthiest engine of democracy and capitalism in the world can offer a good life – the American Dream – to all Americans, it is time to get real and focus on the economic growth, job creation, and support to working people that will really deliver the opportunity to work to everyone who needs it and wants it; and the income and access that offers a decent life above the poverty level to those who do work.

There is still a long way to go before the ‘win/win’ approach creates a sufficient number of jobs, and opportunities for those who need them the most.  With conservative Ron Unz backing an initiative to boost the minimum wage in California, an economy that is finally starting to create jobs again, and companies seeking to have a positive impact on their communities – now is the time. When we get serious, poverty loses, people win.


Since its founding in 1997 by George R. Roberts, REDF has helped thousands of people in California get jobs by providing funding, business expertise and access to networks to social enterprises—”double bottom line” businesses that create jobs in order to employ individuals facing the greatest barriers to employment.
www.redf.org

An insider reflects back on the war on poverty, part 2

GUEST BLOGGER: Carla Javits, President and CEO, Roberts Enterprise Development Fund

 

Last week I wrote about the War on Poverty, my father’s legacy in that fight, and its outcomes.  Now let’s look forward and address what I think is at the heart of this issue to bring about lasting change and prosperity – jobs.

While tax incentives and income transfer programs can help, people across the political spectrum agree that government transfer programs alone will not and cannot eliminate poverty – especially for working age adults and their children.

Jobs are central. The unfinished business of the war on poverty is bringing more people into the workforce and positioning them for advancement.  Perhaps it seems obvious, but just to put a fine point on it – the poverty rate for full-time workers is just 3 percent, and for those not working, it is 33 percent.

On this 50th anniversary of the launch of the War on Poverty, the policy prescriptions that I’ve heard so far both from politically liberal and conservative commentators seem stale with little focus on job growth, and access to jobs for those who have been left out.

We know that the pressures of globalization and technology have been in lockstep with political gridlock making it harder to create jobs and increase wages in the US. The result has been an hourglass economy with high paid jobs for the technologically savvy and highly educated, low paid jobs in service occupations, and fewer jobs in the middle.     Employment discrimination also continues to factor in to disproportionately high rates of unemployment particularly among young men of color.

But in the context of our values as Americans we acclaim the importance of work, and expect people to pull themselves up by their bootstraps.  Most of us would like to see jobs and work as the primary safety net, with programs and entitlements in place for those who are really unable to work.  Opposition to government supports is often fueled by suspicions that they offer a disincentive to work.

Private sector innovation.  The current debate about how to address poverty seems to give short shrift to job creation, and ignores almost completely the innovation occurring in the private sector – the engine of jobs – which is increasingly motivated by pressure from employees and consumers to mobilize core resources to address community problems. The private sector is doing that with a focus on job creation and entrepreneurship, including development of social enterprises and other businesses that intentionally open their doors to people who have struggled to get or keep jobs in the past, impact investing to spur business and job growth, and a resurgence of interest and reform in work-oriented technical education programs; not to mention significant investments in small businesses and workforce development by Bank of America and JP Morgan Chase, to mention just two institutions.

Job creation.  So how can we make jobs the go-to safety net?  Well, first we need more jobs – unemployment is just too high right now.  An initiative focused on job creation for low wage workers is making the case.  Here you can listen to Al Fuller, CEO of Integrated Packaging Corporation, making the case for what he’s done to create good jobs as an entrepreneur who grew up in the inner city.  He is only one of the businesses that participate in an initiative showing that, “Companies can provide great jobs and strengthen their business. The Hitachi Foundation has been garnering proof of this by looking at firms across the country that do just that.”

Good jobs.  Once people are working – particularly full time — their wages and benefits must allow them to purchase the essentials of life, and move out of poverty. This is an issue the business community as corporate citizen must grapple with. Many successful companies make the business case that profits and efficiency increases when front line workers get the pay and benefits and opportunities for advancement that move people out of poverty. Others need to follow them.

Mobility. The chance for advancement, for economic mobility, is at the heart of not only a poverty-fighting strategy, but also the American Dream.  Research indicates that while people in the middle of the income spectrum do have significant opportunities to move up, as do some of those born poor, almost half of those who start in the lowest percentile of income remain stuck there and a full 70% remain below the middle all of their lives.   

People in deepest poverty. There continues to be little focus on people who face the most daunting challenges. About 20 million people in the US live in ‘deep poverty’, living on less than half of the poverty rate, with the majority not working at all in a given year.  They face daunting problems from histories of homelessness and incarceration to addiction, mental illness and other disabilities. Taxpayers, families, communities bear enormous costs for long-term unemployment.

The work that REDF has done for 16 years to create jobs through social enterprises that hire these individuals has demonstrated definitively that most of them want to and are capable of working if given a chance.  

I would challenge our elected officials, business leaders, philanthropic institutions and nonprofits to refocus on the single most important issue that impacts not only the War on Poverty, but ultimately the core of the American Dream, and our expectations for a decent society — the creation of jobs with prospects for advancement, decent wages and benefits, and the inclusion in our workforce of all people who are able to work, allowing people to fight their own battle against poverty.

What results has REDF’s had in job creation? How has private industry started to get involved? What are some of the challenges of job creation? Check back for the final chapter in this series from me.I look forward to seeing your comments below.

 

Since its founding in 1997 by George R. Roberts of KKR, REDF has helped thousands of people in California get jobs by providing funding, business expertise and access to networks to social enterprises—”double bottom line” businesses that create jobs in order to employ individuals facing the greatest barriers to employment.

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Want to help people in need become more successful? Get your FREE COPY of Giving Hope: How You Can Restore the American Dream.

An insider reflects back on the war on poverty, part 1

GUEST BLOGGER: Carla Javits, President and CEO, Roberts Enterprise Development Fund

 

I have a particularly personal interest in the War on Poverty because my father (Jacob Javits), who grew up poor, had the privilege of contributing to the passage of much of the federal legislation and programs that comprised it. As a Liberal Republican US Congressman and Senator, my father cared deeply about alleviating poverty, and believed passionately that work and education were key to doing so. He was committed throughout decades in Congress to minimizing the role of government and maximizing that of the private sector in offering opportunity to ‘leveling the playing field’ for those otherwise left out.

As I reflect on my father’s legacy and this pivotal time in our history it’s been instructive to review the debates of the 1960’s that he participated in. There was a battle in Congress and within the Administration between people who wanted to focus on work as the central strategy and those who wanted a broader approach. For those focused on work, they considered whether or not to target people living in the deepest poverty or instead to get some ‘quick wins’ for those who could get ahead with modest support. The path forward was to build partnerships with the private sector, incentives and stimulus to spur job creation, and workforce training programs. The President and those that wanted a broader set of strategies won, creating an array of government programs from education to health care, to housing.  Community organizing, and the engagement of people from low income communities were the centerpiece.  Anti-discrimination efforts were part of both agendas.

When President Johnson commandeered Sargent Shriver to become General of the War on Poverty, his message to Congress less than two months after the assassination of President Kennedy reflected the full panoply of options, “It will not be a short or easy struggle, no single weapon or strategy will suffice, but we shall not rest until that war is won.”  He went on to make the economic case. “We cannot afford to lose it. One thousand dollars invested in salvaging an unemployable youth today can return $40,000 or more in his lifetime.”

Sargent Shriver himself leaned toward “opportunity,” rather than government programs and entitlements. He said that the effort “does not try to make men good (sic – he forgot to mention the women – sign of the times) – because that is moralizing. It does not try to give men what they want — because that is catering. It does not try to give men false hopes – because that is deception. Instead, the War on Poverty tries only to create the conditions by which the good life can be lived — and that is humanism.”

The result of the policies enacted was the expansion of legal efforts to challenge discrimination, Medicare and Medicaid, and the launch of numerous and varied nonprofit organizations, including our national infrastructure of community action agencies and community development corporations (CDCs), Head Start programs and Job Corps, and volunteer service programs. Many of these still exist today. The CDC’s in particular were a focus of my father’s efforts who got them funded by working across partisan lines with then Senator Robert Kennedy, resulting in significant philanthropic support and private-public partnerships that ultimately delivered millions of affordable homes, although the hope at the time was that they would also contribute in other ways to economic development.  In the 1970’s, he also helped to create a national network through incentives for government procurement (now called AbilityOne) – that has led to the employment of hundreds of thousands of people with severe disabilities in addition to fighting for civil rights, Medicaid, and Medicare.

So who really won – poverty or the people?  Given that 15% of the US population is living in poverty now (versus 19% when the War on Poverty began), House Budget Committee Chairman Paul Ryan said last week that this War ‘failed miserably.’  He also called for new approaches that work better, and suggested that we measure success not by the number of people enrolled in programs, but by the numbers of people that get out of poverty.

While the search for new solutions is clearly worthwhile, recent evidence contradicts the premise that the War on Poverty had no impact – even according to Congressman Ryan’s yardstick. A new Columbia University study indicates that the safety net programs established as part of the War on Poverty have saved millions of Americans from falling into poverty over the past four decades.

The Census Bureau came to a similar conclusion, adopting a new measure in 2010 that takes fuller account than in the past of nutrition and housing payments, means-tested transfers and social insurance programs, as well as taxes. The Columbia study’s authors used this approach to recalculate poverty figures for the period of 1967-2010 and concluded:

Poverty rates would have actually increased slightly over the time period, from 27% to nearly 29%. But after accounting for taxes and transfers, poverty falls by approximately 40%, from 26% to 16%.  

According to the Columbia study, welfare programs have also made a significant dent in child poverty and in “deep poverty,” the 5% or so of the population earning under 50% of the poverty line – a figure that would have been triple or quadruple without the War on Poverty programs.  We also know that there has been a huge decline in poverty among the elderly as a result of Social Security and Medicare.

However, for working age adults and children – after trillions of dollars spent – poverty has barely budged, despite closing the racial poverty gap – African American and Hispanic families still face disproportionately high poverty rates, and economic mobility is not a reality or very limited for most of those born poor. Arguably, strong headwinds unanticipated in the 1960’s – technological change and globalization, among other factors, have suppressed progress. And, moving in the wrong direction, most recent private income and asset gains have gone vastly disproportionately to those at the top of the income ladder.

What does this mean for addressing the ongoing challenges around poverty in the US?  What is most essential in reducing poverty?  How should our leaders refocus to have the greatest impact not only on the War on Poverty, but ultimately the core of the American Dream? The next blog chapter will answer some of these questions.  I look forward to reading your thoughts on this debate.  I encourage you to comment below.

Fighting poverty 50 years later, this time with private money


This week, on the 50th anniversary of the war on poverty, many are debating the effects of this major government initiative. Much of the debate points toward the future and what role the government should play in fueling opportunity. Yet, this discussion misses the fact that so much important antipoverty work nowadays is taking place outside government, in the charitable sector.

The $316 billion Americans gave to charity in 2012 was, adjusted for inflation, about 2½ times the amount contributed in 1972. For a glimpse of how this influx of private money is being effectively used to combat inequality, consider the programs carried out by Genesys Works.

With sites in Chicago, Houston, the Twin Cities, and the Bay Area, its principal goal is to enhance the life chances of low-income high school students. Youth are given the opportunity to work in internships at major corporations during their senior year in high school. After an 8-week intensive training program, they’re then placed at a company where they learn an array of hard and soft skills. This experience enables them to discover that they can succeed as professionals in the corporate world, a model that other nonprofits like Year Up have also proven works.