Must reads: In the Nation Michael Sorkin says micro-apartment may seem trendy, "but their austerity is just another limit on the aspirations of the poor." You should definitely cruise by this cool Pew report, which canvases more than 1800 tech experts on the economic impact advances in robotics and computers may have on the future of jobs. You may also want to check out this clever infographic-like story making a case against the sharing economy by Susie Cagle in Medium, who argues "it's disaster capitalism." NPR reports on this new cookbook for families on food stamps with tasty and healthy recipes that are inexpensive.
Let's start with this New Yorker cartoon from Barbara Smaller:
The idea of a maximum wage sounds outlandish today. But though no such maximum wage level has ever been embedded in America law, it's worth noting that until relatively recently we had a de facto maximum wage policy in place. The Second World War pushed the top marginal tax rate up to 90 percent. The Kennedy administration adjusted that down to 70 percent and there it stood until Ronald Reagan's election. Neither of those was a formal maximum. But they acted as a maximum wage.
Berkeley's Robert Reich weighs in on worker pay over at the Huffington Post, asking what's it got to do with worth to society:
How much does society gain from personal-care aides who assist the elderly, convalescents, and persons with disabilities? Likely more than their average pay of $9.67 an hour, or just over $20,000 a year. What's the social worth of hospital orderlies who feed, bathe, dress, and move patients, and empty their ben pans? Surely higher than their median wage of $11.63 an hour, or $24,190 a year. Or of child care workers, who get $10.33 an hour, $21.490 a year? And preschool teachers, who earn $13.26 an hour, $27,570 a year? Yet what would the rest of us do without these dedicated people? ...At the other extreme are hedge-fund and private-equity managers, investment bankers, corporate lawyers, management consultants, high-frequency traders, and top Washington lobbyists. They're getting paid vast sums for their labors. Yet it seems doubtful that society is really that much better off because of what they do.
In the Policyshop, Demos' Amy Traub explains why a recent ruling by the National Labor Relations Board finding that "McDonald's Corp is a joint employer with franchise owners" is good for workers. Over at Bloomberg View, Megan McArdle says unions might be needed for service jobs but labor laws would need to be retooled to reflect the needs of a sector very different from manufacturing. In the New Republic, Sean McElwee says workers with ownership in their companies, particularly via co-ops, are good for the economy:
Cooperatives can also supplement economic development programs in cities suffering under the weight of deindustrialization...And coops are not just good for unions, the environment, and struggling towns—they are good for workers, too. A meta-study by economist Chris Doucouliagos examines 43 published studies and find that profit-sharing, worker-ownership, and worker participation in decision-making are correlated with higher productivity. The effects are stronger among labor-managed firms than among those with merely worker-ownership schemes like ESOPs.
Oh and guess what? A recent Wharton study finds that customer satisfaction and sales are tied to higher levels of employees in retail and higher pay:
But what surprised Fisher, Netessine and Krishnan the most was the potential financial return if the unnamed retailer were to make even a modest investment in hiring more staff. According to the study, “increasing associate payroll by $1 at a given store is associated with a sales lift of anywhere from $4 to $28, depending on the current level of payroll relative to store sales. The implication of this finding on retail performance is quite dramatic.” “We were amazed to find how this retailer could increase sales by changing its staffing resources through adding more employees or simply reallocating existing staff,” says Netessine. “In some stores, the sales leap would be $28 to $1 in employee costs, and that was really striking. We were blown away. It never occurred to most of the retailers that by moving employees around the stores, you could increase sales.”
You may also be interested in this 2012 investigative journalism piece from MotherJones' Mac McClelland, which takes you into the "backbreaking, rage-inducing, low-paying, dildo-packing time inside the online-shipping machine."
Check out this cartoon from Liam Black:
In Alliance Magazine, Audrey Selian and Ken Hynes discuss why impact investing has failed expectations on scaling, providing a lengthy discussion on the emerging practice's challenges:
From a strategic perspective impact investors should perhaps be backing a portfolio or bundle of companies within a sector. This may mean investors should be routinely and deliberately working in groups: working ‘alone’ may be sub-optimal from the perspective of the ecosystem, and in the long run possibly from the perspective of the company. We are obsessed with scale for the individual companies in which we see a potential return – though some, like Uli Grabenwarter, question whether such scale should be an end in itself. The selfish side of our brains will seek to open doors and see scale achieved for those in which we have a personal stake. If we really are, for example, committed to the dispersion of appropriately priced, sustainably produced sanitary napkins for women at the BoP, perhaps we should spend less energy examining the competitive market space around the one company we happen to have invested in and, instead, spread our bets in the name of impact, or invest in an intervention that serves more than one company.
Over at the Huffington Post, Social Enterprise Alliance's Kevin Lynch argues that organizing around social enterprise is a more fair way of structuring the economy:
The myth of the Privilege Economy is that it rewards hard work and perseverance. Yes, but. But, it rewards holders of capital disproportionately to all others. But, the economic capital it rewards is massively concentrated among the privileged. But, it even more generously rewards what Chris Rabb calls Invisible Capital: social capital, cultural capital, and human capital, that flow from a set of characteristics ascribed almost entirely to privilege holders like me. But, every time it rewards us privilege holders, it further perpetuates that privilege. In contrast, social enterprise pivots us away from the Privilege Economy to a framework of economic justice, in several powerful ways...In the field, we often speak of "scaling" social enterprise. What we're talking about is creating the conditions in which social enterprise can move from a sliver of the economy to the biggest slice.
Over at Markets for Good, David Henderson says the democratization of evaluation is good for the social sector:
New technologies are enabling social investors to investigate the social and environmental contexts in which they make their investments, and front line social service providers have access to sophisticated client management solutions that allow them to examine client outcomes as often as they choose, all without the intervention of so called “evaluation experts”. This democratization of evaluation is great for the social sector. Evaluation should not solely be the domain of those who are members of American Evaluation Association. Instead, every person in the social sector should have an interest in evaluative techniques, and access to tools that lower the cost and increase the frequency with which we can assess whether our interventions are achieving their intended impacts.
Meanwhile in the Stanford Social Innovation Review, RSF Social Finance's Don Shaffer discusses how capital can be better used to open up the social sector:
To build a thriving social enterprise sector, we need to rethink the purpose of capital and employ an integrated capital strategy. Integrated capital is the coordinated and collaborative use of different forms of capital (equity investments, loans, gifts, loan guarantees, and so on), often from different funders, to support a developing enterprise that’s working to solve complex social and environmental problems. Integrated capital addresses the funding challenges social enterprises face in a number of ways: It allows for longer development times by including some types of investment that don’t need to make a return, such as grants. It gets enterprises through the “valley of death,” where they have a promising business model, technology, product, or service, but need more capital to realize its potential and don’t qualify for traditional financing. And when community foundations and local investors participate, integrated capital creates a community commitment to the enterprise’s success.
In Pioneers Post, Isabelle de Grave discusses the reaction to announced results from the Peterborough Social Impact Bond. You might want to check out this podcast on how college endowments can be used to move green energy along. You may also be interested in this April piece in Institutional Investor on the invest/divest movement.
The New York Times' Neil Irwin over at Upshot blames five sectors for the economy being weak:
The American Bankers Association's Wayne Abernathy says the diminishing banking system is bad for the U.S. economy:
The number of banks in the U.S. fell to 6,730 at the end of March, with only one new charter since 2010. By comparison, in 1892 there were 7,118 banks in America—723 more than the year before. The attrition is concentrated at the lower end of the size range, as the Federal Deposit Insurance Corp.’s consolidation study reported earlier this year. If you prefer community banks and what they offer, your options are dwindling. If you value a flourishing industry, the lack of new entrants should cause alarm. These new signs suggest a lack of growth and vitality. Either one, taken in isolation, would seem to be a whiff of a smoldering problem. Taken together, they suggest a fire that is burning our national financial future at both ends. This is particularly worrisome because the U.S. banking tradition has historically encouraged the development of banks of all sizes and business models to accommodate a variety of banking customers. Banks are essential to the economic success of any modern nation. They play a central role in the conduct of monetary policy, bring savers and investors together efficiently and operate a reliable, fast and safe national payments system. We cannot afford to be complacent about the industry’s future.
We also have this depressing story from ProPublica's Paul Kiel on the predatory lending and suing practices of one company targeting cash-strapped military families. Meanwhile, Harvard Business School's Karen Mills looks at whether there is a "credit gap" for small businesses:
There is disagreement over whether there is indeed a credit gap when it comes to small business. Banks say that there is currently a lack of demand and that they can't find enough qualified borrowers. Small business owners feel that despite being creditworthy today, banks remain either wary or entirely unwilling to lend to them. There is no data that definitively measures either the credit gap for small business or the impact of that gap on the economy. (As part of recent financial reform legislation, the gap in small business credit data was recognized and a specific provision was included to allow for more credible monitoring for small business access to bank credit.
You may also want to check out this documentary we featured earlier this summer on the woes of people without adequate banking services:
And may be you missed hearing that Bank of America has to pay the U.S. government $16 billion for passing along "defective" loans, making it the largest single settlement in corporate America's history.