One of the challenges that advocates are discussing here at an anti-poverty conference in Aspen — yes, I realize the irony — is getting buy-in from the private sector. How do you convince companies that social spending and government “handouts” are good for the bottom line?
Randy Osmun has a pitch: reduced employee turnover.
Osmun is the executive director of The Source, an innovative nonprofit in Grand Rapids, Mich. Companies pay The Source to bring caseworkers — some partly funded by the state — on site. Caseworkers connect employees with whatever social services or philanthropic support they need, which means anything from donated baby goods to food stamps to an affordable loan so they don’t patronize a payday lender. The goal is to stabilize workers’ home lives and thereby create more reliable employees.
“This is different than charity,” he says. “I can say to an employer, ‘Look, Joe is a great guy, he’s been through a lot, and you should really give him a break.’ But that’s just not how employers think. They don’t want your problems in their facility. What they want is resilient, dedicated, hard-working employees who come to them without problems.”
The program began in 2003, when local chief executives started talking about why their turnover rates were so high, especially among low-wage, entry-level workers. Realizing that poverty produces complications and stresses that can affect workers’ job performance, and their ability even to make it to work in the first place, the executives decided the solution might involve providing more comprehensive services to workers — and leveraging services the state already offered but that are often obstructed by red tape and overwhelmed public caseworkers. (The caseworkers placed at The Source’s partner companies have reduced caseloads.)
Turnover fell dramatically, Osmun says, with yearly retention rates for welfare beneficiaries averaging an unheard-of 97.4 percent: “People in poverty want to work, but sometimes life, due to the complexity and lack of resources, causes them to make trade-offs where work is the best thing for them to lose. When we can address the complexity, whatever that is, and allow them to continue to work, they work.”
The Source has since replicated its model in four other cities, involving 53 companies that collectively employ 27,000 employees. Osmun is developing a national rollout strategy.
This model is attractive to companies partly because they know its benefits will accrue directly to them. Other kinds of social services expansions or community-wide workforce development projects (including a pilot project The Source has created to help jobless workers) have more trouble sustaining corporate support. Why, after all, would a company invest in a community-wide workforce development program when it knows it won’t get exclusive claim to the rewards? That’s not the most efficient way to develop talent, from the firm’s perspective.
Of course, this attitude is partly why working families across the country have become so financially unstable in the first place.
“There has been this Wal-Mart mentality,” Osmun says, of cutting wages, reducing taxes that fund social spending, and prioritizing profitability today without thinking about the future. “Twenty years later we’ve seen a complete destruction of our school system, huge rates of incarceration and poverty, and now employers are saying, ‘I can’t hire good people.’ You can’t hire good people because you have devastated the community.”
Osmun is passionate about improving the lives of the working poor; he grew up in poverty himself and worked in a factory. He truly believes his partner companies have humanitarian motivations, too, and his ongoing relationship with them facilitates frank conversations about improving working conditions. But when pressed, he acknowledges that one consequence of The Source’s particular strategy for encouraging corporate investment in the community — by partly privatizing the delivery of social services — might help justify further cuts to corporate taxes and the social safety net. And wages, too.
It’s undeniably helpful in the short run for companies to reduce the barriers between struggling families and the support services they’re legally entitled to. But in the long run, welfare for employed workers is also a form of welfare for their employers, since it enables firms to keep wages ultra-low. If The Source’s model involves privatizing government services, it also involves socializing worker compensation, just as McDonald’s and Wal-Mart have been accused of doing.
But in the absence of political will to raise the minimum wage — which would avoid penalizing firms that want to raise pay above poverty levels — perhaps The Source’s strategy is the anti-poverty model that will ultimately win out.
Read more about this topic: