Starting Small… Thinking Big. A Women’s Initiative Blog

Lack of Financing Putting the Brakes on Startups

Startups are said to be the economy’s great job creators but the credit crunch has hurt young businesses. In a recent issue of Time magazine (4/11) it was reported that new businesses with fewer than 100 employees created about 50% more jobs than older firms from 1992 to 2005. However from 2006 to 2009, jobs created by startups have fallen behind. Startups (which typically finance their businesses with home equity loans and credit cards) have been particularly hurt by this recession which caused a decreased demand and a lack of credit.

Women entrepreneurs in the San Francisco Bay Area were able to create and retain 4,332 local jobs in 2010 with training, funding, and support from Women’s Initiative for Self Employment.

The need to support young businesses has never been greater. To create the jobs that will restore our economy we will need to make capital accessible to the smallest new businesses.

Latinos in a Digital Divide

One can safely assume that if you are reading this you are on the internet. Are you reading it from home? On your phone? To some, accessing the internet is as normal as coming home and turning on the television. But according to the Pew Hispanic Center report, “Latinos and the Digital Technology, 2010,” only about 65% of Latinos in the United States use the internet as opposed to 77% of white Americans. It also states that only 45% of 45 million Latinos in America have broadband internet connections at home while whites stand at 65%.

What is most interesting about this report is that if education and income were controlled the digital divide disappears between whites and Latinos. What this says is that there is no real difference between the two groups other than identity. Reports such as this one helps feed the idea that if more effort were put into leveling the playing field there would most likely be no noticeable statistical difference between Latino and whites in income, education, and all that follows.

Latinos, in the coming years, will count for almost one third of the nation’s population. Seeing that they will be the majority, their use of technology is nowhere near where it should be for such a large population. Latinos and other minorities need to be allowed to be more competitive.  Better educational and income opportunities are needed for those in the lower-income brackets in order for them to be successful and have access to things that many take for granted such as an internet connection at home or a cell phone.

Training for What?

A New York Times article on Monday – After Training, Still Scrambling for Employment – confirmed what we at Women's Initiative for Self Employment have long suspected: job training is only useful if there are jobs to be had. On the other hand, microenterprise training is a proven method of job creation. Our white paper – Job Creation through Microenterprise Development – shows that the women who go through the small business training program offered by Women's Initiative not only produce jobs for themselves, but for others as well. In fact, in 2009 alone, Women's Initiative clients created more than 2,200 jobs.

It’s time for the government to realize that no amount of job training is going to help people find employment when there are no jobs to be had. With the number of unemployed workers still outnumbering job openings five to one, it is more important than ever that federal funding through the Workforce Investment Act should focus on job creation as well as job training.

Current job training programs appear to be operating under outdated assumptions about the economy. “A lot of the training programs that we have in this country were designed for a kind of quick turnaround economy, as opposed to the entrenched structural challenges of today,” the New York Times quoted Rutgers University labor economist, Carl E. Van Horn saying.

A study conducted by the Department of Labor showed that, even before the recession, job training programs resulted in little or no increase in earnings for participants. In contrast, women who participate in microenterprise training programs are seeing significant increases in earnings. Women’s Initiative graduates typically increase their income an average of 75% within the first 12 months after training.

In a Huffington Post op-ed Julian L. Alssid, Executive Director of Workforce Strategy Center in New York City, agreed that skills training alone isn't enough without job creating strategies.

Consider these three reasons to include job creation through microenterprise training in our workforce investment strategy:

·     18% of all US employment is in the microenterprise sector.

·     Microenterprise training enables unemployed workers to create jobs for themselves and others in their community.

·     Microenterprise training results in an increase in income and assets, thus stimulating the economy.

Job Creation Through Microenterprise

Women's Initiative has released a new research paper on “Job Creation through Microenterprise Development.” 

The research shows that our training support program is a proven method of job creation.  In 2009, when major corporations were downsizing and announcing layoffs, Women’s Initiative graduates created 2,244 jobs.  Other highlights of the research include:

· Nine in ten clients are employed or self-employed twelve months after training.

· More than six in ten are self-employed twelve months after training.

· One year after training more than one in ten clients provided part-time, full-time, temporary and contract jobs for others.

· Five years after training, more than one in five provided jobs for others, with an average of nearly two jobs provided for others per client. 

· For every 100 women who receive training, an average of 245 local jobs are created and retained five years after graduation.

· With an average cost of $1,525 per woman served, a $1 million investment in Women’s Initiative’s programs would result in 132 new jobs being created within 12 months and a total of 480 new jobs in five years.

 Congratulations to the strong clients of Women's Initiative who are having a significant impact on the Bay Area economy!   

Cause of Death: Bad Neighborhoods

Although life expectancy in the US has increased by 30 years in the last century, if you live in a neighborhood with high poverty rates, chances are, you and your family can’t expect to live as long as those living in affluent communities. People who live in West Oakland die an average of 10 years earlier than those who live the Berkeley Hills and Bay View/Hunter’s Point residents die 14 years earlier than those living on Russian Hill.

A report published in Race Poverty and the Environment, a project of Urban Habitat shows that the neighborhood you live in directly impacts your health.

Bob Prentice, Director of the Bay Area Regional Health Inequities Initiative (BARHII) writes that physical and social improvements such as food and water sanitations, workplace and traffic safety, declines in tobacco use, and housing conditions have contributed more to life expectancy than advances in antibiotics and vaccines over the past century.

Community economic development may have more than an economic impact on low-income communities; it may help people in these communities live longer and healthier lives. Women’s Initiative has been awarded a grant from the UCSF’s University Community Partnerships Council to investigate the relationship between economic development and health. Together with our university partners, Dr. Claire Brindis and Dr. Mary Kreger and at the Philip R. Lee Institute for Health Policy Studies at UCSF Women’s Initiative will be studying the impact of microenterprise development on community health and well-being, especially that of mothers and their children.

 

More in Need and Little Relief in Sight

Are Bay Area non-profits keeping up with the recession? The United Way’s recently released Bay Area Nonprofit Pulse Survey indicates that while non-profits are doing more with less, just three percent are seeing improvements, and one in four have had to eliminate services.

More than six in ten non-profits reported an increase in demand for services last year and four in ten were not able to meet those demands.

Unlike for-profit businesses, demand and revenues often negatively correlate in the non-profit sector. Since the beginning of the Great Recession growing demand for services has been accompanied by declining revenues from both private and public sources. More than half of non-profits reported a drop in revenues in 2009.

Many non-profits reported tapping into reserves to cover costs last year which will be painfully felt in coming years if demand for services remains high. Anne Wilson, CEO of United Way of the Bay Area says that those hit hardest by the recession may take years to get back on their feet.

Other ways that non-profits are stretching resources include collaborating with other organizations such as the United Way’s SparkPoint Oakland Center to bring together a number of non-profit organizations including Women’s Initiative for Self Employment. Non-profit organizations are also working with more volunteers to increase levels and quality of service without increasing costs.

Mompreneurs

Mothers who can’t find sufficient healthy food for their children are taking matters into their own hands, according to Dale Buss of the Wall Street Journal. These women are combining their knowledge of children with the need for healthier food to create small businesses that focus on healthy snacks and organic baby food. In his article, The Mothers of Invention, Buss describes these “mompreneurs” as women who are using this opportunity as a “chance to achieve a work-life balance they never found in the corporate world.”

At Women’s Initiative, 27% of clients are single parents. Many working women face the struggle of providing care to their children while financially supporting themselves and their families. Flexible work schedules through self-employment can help provide a solution, although balancing work and family life is still not an easy challenge.

The “mompreneurs” in Buss’ article are still facing challenges, including how to maintain growth and adapt to market needs in a weak economy.

By 2007, 70% of mothers with children under 18 participated in the US labor force (compared to only 47% in 1975). Self-employment can provide women with confidence, financial independence, an outlet to take full advantage of their skills and give back to their community, and an opportunity to create flexible schedules to balance work and family.

With an economically depressed economy and high unemployment rates (10% nationally and 12.4% in California), this need for new strategies to achieve self-sufficiency is growing. Today, Women’s Initiative graduates more than twice as many women annually than 5 years ago.

IDAs Save Homes From Foreclosure

Over the years, the microfinance industry has shifted its focus from increasing incomes to building the assets of its clients. After all, assets are the key to financial stability, allowing us to weather storms, such as the big, rainy mess we're in now.

Individual development accounts (IDAs)--matched savings accounts funded, for the most part, through the federal program Assets for Independence--are a powerful tool for financial security. New research from CFED and the Urban Institute shows that low-income homebuyers who used IDAs to buy their homes were two to three times less likely to lose their homes to foreclosure, probably because their IDAs enabled them to avoid subprime mortgages.

Which begs the question: at a time when foreclosures are at a record high, why is this innovative program--with proven results--getting only $19 million a year, while the big banks have gotten hundred of billions?

If you are a graduate of Women's Initiative interested in opening an IDA, please click here for more information.

San Francisco Bay Area in “Double Trouble”

The Urban Institute launches MetroTrends - a new website providing socio-economic information on the nation’s metropolitan areas - with an analysis of areas hit hardest by job losses, falling home prices and both. According to the study, areas that experienced the greatest housing booms from 2000 to 2006 are now suffering the most. The San Francisco Bay Area is said to have been hit hardest by both job losses and falling home prices.

Women’s Initiative Partners with UCSF to Research Microenterprise Development and Community Health

Can microenterprise development improve community health?

Microenterprise development is widely recognized as a poverty alleviation and economic development strategy for low-income, minority and immigrant communities but little is known about impact of microenterprise development on the health and well-being of these communities. Women’s Initiative believes that that the best way to reduce health risks associated with poverty is to reduce poverty, starting with wives and mothers.

A review of the relationship between family and health published by the Journal of Marriage and the Family showed that women’s employment and her family’s socioeconomic status have been found to be key factors for her family’s physical and psychological health. According to a policy brief on health disparities among women published by the UCLA Center for Health Policy Research in November 2009, low-income women in California are four times more likely than women who are not low-income to report poor health and 41 percent of low-income women in California are uninsured. The Population Reference Bureau reported that children who live in poverty run a higher risk for health problems, teen pregnancy, dropping out of school, substance abuse and behavioral problems. Children who grow up in impoverished neighborhoods are more likely to live in such areas as adults as well. An analysis done by the National Women’s Law Center (NWLC) on national US census data on poverty for 2008 showed that the number of women and children living in poverty and extreme poverty is growing while the number of women with health insurance is shrinking. For African-American women and Latinas, poverty rates are the highest while insurance rates are the lowest. The BBC reported that that despite medical advances, public health experts had found that the link between poverty and early death remains as strong as it was one century ago. Health disparities among low-income women, women-headed households and low-income communities are a serious public health problem in California.

Women’s Initiative is partnering with health policy research experts at the University of California, San Francisco to conduct a ground breaking pilot study on the relationship between microenterprise development and community health, especially that of mothers and their children. Together with the university partners, Women’s Initiative is seeking a small University Community Partnerships grant with the Tides Foundation and hopes to leverage funding for the pilot project for a more extensive research on the impact of microenterprise development on the health and well-being of low-income, minority and immigrant communities.