The schism between large and small businesses began long before the pandemic and has only grown. The number of business owners across the country decreased by 22 percent during the first few months of the pandemic, with the hardest hits to Black- and Latinx-owned businesses, according to a study of labor data in the Journal of Economics and Management Strategy. Meanwhile, Fortune 500 companies earned $14.2 trillion in revenue in 2020, up from $13.7 trillion the year before and an all-time high.
It is no surprise then that cities have had to re-think the way they support businesses in training and recruiting local employees, especially workers from low-income communities. Some cities are also making additional effort to support their minority- and woman-owned small businesses. The country’s most ambitious workforce development program was the New Deal, during which FDR’s federal government employed millions of workers in the construction of buildings and roads during the Great Depression. While nothing on that scale is in the works, some cities with strong labor movements are leveraging their existing powers and partnering with private companies to set aside jobs, incentivize local businesses and provide free digital training to small entrepreneurs.
1. Training and hiring marginalized workers
One tactic cities are taking to address gaps in hiring in disadvantaged communities are leveraging relationships with unions who work on city-owned projects. Last August In New York City, the De Blasio administration announced a new project labor agreement forged with the Building and Construction Trades Council of Greater New York (BCTC), which represents about 100,000 New York City residents. The new contract requires unions to prioritize hiring workers from designated zip codes where at least 15 percent of the population is below the federal poverty level or where at least 15 percent of the population are public housing residents. The agreement will cover renovation work on city-owned buildings as well as some new projects. According to Gary LaBarbera, President of the Building and Construction Trades Council, the commitment will lead to “community hiring that will connect tens of thousands of New Yorkers to not just jobs, but middle-class careers in the union building trades.” LaBarbera also told Next City that improvements to recruitment as a result of the agreement will create “a pipeline of work that will fuel the city’s recovery from this economic crisis.”
2. Digital Skills Training
The coronavirus pandemic forced many more brick and mortar stores online, requiring small businesses with no web presence — let alone an online ordering infrastructure — to adapt quickly. For businesses who were already on the losing side of the digital divide, this only exacerbated the problem. In Detroit, a public-private partnership between the city and a global design firm called Rebrand Cities has been offering free digital skills training, including web design basics, to qualifying small businesses, as Next City reported in August. The partnership, called Digital Detroit, includes web design instruction, three months of free hosting, branding and content creation workshops. “It transformed my business tremendously. It gave me more reach,” Don Melson, who owns a graphic design and printing company that was in the first cohort to receive the training, told Next City.
3. Promoting higher paying jobs
There have been several high-profile examples of incentive programs that cities have deployed to lure mega-businesses – like Amazon, which bowed out of a proposed NYC headquarters amid criticism. These schemes reignite debates about whether small businesses or large businesses can best provide good-paying jobs. But some are exploring what cities can do to encourage smaller and local businesses to thrive, while also providing quality jobs. The city of Austin introduced incentives for small businesses in 2018, a response to the inequitable growth it has been facing for decades. Through its Business Expansion Incentive Program, the city offers up to $1,800 in wage reimbursements per employee per year for local businesses as well as an up to 50 percent property tax reimbursement. It also offers up to $3000 per hire to companies that hire from disadvantaged communities. Both programs require participating companies to pay their employees at least $15 an hour, more than twice the state’s minimum wage of $7.25 an hour. The city approves businesses for the program based on their overall benefit to community, including theirs history of hiring from underrepresented groups and neighborhood connections.
4. Reimagining workforce development Post-COVID
Pandemic-related shutdowns cratered employment figures across the country, a mass job loss not seen since the great depression. While all this was happening – the need for workers to help deal with the unfolding crises only grew. So it made sense for governments to try and hire newly-laid off workers to provide crisis support. The most common example of this across the country were contact tracers, who don’t need any specialized degree and many of whom were newly laid off workers from other industries. (And some of them are reassigned librarians.)
But the city of Birmingham went a step further, as Next City reported in September, by introducing the Birmingham Service Corps, which paid newly laid off workers to take public service jobs around the city. Some of the jobs in the initiative were city-run crisis management roles directly related to the pandemic, calling people and letting them know how to get tested. Other roles were at non-profits and city institutions, like the Birmingham Zoo. The initiative was funded with $1 million refundable through CARES Act funds along with $500,000 in corporate donations. Applicants needn’t have lost their job due to Covid, although most fit this description, according to program administrator Suzanna Fritzberg. “The city and community were recognizing that Birmingham community members had needs that weren’t being otherwise filled,” Fritzberg told Next City.
This article is part of Elements of an Equitable Recovery, a series on solutions helping small, especially woman- and minority-owned, businesses survive and thrive. This series is generously underwritten by LISC.
Roshan Abraham is Next City's 2020 Equitable Cities Fellow.