Domestic impact investments have historically focused on job creation within the United States, with most funds basing their impact thesis on Community Reinvestment Act CRA standards. These standards hinge on counting jobs in specific zip codes – without paying attention to the quality of those jobs, whether they pay higher than minimum wage, or what benefits and opportunity for advancement they have.
Yet the United States does not have an unemployment problem per se: it has an employment problem, where low quality jobs keep workers in a cycle of poverty. Bad job creation is more part of the problem than the solution.
We know that quality jobs provide a clear "alignment advantage": there are clearly documented economic benefits for companies and investors, and there are substantial positive impacts on the well-being of workers, their families, and their communities. Investing in quality jobs is a great opportunity for investors seeking to have positive impact - one that should not be missed.
Investors can affect the quality of the jobs their portfolio companies create – both by driving dollars to deserving job creators and by pushing for and helping implement higher standards across the portfolio. We aim to support their efforts in this, building on the work of advocacy groups focused on worker rights that engage directly with large employers and policy makers.
By providing frameworks and support, we can ensure that investors play a positive role in the creation of high quality jobs.
Our Work With Quality Jobs
Transform Finance has been working on the issue of quality jobs since 2014. Since then, we have:
- Developed a business case and a social case to help investors understand why it matters to invest in quality jobs.
- Created a floor-and-ladder approach to identify opportunities for fund managers to improve the quality of jobs in their portfolio companies along the axes of pay, benefits, opportunities for advancement, opportunities for wealth building, and worker voice. This approach has been adopted by HCAP Partners and replicated by others.
- Hosted a daylong convening at the Ford Foundation with multiple stakeholders among asset owners, fund managers, union and worker rights advocates, to explore the existing barriers to investing for quality jobs.
- Participated in multiple roundtables, including with former Secretary of Labor Tom Perez, on quality jobs and long-termism in investing.
- Advocated for and socialized this work in multiple investor forums and publications. Our work has been featured in a Federal Reserve publication on approaches to quality jobs.
- Provided custom support and resources for the members of our Investor Network, which represents over $2 billion in capital aligned with our mission, including the creation of quality jobs.
We are building on this work to reach more investors and tailor approaches for specific contexts (such as geographies, industries, and stages of the enterprise). While there is solid research making the case for quality jobs, we believe that the business case can be strengthened specifically for an investor audience, and be made to intersect with the broader conversation around long-termism approaches in investing. As such, we are synthesizing existing research and forming new partnerships to refine the floor-and-ladder approach that we have already built. We hope to disseminate our approach in a new report.
We also incorporate the lens of quality jobs within our other projects. In our trainings for place-based impact investing, we bring the ideas of Quality Job creation to the forefront of community-centered capital, helping communities develop their own metrics and strategies. We are also analyzing more deeply the intersection of quality jobs and racial justice, in particular with respect to jobs traditionally held by women of color, as the issue of quality jobs is one that disproportionally affects communities of color.
Are you an investor interested in how your portfolio affects job quality? Want to find out more about about this project? Please send us a note at email@example.com.