How can we restore economic balance in the U.S. at a local and national level?
As an impact investor and philanthropic advisor, I have the unique opportunity to see firsthand the unprecedented pace of change happening in cities around the world. From Shanghai to Paris, every major city seems to be facing a set of unfamiliar challenges marked by globalization.
San Francisco, the great American city I call home, has benefitted enormously in the last 25 years from globalization and technology innovation. This has resulted in incredible job and population growth and unprecedented wealth creation for those lucky enough to be on the right side of these trends. Unfortunately, the story hasn’t been positive for everyone, and all boats didn’t rise. Gentrification has been overbearing, increasing rents and pricing out lower-income workers, making it necessary for some teachers, firefighters and Uber drivers to commute up to four hours a day to work. Even when positive, change hasn’t been easy to integrate.
Leading experts in urban development recognize that with economic growth, cities face certain trade-offs in equity, diversity and democracy. In the past, nations and cities have measured their progress based on economic growth alone. This view of progress is rapidly evolving. Renowned economist Michael Green developed the Social Progress Index, measuring a city against “its capacity to meet the basic human needs of its citizens, establish the building blocks that allow citizens and communities to enhance and sustain the quality of their lives, and create the conditions for all individuals to reach their full potential.” Urban theorist Susan Fainstein defines the ideal city as one that goes beyond the goals of efficiency and financial prosperity to provide equity, joy and fulfillment to its residents. Both experts show that when cities don’t round out growth, they ultimately become out of balance and less prosperous.
America ranks 20 out of 20 for being the most unequal society within the top 20 developed countries, and our cities are ground zero for the day-to-day challenges that come from this type of disparity.
Why does such broad economic disparity exist within the United States, and how can we restore balance locally and nationally?
Enrico Moretti, professor of economics at UC Berkeley, helps to answer this question by examining factors such as average level of education of the workforce, which he calls the “multiplier effect.” Moretti has shown that one new high-skill IT job results in five additional jobs outside of technology—everything from taxi drivers and dry cleaners to doctors and lawyers.
“There’s a growing disparity between the cities that are innovating and the cities that are not. The growth of jobs in the innovation sector matters to all of us,” says Moretti, “whether we work in IT or not. Cities that have a well-educated workforce keep attracting innovative employers…and more skilled workers.”
However, there are other considerations. Jeremy Grantham, chief investment strategist of GMO, recently said: “When the smoke clears, all these new technologies seem to increase the power of the elite, of the technologically gifted, and you see the development of new corporations that become worth scores of billions and seem to be largely irrelevant to the average worker.”
Ironically, while cities are grappling with growing income disparities, the American workforce is becoming less competitive, as corporations seek to fill their global talent gap. It turns out that there are 12 million high-skilled jobs that will go unfilled in the next decade. At the same time, there are millions of youth with the motivation and talent to fill the jobs. Economic justice for young adults equals future economic prosperity for American cities, representing one of the single-biggest investment opportunities for increasing growth.
One beacon of hope that has proven relevant across the country can be found in the nationwide organization Year Up, which works to build a bridge between unemployed young adults and the increasing corporate demand for high-skilled workers. Year Up empowers low-income young adults to go from poverty to professional careers in a single year.
As cities continue towards innovation, there will always be room for professionally trained workers to relocate and take advantage of this trend. However, the biggest opportunity for inclusive prosperity exists in developing the youth who are already in our neighborhoods but lack the social networks and education to seize the opportunities that innovation brings. That’s a call to action for philanthropists and corporate leaders to work together for a brighter future.
Allison Duncan is the founder and CEO of Amplifier Strategies. She advises leading organizations working at the intersection of philanthropy, investing and innovation. As a serial social entrepreneur, she cofounded Uplift, a collaborative initiative for poverty alleviation, Impact Atlas, a technology platform for personalized mentoring programs, and Battery Powered, the largest and fastest-growing giving club in America.
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