Joyce Klein is the Director of the Aspen Institute microenterprise Fund for Innovation, Effectiveness, Learning and Dissemination (FIELD).
We’ve all heard, and seen the data, that small businesses are an important source of job growth. But what about the smallest businesses—microenterprises? Do these businesses—food trucks, home day-care providers, landscapers, small construction contractors—also support jobs? Are they relevant in addressing our nation’s employment challenges?
The answer is yes. These firms do support and create jobs. Recent research from FIELD—a program of the Aspen Institute’s Economic Opportunities Program—tracked the experiences of almost 2,000 microbusinesses that received loans and/or business support from community-based microenterprise programs. The “Microenterprise Development as Job Creation” report found that these firms supported an average of 2.9 jobs, including the owner. Forty-one percent of the businesses created paid work (either as a direct employee or a contractor) for individuals other than the owner. How good were these jobs? One might expect that most of them would be part-time, minimum-wage jobs. While not all of the jobs are full time (37% of paid workers and two-thirds of owners worked full time), wages for paid workers were higher than one might think, with a median of $10 per hour, and an average of $14 per hour. Forty-six percent of the jobs paid wages above $10.60 per hour, the level needed in 2010 to lift a family of four above the poverty line (assuming full-time work).
The costs of the services (loans and management advice) provided by the microenterprise organizations averaged a one-time amount between $2,112 and $2,226 for each job supported. In 2010, the microbusinesses paid an average of $21,152 in additional dollars to owners and workers, in the form of wages and/or owners’ draw. In an economic context in which families are struggling to earn income, and which employers are more likely to hire those who have job experience and are currently working, we’d argue that these unexpected job creators are playing an important role in meeting our nation’s employment challenges.