Fostering the Power of Universities and Hospitals for Community Change

Communities across the country are recognizing the tremendous resources nonprofit anchor institutions—such as hospitals and universities—can provide as engines of inclusive and equitable economic development. Increasingly, cities—often led by Mayors—are launching comprehensive strategies to leverage these institutions to address challenging problems of unemployment, poverty, and disinvestment. In 2014, several cities, including Chicago, Baltimore and New Orleans, have launched community building and job creation strategies that revolve around anchor institutions; and in Cleveland, a decade old collaboration of philanthropy, anchor institutions, and the municipal government continues to rebuild economies in some of the poorest neighborhoods in the city.

The ongoing fiscal crisis at all levels of government is putting tremendous stress on local economic development efforts designed to create family-supporting living wage jobs, revitalize local economies, and bring back wealth to our communities. Through their procurement and investment practices, anchor institutions represent a new source of economic development financing, but their enormous potential is so far largely unrealized. Unfortunately, the federal government has been largely missing in action in terms of creating the right policies to support cities in harnessing the full economic might of their anchor institutions.

Nearly 20 years ago, Harvard Business School Professor Michael Porter noted that urban university expenditures were nine times greater than spending on all federal urban job and business development programs combined. That number is surely much greater now.

Anchor institutions represent a new source of economic development financing, but their enormous potential is so far largely unrealized.

Today, universities, hospitals and other anchor institutions wield considerable economic power in a community. Hospitals and universities are responsible for more than $1 trillion of our nation’s $17 trillion economy (about 6% of GDP). In addition, these “eds and meds” control well over $500 billion of endowment investments and they employ roughly 8% of the national workforce.

Anchor institutions are place-based enterprises, firmly rooted in their locales. Other anchors include community foundations, cultural institutions such as museums and performing arts centers, and municipal governments. Typically, anchors tend to be nonprofit corporations. Because they are “sticky capital”—in contrast to for-profit corporations which may relocate for a variety of reasons, such as lower labor costs, more subsidies, fewer environmental regulations—anchors have an economic self-interest in helping to ensure that the communities in which they are based are safe, vibrant, and healthy.

A particular opportunity is presented by emerging institutional “buy local” strategies which drive anchor procurement and investment locally, substitute imports, and recirculate money two or three times in what economists call a “multiplier effect.”

In Cleveland, University Hospital’s “Vision 2010” initiative drove 92% of a $1.2 billion construction and procurement effort into the local and regional economy (at the height of the 2008-09 recession), benefiting more than 100 local minority- and female-owned businesses. In Philadelphia, the University of Pennsylvania has systematically shifted nearly $100 million of procurement annually into the distressed West Philadelphia neighborhoods adjacent to its campus. In southern Ohio, the University of Cincinnati has allocated more than 10% of its $1 billion endowment to local investments intended to stabilize and revitalize the city’s Uptown District. Finally, in Boston, Northeastern University has seeded an economic development fund with $2.5 million to enable local businesses to expand and hire more employees.

The latest innovation in the field involves mayors using the power of their office to develop and implement multi-anchor strategies aimed at strengthening local economies. In March 2014, World Business Chicago, a not-for-profit economic development organization chaired by Mayor Rahm Emanuel, launched Chicago Anchors for a Strong Economy (CASE). The goal is clear: identify ways to connect the city’s anchor purchasing needs to local firms, thus producing a stronger and more integrated local economy. Earlier this year, Baltimore Mayor Stephanie Rawlings Blake launched the Baltimore City Anchor Plan (BCAP) which focuses on place-based opportunities to connect anchors and neighborhoods—particularly those that are disinvested and most in need of equitable development linked to employment for low-income residents. And in mid-September, Mayor Mitch Landrieu of New Orleans launched the Economic Opportunity Strategy to “recruit, train and connect the hardest to employ to real jobs and match local businesses to strategic opportunities for growth.” Anchor institutions, among the city’s largest purchasers of goods and services, have been identified as key partners in the new strategy.

Many have imagined how much more powerful these local anchor-based economic development strategies could be if the federal government were to provide a policy framework that would encourage anchors to align their business practices (purchasing, investment, hiring) to explicitly benefit the communities which they call home. After all, the vast majority of anchors are quasi-public institutions that receive substantial taxpayer resources ranging from university research grants to hospital Medicare reimbursements, and, of course, generally do not pay taxes themselves. Shouldn’t the federal government provide greater encouragement to these beneficiaries of public funds?

In 2008, just as President Obama was taking office, the Anchor Institution Task Force (AITF), a consortium of universities engaged in community work (full disclosure: I sit on its steering committee) presented the incoming Administration with a set of specific policy recommendations, arguing that “the federal government can and should play a catalytic role in engaging anchor institutions in democratic partnerships with their communities, cities, and regions.”

These recommendations for federal action were based on a long history of governmental encouragement of both universities and hospitals in their civic roles. From the Land-Grant College Act of 1862 and the GI Bill and the formation of the National Science Foundation in the 1940s and 50s, to today’s implementation of the Affordable Care Act and its requirement that nonprofit hospitals file Community Health Needs Assessments with the IRS, the federal Government has helped shape the direction of higher education and health care in America.

It is past time for a new federal policy strategy to help cities leverage the economic might of their anchor institutions to benefit communities—particularly low- and moderate-income communities that have been marginalized by growing wealth inequality, low-wage work, and dwindling resources focused on their needs.

Editor’s note: A new report from CAP Senior Policy Analyst Tracey Ross explores strategies for how the federal government can encourage universities and hospitals to use their vast economic resources to increase community revitalization and economic growth.  Read it here




It Takes a Village to Enforce Fair Wage Laws

Seattle made history in June when it became the first major city in America to pass a livable minimum wage of $15 an hour. Los Angeles, Chicago, New York and other cities around the country are taking steps in that direction, too.

But winning a robust minimum wage is only half of the battle.

Last month, Seattle again made history when Mayor Ed Murray announced the creation of a citywide Division of Labor Standards Enforcement to enforce its minimum wage law and other labor standards. A key feature of the new division is that it utilizes community groups as partners in outreach and to educate workers about their rights.

Because wage theft is so common in industries that employ minimum wage workers, only an effective, strategic enforcement system will ensure that workers receive the new wage they are entitled to.  Fortunately, we know how wage theft happens and we know the kinds of enforcement techniques that result in low-wage workers being paid their due.

A landmark 2009 study of nearly 4,500 low-wage workers in three of the cities currently considering a minimum wage increase—Los Angeles, Chicago and New York—found that more than two in three workers experienced at least one pay-related violation during their previous work week. Of these workers, one in four was paid less than the minimum wage, and three in four were not paid their overtime wages. Wage theft costs workers and their families in these three cities an estimated $56 million every week—that’s $56 million stolen weekly from workers’ pockets instead of helping their families and communities.

We also know the people who are the victims of wage theft. Government statistics and private studies show that they work in restaurants and hotels, retail and grocery stores. They clean office buildings and care for our children and elders. They build our homes.

Relying on government alone to right these wrongs simply doesn’t work—government has neither the resources nor the manpower. The U.S. Department of Labor has slightly more than 1,000 investigators who are responsible for protecting the rights of 135 million workers in 7.5 million businesses nationwide. Things aren’t any better at the state level, where the ratio of investigators to workers is approximately 1 to 150,000.

We also know that enforcement doesn’t work if it relies solely on workers filing complaints. A study of the largely complaint-based federal system found that for every one complaint received, there are more than 100 other labor-standards violations that go undetected, allowing unscrupulous employers to fly under the radar. One reason workers don’t complain is that nearly half of those who suffer wage theft also face retaliation for speaking up about it.

The fact is that enforcement of existing laws is so poor that the average employer has a less than 0.001 percent chance annually of being investigated by the Department of Labor’s Wage and Hour Division.  That doesn’t exactly strike fear into the hearts of scofflaws.

Only an effective, strategic enforcement system will ensure that workers receive the new wage they are entitled to.

But just as surely as we know the challenges to effective enforcement, we also know how we can change this status quo and secure compliance—through an enforcement agency that has strong penalties at its disposal to deter and correct violations.  We also know from lessons learned in places like Los Angeles, San Francisco, Florida, and New York—in industries ranging from construction to hospitality to janitorial to agriculture—that community groups must play a critical role in enforcement.

Successful enforcement partnerships take advantage of the strengths of both government and community groups. City agencies have the power to file complaints, assess significant penalties, and take wage thieves to court. But even the best-trained investigator can’t possibly know the industries in every city and can’t be in all places at once. Community groups do and are.

Non-profits—based in our neighborhoods and knowledgeable about their industries, languages and cultures—can help spread the word to both employers and employees about minimum wage protections and other labor standards. Community based organizations can also support victims of wage theft who—fearing retaliation—don’t want to take a complaint directly to a city official. They can interview workers and witnesses and assemble the necessary proof in an atmosphere of trust.

Community groups also have vital information that supports strategic enforcement. It is an inefficient use of limited enforcement resources for investigators to wait for complaints to come in, or to investigate every industry equally. Existing violation data and the experiences of the US Department of Labor demonstrate that by focusing attention on high-violation industries and fractured employment relationships—like subcontracting and franchising—enforcement agencies are much more effective in discovering abuses and taking action to stop them. Community groups have contact with working people every day and can help city agencies investigate known violators. Business can play a role, too, by pointing out bad actors who gain a competitive advantage over responsible employers by breaking the law.

In short, through these partnerships, city enforcers are able to focus on correcting and deterring violations. They can assess penalties and award back wages to a degree that makes it very clear that our cities and states will no longer tolerate cheaters.

We can make the promise of a higher minimum wage a reality for millions of our neighbors and co-workers.  By establishing a Division of Labor Standards Enforcement and funding community-based outreach, Seattle is moving in the right direction.  Other cities should take note.





Domestic Violence Awareness Month: Current Policy Choices Aid Abusers

Since the passage of the Violence Against Women Act twenty years ago, opinions among the public and politicians have shifted remarkably from viewing domestic violence as a private family matter to expressing overwhelming support for survivors who seek outside help to end abuse – at least in the abstract.

However, the devil is in the details.

A sizeable number of Americans (and politicians) claim to support survivors while limiting their ability to access the supports needed to leave an abusive relationship. In essence, people are trying to reap the benefits of appearing “anti-violence” while supporting policy choices that in fact aid and abet abusers.

Almost half of all survivors report experiencing financial difficulties.  Those who support survivors should not force them to choose between abuse and homelessness. Nor should they ask survivors to risk losing their health insurance or custody of their children.

Yet that’s exactly what some of our current policies choices do. The status quo strengthens abusers and harms survivors by:

Weakening direct services. We often have many positive things to say about the advocates who dedicate their professional lives to assisting survivors of domestic violence. Yet at the same time our lawmakers haven’t given them the funding they need to do their jobs. Three vital programs – the Legal Assistance for Victims program, the Rural program, and the Transitional Housing program – had their funding cut in the 2014 appropriations bill. In fact, some lawmakers, such as Congressman Paul Ryan, have supported further cuts to funding for domestic violence service providers. These funding pressures occur at a time when the number of survivors coming forward will likely increase, in part due to referrals from the invaluable domestic violence screening and counseling benefits included in the Affordable Care Act.

As demand for services rises, let’s remember that on one day last year, almost 10,000 requests for services were denied due to a lack of sufficient resources for service providers.  Further, more than 1,500 service provider staff positions were eliminated last year. The fact is when survivors cannot receive services, sixty percent return to their abusers.

Support for survivors cannot be separated from support for a robust social safety net.

Undermining access to attorneys and court advocates. For many survivors, access to civil legal services is essential to ending abuse. Through the court system, survivors can receive civil protection orders (also known as restraining orders), obtain a U-visa, or divorce an abusive partner.  Attorneys can also help survivors gain custody of their children, eliminating a common threat abusers use to force survivors to stay. But despite the demonstrated benefits of legal services, inadequate funding last year resulted in only 12% of domestic violence programs assisting survivors with legal representation, and slightly more than half were able to have an advocate accompany a survivor to court.

Civil legal aid providers—who also handle many domestic violence cases—remain badly under-resourced. In the past few years, more than 1,200 individuals who worked for legal services providers have lost their jobs due to funding cuts as the number of individuals who qualify for legal aid has risen.

This gap in services is alarming. The immense power differential between an abuser and a survivor, along with the effects of trauma, make it exceedingly difficult for survivors to file petitions without support.  Survivors are placed at even more of a disadvantage when their abusers have access to legal resources.

Refusing to pass paid safe days legislation. Many survivors do not even make it to the courtroom because they cannot take off work. Only California, Connecticut, the District of the Columbia, and four cities provide survivors with paid “safe” leave. In the vast majority of states, survivors who work in low-wage jobs with little job security cannot take off multiple days of work to attend courtroom proceedings. They are forced to choose between providing for themselves and their families and their safety; some may stay with an abuser as a result. For a country that claims nearly unanimous support for survivors of domestic violence seeking help, we make it very hard for them to actually access it.

Failing to invest in affordable housing. Instead of choosing to preserve existing affordable units and build new ones, we have lost almost 13% of our nation’s supply of low-cost housing since 2001. While direct service providers strive to provide domestic violence survivors with emergency shelter, it is impossible for them to meet the demand for long-term housing. When we fail to invest in the affordable, permanent housing, survivors are forced to choose between terrible options. They may ask, “When my stay in emergency housing ends, do I return to my abuser, or do I become homeless?” or “Do I stay in this lease with my abuser or do I move out, knowing I have nowhere to go?”

Support for survivors cannot be separated from support for a robust social safety net, affordable medical care and housing, paid safe days, and well-funded domestic violence service providers and legal aid providers. It’s time to evaluate our policy choices. It’s time for all of us to make a real commitment to ending domestic violence—not just in word, but in deed.





Child Care Centers and the Quality Improvement Catch-22

Quality, affordable child care is not only right and necessary to prepare children to learn; it’s also needed if low-income working parents are to have a shot at working their way out of poverty.  Our nation’s funding source that is supposed to help low-income families in this regard is the Child Care and Development Fund (CCDF). Unfortunately, due to inadequate funding, only 1 out of every 6 eligible children nationwide is actually served by CCDF.

Most states operate CCDF as a voucher program.  Eligible parents use vouchers to offset the cost of child care—the fee for each family is determined on a sliding scale basis set by each state. Child care centers that accept vouchers are paid through a combination of voucher reimbursements and family fees.

Many states are now attempting to improve quality in their CCDF child care programs through “quality rating and improvement systems” (QRIS).  While QRIS guidelines vary among states, they often feature a rating system based on progressively higher quality standards.  In many states, the higher a center is rated, the more money a center receives for each voucher.  By tying voucher reimbursement rates to these ratings, the system is designed to incentivize and ultimately fund quality improvements for participating centers.

However, achieving a higher rating in order to receive more money requires a significant capital investment. We at the Mississippi Low Income Child Care Initiative (MLICCI) are concerned that many childcare facilities serving low-income families—already struggling to offer desperately needed services to even a fraction of the eligible children—cannot afford the initial investment that is necessary to achieve higher QRIS ratings. It amounts to a Catch-22: for too many centers, the QRIS incentive system is in fact an insurmountable financial obstacle to receiving the financial assistance they need to serve vulnerable children.

To test this concern, we conducted Step-Up, a project designed to demonstrate what centers serving low-income families would have to do to achieve higher quality ratings and greater reimbursement rates in Mississippi. While QRIS systems vary by state, our findings are relevant for any state that finances quality improvements through boosted reimbursement rates—which is the vast majority of states.

Step-Up selected 16 representative centers from around the state, all serving low-income working families.  We walked the centers through the QRIS requirements and documented what actions were necessary to attain higher quality ratings. Together, we developed comprehensive, detailed quality improvement plans; and the centers received significant financial resources—provided by MLICCI through a grant from the Kellogg Foundation—to fund the improvements.

The interventions worked. All participating centers achieved higher quality rankings. But it was also very clear—and hardly surprising—that low-income childcare facilities with limited resources never would have been able to make these quality improvements without Step-Up funding.  Average cost? $11,475 per classroom, which included monies to buy furniture and equipment, and renovate interior classroom spaces and exterior playground spaces.

In addition to requiring an initial investment that is often prohibitive, the QRIS system has a second serious flaw: its reimbursement rates for vouchers are significantly below what is needed to fund QRIS improvements. In Mississippi, the rates begin at just 62% of the state’s market rate for child care. When a center improves to a 2-star rating, it receives a reimbursement of 69% of the market rate; 3-stars merit a 79% reimbursement rate. Even at the highest 5-star rating—which only 11 out of 1,600 licensed centers in Mississippi have attained—a center receives only 87% of the state’s market rate for child care.

Finally, reimbursement rates are paid only for active child care subsidies. With only 1 in 6 eligible children receiving a voucher, the number of higher reimbursements is simply too small to finance the quality improvements. In fact, we estimate that it would have taken about 4 years for the child care centers in the Step-Up project to recoup their initial investment.

Quality improvements are indeed important—important enough to warrant the additional investment required.  But we cannot keep pretending that these improvements can be paid for out of the current pool of meager resources.  If we do, then even fewer children will be served by CCDF.  Child care centers serving low-income families will either opt-out if the quality improvements are voluntary, or be priced-out of existence if they are mandatory.  Either of these outcomes will exacerbate the struggles of the working poor.

This nation needs to do more than just talk about the need for quality, affordable childcare for all children—it needs to make a real commitment.





Ulises’ American Dream Deferred

“As time went on, I saw how my own country, the place where I lived, was actually a bad place. I would see people fight and I thought that would be my life. I thought, that’s me–then I turned 4.”

That’s not a joke. Ulises, an undocumented 16-year-old high school junior living in the Bay Area, is a living example of poverty prematurely aging a child’s soul while impeding him in so many other ways.

Ulises was born in Mexico City in 1998. There were 16 people living in his house, his mom gave birth as a teenager, and his father left in 2003 to find work in California.

“‘For a better life,’” Ulises remembers his father saying.

Ulises and his father were close, and when they were separated, Ulises felt confused and lonely. His father sent money but not letters.

“I was so angry with my dad because there was so little information about him,” he says.

Soon enough, older boys from the neighborhood stepped in to fill the void. When Ulises was 5 years old, an older boy he calls Loco pulled him out of a scuffle in the street and earned his loyalty.

“He was bad like me—you could say gangs—he was in one like me,” Ulises says.

Loco was around 18 and a good fighter. He taught Ulises some martial arts moves, which would come in handy.

“I started getting into more trouble,” Ulises says.

Soon another man, older, whom Ulises won’t name, started plying him with food, like a hamburger covered in pineapple and jalapenos that Ulises to this day describes lovingly. In return, for reasons Ulises doesn’t remember or can’t understand, the man expected the little boy to fight.

“I really regret knowing him,” Ulises says. “He taught me not only how to fight but how to not feel anything, and to not give mercy. I was being used. Even though I was just a kid, I did things no kid should do. That doesn’t make me a kid. That makes me a criminal.”

At 8, Ulises’ mother told him the family would be going to the United States to reunite with his father. He didn’t believe her.  His grandfather drove his daughter and her three children the 30 hours from Mexico City to Tijuana, where they met a coyote who helped them cross the border. Ulises remembers walking through the desert for three days with a dozen strangers.

“My mom was more scared than I had ever seen her,” he says. “She kept looking at us [children], from one to two to three.”

His father met them at a safe house where the travelers left one by one.

“Finally it’s our turn and I don’t even recognize my dad,” Ulises says. “At first he didn’t talk to us, he talked to the person who brought us.”

His dad then drove them to Oakland where he worked as a cook in a Chinese restaurant.

Elementary school was hard for Ulises. Surrounded by Chinese classmates, he was bullied for not understanding English. There were fights and, finally, tears. He says it took 18 months to feel normal, but he still doesn’t feel welcome.

“The only thing I knew growing up was that this country didn’t want any immigrants here,” he says. “Both of my parents live in fear about it. They tell me, ‘Try to get good grades, be a nice kid.’ For years I was fighting and they never told me that in my own country.”

But in the opinion of Ulises and his parents, the difference in the United States is opportunity.

“In Mexico my mom was not able to look me in the eyes and say ‘you will be someone in life.’ And here she was able to say it,” he says.

Many of his old friends in Mexico are in jail, and he heard that Loco was shot and killed. Ulises is in high school in Berkeley and attends an after-school program called College Track that will be with him through college graduation. It’s where we met and set up the supports to help him earn a college-eligible GPA and a college-ready ACT score.

Ulises is also eligible for the California Dream Act, signed by Gov. Jerry Brown in 2011 to give undocumented students access to state financial aid and institutional grants at public universities.

“It’s a country where you can have a little bit of hope,” Ulises says.

A little bit.

Ulises narrowly missed the chance to work legally in the United States. Established by President Obama’s executive order in June 2012, Deferred Action for Childhood Arrivals (DACA) grants federal agencies prosecutorial discretion for young people who meet certain criteria, including entry into the United States before the age of 16. But Ulises, his sister, and brother are ineligible.

“Bad timing,” Ulises says.

So while he waits for immigration reform, his family moves forward. His sister just started college, and his mom recently gave birth to a baby girl, a U.S. citizen. The family still lives below the poverty line, but Ulises dreams of majoring in business and earning a culinary degree, following in his father’s footsteps.