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Takeaways from Our Discussion about Equitable Small Business Opportunity and Good Jobs Tied to Infrastructure and Climate Investments

Promoting business opportunities for all, while creating good jobs and developing shovel worthy infrastructure and climate action projects, is not a pipe dream. And yet our traditional ways of operating won’t get us there. Simple spending more, rather than smarter and more fairly, won’t be enough. Business as usual is neither inclusive, protective or coordinated enough, and it often lacks a vision for what the market for contracts and good jobs could be.  

In December, in the second session of a two-part, jointly produced learning series, Brookings Metro, Living Cities and the What Works Plus funder collaborative convened leaders and innovators to explore what it takes to expand generational wealth for business owners, especially historically excluded and under-represented entrepreneurs, and also ensure good jobs for their employees, through infrastructure and climate investments.

You can listen to the webinar recording here. These are some highlights:

As much as possible, use plain language in procurement documents.

There are at least four keys to building a successful economy for workers and for businesses, argued Bo Delp, who heads the Texas Climate Project—a coalition of 25 labor unions from across the state. Delp believes the following efforts will ensure taxpayer dollars are being used responsibly and reward responsible contractors, who want to win contracts and be good, productive employers as part of that success:

  1. Engaging community stakeholders, for example through faith and community-based organizations, to ensure that procurement contracts and community benefit agreements (where CBAs are developed) reflect real community values and priorities;
  2. As much as possible, using plain language in procurement documents;
  3. Enforcing agreements to protect workers, not assume they’ll be protected, e.g., enforcing requirements to pay workers local prevailing wages; and
  4. Providing compliance assistance to help companies meet the requirements and guidance coming from new rules in the Inflation Reduction Act (e.g., to favor hiring workers from apprenticeship programs).

Delp added that one key to addressing the race-to-the-bottom dynamic between employers is to emphasize good-employment frameworks, such as community benefits and community workforce agreements, that promote a level playing field but raise the floor, so companies competing for bids have less incentive to undercut each other by squeezing wages and other defining features of a good job.

Aside: In the past few months, we’ve seen federal agencies lean in to provide detailed information about and, in some cases, direct incentives for, these “high-road,” agreement-based models of development, e.g. the U.S. Department of Labor’s overview and guide for workforce investors and the Department of Energy’s primer on developing community benefits agreements to better compete for DOE grant funds.  

what is needed to build demand: policies and rules that flow with the money

In that vein, when it comes to translating the infrastructure spending to high-road jobs, Madeline Janis, founder and executive director of Jobs to Move America and a pioneer in the use of community benefits and workforce agreements, explained what is needed to build demand: policies and rules that flow with the money (like that DOE example) and thus create incentives and specific, enforceable contract language. She encouraged expanding our thinking about all the potential subsectors of work, not just construction, that need their own tailored policies and rules to ensure good jobs, e.g., mining raw materials for batteries and other critical components, manufacturing of electric vehicles and other hardware, operations, repair and maintenance, and recycling will all play important roles in scaled-up climate action–much of it in the form of infrastructure or connected to infrastructure. For example, scaling up home-based solar power and cleaner home heating and cooling depend on modernized and more capable electric grids, expanding EV use depends on that plus widely accessible charging stations, and these and other large-scale shifts depend on a backbone of software services and semiconductors (since computer chips are in everything), more of which will be made in America, thanks to federal policy.  

On the supply (supplier) side, Madeline believes all companies need to commit to equitable hiring and training pipelines, like apprenticeships.  What is in it for companies?  A pipeline of skilled workers, less turnover, higher-quality deliverables, and reputational improvement. 

John Porcari, co-founder of the Equity in Infrastructure Project (EIP), which focuses on procurement innovation by participating infrastructure agencies who take a pledge, previewed an agreement that was just announced formally. On January 9th, the Southeastern Pennsylvania Transportation Authority (SEPTA) and the Chicago Transit Authority (CTA) signed a reciprocity agreement between the two agencies that makes it easier for historically underutilized businesses (HUBs) to work for both agencies.  The agreement allows businesses to bid on contracts with both agencies through one certification, while at the same time expanding the pool of prime and subcontractor firms that can bid on projects.  John highlighted this reciprocity agreement as a key innovation because it is “not part of the core mission” of either SEPTA and CTA, but a demonstration of their commitment as part of the EIP to increase the number, size and proportion of contracts that go to historically underutilized businesses.

Insurance and bonding capacity are two barriers that are well-known for small, historically underutilized businesses (an issue we explored in the first session).  We heard from Jen Mayer, King County’s Metro’s Equity and Social Justice Capital Implementation Program Manager, that the county can elect to use project funds to pay the insurance premium for a contractor.  The County has also co-sponsored bonding capacity workshops, to help HUBs get approved for higher levels of performance bonds.

Next Street Financial is leveraging technology to repair the broken channels for Black and brown entrepreneurs to access capital.

More broadly, we need to see expanded capital access and capacity building investments for HUBs, but we also need much better coordination across those supports, especially in local markets. They are often very stovepiped and confusing for entrepreneurs to navigate and use well. Charisse Conanan Johnson gave us a tangible solution: she and her colleagues at Next Street Financial are leveraging technology to repair the broken channels for Black and brown entrepreneurs to access capital. She cited progress in the Chicago region as a source of lessons: business support organizations in Cook County share, via intake, a management platform to deliver consistent, quality technical assistance to small businesses. A similar effort in NYC is being piloted by Mayor Adams, with support from MasterCard, so that businesses can track their transactions with the City (think permits and inspections) with transparency via a platform.

Johnson also pointed out that business planning and other forms of training have begun to incorporate good-jobs concepts, to help even small suppliers design and scale business models that are fair and rewarding to workers and good for business growth too. There’s more actionable, well-informed guidance–for institutional buyers and their partners–than ever before. For example, in December, not long after our webinar session, the Aspen Institute published this guide on linking innovative procurement to good job promotion. 

In sum, said these experienced leaders:

  1. Define shared priorities: Engage community stakeholders, business, community colleges and other workforce players, and other critical actors to clarify and align around clear priorities. 
  2. Develop specific, enforceable agreements: Based on shared priorities, use well-precedented “high-road,” contract-based development frameworks, such as community benefits agreements and community workforce agreements, to define fair work and contracting specifically and create a more level, transparent playing field among bidders and between prime and subcontractors. 
  3. Reduce barriers to disadvantaged entrepreneurs: From the contracting (procurement) side, use contract templates, contract unbundling (breaking a larger contract into smaller component contracts), and other models to simplify and reduce barriers that are disproportionately affecting Black, Indigenous and people of color owned and women-owned firms. 
  4. Help new suppliers develop–as good employers from the start–with an inclusive, integrated approach: Most of the actions recommended above produce benefits first, and sometimes only, for incumbent suppliers–those who have established themselves to some degree and know their industries. What about building the supplier pipeline (pool), just as we need to build the talent (worker) pipeline for infrastructure and climate actions? On this, it’s key to: Understand capital and related business support needs, including early-stage coaching, for BIPOC and other disadvantaged entrepreneurs, so as to make the supports offered more responsive, coordinated and easier to navigate. See, for example, Next Street’s analysis of why business support “ecosystems” have traditionally failed to function as systems, especially for BIPOC entrepreneurs, this assessment done by partners in Philadelphia, and Living Cities’ mapping and analysis of the New Orleans’ entrepreneurial support landscape and its disparities. Remember to make being a good employer a part of supplier development strategy. It’s important that developing and offering good jobs not be seen simply as a “tax” on the smallest businesses, translating to higher operating costs and less competitive bidding. Even the smallest suppliers need to understand the business case for good jobs and worker-empowering, high productivity business models, but they need to understand them on their own terms. See the Entrepreneur Fund’s guide on how small businesses can approach job quality, A to Z, from strategy to action.
  5. Invest in the workforce we need: Make complementary community investments in the workforce–especially in the “talent pipeline challenge” getting increased attention because of massive expected worker shortages over the next decade and because of the lack of gender and race diversity, historically, in core infrastructure sectors–to equip workers and match them to employers, both small and large, in changing industries. Compared to other job-growth sectors, the infrastructure and climate sectors offer better job quality, on average, and also easier access, especially for workers without college degrees. Interest in apprenticeship programs, expanding affordable child care and other needed supports for work, high road training partnerships and other cross-sector alliance frameworks continues to grow–and attract flexible resources, both public and private.

What’s clear is that public agencies, community organizations, prime contractors, HUBs and other small to medium sized businesses, higher ed institutions, and business support organizations have the opportunity to use these federal infrastructure and climate investments–in many cases supplemented by State and local government resources as well–to build a better future. They can help us get there by focusing on measurable outcomes for workers and business owners, collaborating to function as a true procurement ecosystem instead of a fragmented set of agencies and program offerings, and creating a market wherein historically underutilized and disadvantaged businesses are invited in and encouraged to to share in the growth.

 

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