Social change work is hard and frustrating and wonderful and terrible; it is also, at times, funny, quirky and just plain fascinating. With this blog we hope to capture all that goes into what we do at Capital Good Fund, and we invite you to join the conversation!

Thursday, February 26, 2015

Poverty Is Bad For Business

Poverty and Economic Development
Image credit: Jason via Flickr
Poverty is not merely a moral issue; it is an economic problem. We cannot have a strong economy so long as over 45 million Americans live in poverty and 49 million do not get three square meals a day, every day. And we cannot have a strong economy so long as families making $20,000 per year spend $1,200 on check cashing and money orders.

When a payday lender charges 261%, every dollar the borrower spends on interest* is a dollar not spent on savings, education, clothing, and other basic needs (on a $325 payday loan, the average borrower will pay nearly $500 in interest). When a predatory auto loan results in repossession, it becomes that much harder for a family to get to work, school, or the doctor’s office; jobs are lost, children's health and futures are compromised. And when wages are stagnant, a family's ability to buy homes, cars, and furniture—to engage in spending that drives the economy—is severely curtailed.

In an ideal world the moral would triumph over the expedient, but as I've written previously, it is incumbent on us to accept reality and find creative ways to raise awareness and drive social change. Given that poverty rates have held steady over the past five decades, we can reasonably conclude that the ethics-based anti-poverty stance has failed.

A Call To Action
People of all political stripes would get behind a campaign that connects poverty and the economy. Yes, there are clear differences of opinion about how best to uplift the poor, but there is also broad consensus about job training, education, and other economic development initiatives. We can build on that.

Sometimes an adjustment in messaging can have a tremendous impact. Study after study, for instance, has found that most anti-smoking ads don't work; the more we tell teenagers it's bad to smoke, the more it feeds into their need to assert their independence and rebel. What does work is messaging that explains how the tobacco companies are trying to trick youth into smoking (a good example is called Truth). When the rebellion is pushed in the opposite direction, the independent thing to do is not smoke.

I propose that we tweak the messaging to drive home that poverty is bad for business. That poverty reduces productivity and limits the pool of qualified people to fill job openings. That it harms people's health, thereby increasing health spending (which already accounts for over 17% of U.S. Gross Domestic Product). And that it results in poor educational outcomes, which are inarguably harmful to future economic growth.

Similarly, at little cost we can change the way the public and those in power think about poverty. For too long—since President Johnson’s War On Poverty—poverty has been absent from the public discourse. Of course, messaging alone isn't enough, but at least people are finally starting to talk about inequality, and discussion is the first step to action.

That’s why I plan to launch an initiative to Put Poverty Out Of Business. This initiative will bring together the business community, faith-based leaders, nonprofit activists, and policymakers. The idea is to unite under one umbrella various social and environmental movements, including prison reform, raising the minimum wage, decreasing military spending, and regulation of predatory lending.

What these all have in common is that there is a strong economic link. A reduction in mass incarceration, for instance, will save the federal government and states billions of dollars. Put Poverty Out Of Business comes into play when we consider the fact that the for-profit detention industry is worth nearly $2 billion. The message then switches from “Mass incarceration is immoral” to “Mass incarceration is bad for people and the economy. Let’s put it out of business.”

It is important that the messaging be “bumper sticker ready.” People are busy and attention spans are short; we all compete in a marketplace of ideas, and our competitors—those that profit off the poor—are able to use their profits to maintain the status quo. To successfully Put Poverty Out Of Business we have to take a new approach, one defined by a clear and concise message spread by a movement of people dedicated to reshaping our nation for the better.

If you are interested in talking to us about launching a Put Poverty Out Of Business campaign, feel free to comment on this post or shoot me an email at

More Reading:

Making Money Off The Poor
Should Businesses Make Money From Poor People?

1 comment:

  1. Yes, Poverty is really bad for business.... It is bound the earning money, and to decrease the improving technology.