By Brent Warwick
A vital concern for any community that desires to thrive is the ability of residents to improve their economic status or that of their families. If people are locked into a low socio-economic status (also known as low mobility), that community’s efforts to flourish will be hampered until the underlying issue of economic mobility is properly addressed.
Once again, small businesses play a key role. Similar to the impact that small businesses have on employability, they also have a significant impact on economic mobility in the surrounding community. There are a few key reasons for this.
Vibrancy of the local job market
While insightful research continues to challenge our long-held notions about what contributes to low-mobility areas versus high-mobility areas, one factor seems to be a constant: the availability of good jobs. Areas without a vibrant local labor market often see homegrown talent depart for areas with greater opportunities. That contributes to stagnation, disillusionment, and an accumulation of additional barriers to mobility.
Small businesses are essentially the pioneer species in barren low-mobility economic landscapes. They are the quickest to market, the most nimble in making adjustments, and the most vested in terms of the outcome. The local market, including all of its constituent parts, is crucial to the success and sustainability of a small business. And more job opportunities mean more mobility for those who need jobs.
Exposure to good social networks
A beneficial byproduct of a vibrant local job market is the creation of social networks that promote economic mobility. Many small businesses find their employees via referral. For instance, a current employee knows a good prospective candidate — who may not have the ideal credentials or background — and introduces him to the employer. That transfer of trust, despite one’s credential shortcomings, is an invaluable intangible.
Similarly, the children associated with local social networks are beneficiaries of these intangibles. There are countless examples of a recent high school or college graduate who, needing employment, is offered an opportunity via an introduction made by a family member. Inclusion in these social networks is often the simple difference between subsistence on the margins versus flourishing through growth or the possibility for growth.
And since small businesses are often at or near the center of a vibrant local job market, it stands to reason that small businesses are one of the prime catalysts for these social networks.
Less stress, more flexibility
Small businesses also don’t have the often stress-inducing bureaucracy of large corporations or the rigid drive to satisfy shareholder profitability demands. Small businesses are most often privately held and as such have the freedom to create a work culture that values human flourishing beyond work. And when employees are afforded real freedom to leave work at work, and flexibility to attend to their families’ needs, there are tangible benefits for their lives outside of work. The elimination of various causes of stress and conflicts of time, originating from the work environment, can help provide the mental, emotional, and physical space to help families flourish.
An increasing amount of research suggests that intact family units contribute to economic mobility. While less stress and more flexibility at work may not fix the problem of broken families, they can at least potentially contribute to keeping families together.
While an individual small business may not have the scale and reach to make a noticeable impact on a community’s economic mobility, it can certainly have an impact on the economic mobility of one family. Then, coupled with other small businesses, that impact can start to be felt within a community.
What we can do
Like all large-scale challenges facing humanity, the problem of economic mobility is complex, varied, and layered. We cannot expect the solutions to be simple or quick.
However, given the impact that small businesses can have in key areas associated with economic mobility, it makes sense that our support of small, local business is a good place to start. Let’s encourage small businesses to be the vital component that they can be for the common good of our community and beyond.
Brent Warwick is a partner at ipsoCreative.