Affordable child care important for workers and businesses alike

FloridaToday.com ran a column yesterday by a local entrepreneur on the importance of child care to workers and small businesses. Rhonda Abrams, the president of a small business called The Planning Shop, which provides training and instruction for small businesses on developing business plans, strategies, and other topics related to entrepreneurship  writes about the crisis of child care  and the need for her workers– and the workers of other small businesses– to be able to access quality, affordable care for their children. Not only does this help out families, it also enables workers to stay at their jobs, reducing turnover and the loss of valuable employees.

This is a particular challenge for female workers. Abrams cites that nationally, 64 percent of mothers with children younger than 6 years old are in the labor force. In North Carolina,  median full-time earnings for women is $37,199, according to the American Community Survey.  Child care costs in North Carolina, however, average between $6,000 for family care to almost $9,200 at a child care center, depending on the age of the child. This is a range of 16 percent to almost 25 percent of the median earnings.

As child care costs continue to rise, parents struggle to be able to afford quality care– often having to use several different child care providers to cover a full-time work week. This is also a particularly acute problem for low-income families, for whom child care subsidies are the key to  being able to find a job and stay in a job. But as WRAL reported recently, cuts to child care funding has meant that many families will lose their subsidies.  In Wake County alone, a $1.9 million cut in funding meant that 750 termination  notices were sent to families who were receiving child care assistance for kids between 81/2 to 12 years old.

As Abrams says in her column

Small businesses all over the country lose terrific workers every day because of the lack of good child-care options, and some of the best and brightest women have dropped out of the workforce.

Ultimately, helping parents care for their children while they work is an economic development issue. It affects workers, productivity, employee turnover, and job security. It also impacts the children who are not provided a stable and quality environment during their parents’ working hours. Economic development is not just about creating jobs or growing businesses; it is also about creating the supports to workers and businesses to help make them both viable.

February 26, 2013 at 11:04 am

Parents Polled About Causes of Child Obesity

NPR, the Robert Wood Johnson Foundation, and the Harvard School of Public Health recently conducted a poll to focus on what type of health decisions are made in American households on the average weekday evening.  The poll was attempting to answer why one in every three American kids are overweight or obese.

The answer, they found, was not that parents did not know that children needed healthy foods and exercise.  In fact, 95% of parents said it was important or very important to eat and exercise in a way that helps their child maintain a healthy weight. Most of the reason chopped down to how parents handled the day-to-day grind of preparing foods.  Up to 73% of parents reported that the children just liked the taste of foods that lead to unhealthy weight gain, and thus they ate the food.  The other reasons amounted to the inability to find the money or time to purchase and prepare healthy foods.

And the community environment and development had a large part to play in this situation.  The poll shows that around 25% of people reported that there were unhealthy food options that are close by, while healthy options were either not available or priced out of the family’s budget.  Additionally, when it came to walking and exercising in the community, over 20% were concerned about the safety of their children in exercising outside.

This all confirms the premise of the CDFI Fund’s Healthy Food Financing Initiative, that we need to reinvest in our communities to promote the accessibility and innovation in new ways to prepare and distribute healthy food options.  The families in our communities know and want their children to grow up healthy; eating the right foods and getting enough exercise.  However, we have systematic issues that are arising that are making it harder than necessary for these working families to make these decisions.  Through promoting new innovation in this field, and encouraging small businesses to help families meet their needs, we can encourage a healthier community to grow.

February 25, 2013 at 12:28 pm

What $1.2 trillion in cuts means for small business

The Washington Post’s “On Small Business” blog has such a great analysis of what sequestration will mean to small business that we’re just going to re-post their findings here.  In order to avoid devastating budget cuts at the start of the year, Congress decided to kick the can down the road and delay taking any action until March 1. Now that date is just around the corner and unless Congress acts this time, $1.2 trillion in federal budget cuts over the  next decade– again, known as “sequestration” or the “sequester”– will go into effect. This will have massive impacts across the board, and will probably even send us spiraling back into recession. No doubt this will affect businesses both large and small, but there will be particular impacts on small businesses  Looking at data from the Internal Revenue Service , the U.S. Census Bureau, the Small Business Administration, and various other sources, the Washington Post found that $1.2 trillion in cuts would equal:

• The capital needed to start 40 million new businesses (average cost of $30,000).

• More than enough to cover the payrolls for every small business in the country for six months (total $2.1 trillion annually).

• Enough money for every small employer in the country to add five new $40,000-a-year employees for a full year (6 millionsmall employers).

• More than the combined taxes to be paid this year by every filer under the IRS’s Small Business and Self-Employed division (about 40 percent of $2.9 trillion, or $1.16 trillion).

• Triple the total amount of venture capital investments made so far this century ($423 billion since 2000).

• The capital you would need to make 150,000 start-up investments, based on the average venture capital deal during that period ($8.1 million).

• More than the total amount of lending to small businesses in the first half of 2012 ($1.17 trillion) and four decades worth of SBA-backed loans (about $30 billionannually).

• The cost of covering the health insurance premium for every small business employee in the country for five months (average cost of $4,260 for individual coverage).

• More than three times the total amount of goods and services exported by small and mid-sized businesses each year ($380 billion).

• Enough money to power the SBA on its current budget for more than a thousand years (2013 budget request is $948 million).

Of course, in reality, the entire $1.2 trillion– if saved– would not be devoted entirely to small businesses. Nevertheless, this is truly staggering and shows just how much money $1.2 trillion really is.  Even saving a fraction of this funding would be significant for small  businesses.

For more details on the broader impacts of the sequester, see here for four charts that illustrate the impacts. Sadly, many in Congress are acting like the sequester is unavoidable. Rather than trying to stop it from happening– or even working toward a compromise– they’re working to protect their own districts.  Seems like they’re missing the forest for the trees. Still, Congress has about a week to act. Let’s hope that our elected officials can save us from getting into another economic hole before then.

February 22, 2013 at 9:44 am

Payday lending might be back in NC

Payday lenders have been illegal in North Carolina since 2001, but recently there has been a proposed bill to reverse this and make it legal for payday lenders to operate in our state again.  As Progressive Pulse describes it, payday lending

… is the pernicious practice of making short-term loans (typically of a week or two in length) to desperate people at effective annual interest rates of several hundred percent.

This is a very dangerous possibility for North Carolina. Payday lending is marketed to people who are looking for a quick fix for an immediate financial problem, but what actually happens is that people end up in a cycle of loans that they are ultimately unable to pay. The Center for Responsible Lending explains that these lenders are specifically located in low-income neighborhoods, targeting those who are most vulnerable and least able to climb out of these predatory cycles. The graphic below clearly articulates the cycle and problems with payday lending.

Re-introducing payday lending would not help individuals and communities who are already struggling financially. In fact, it could make the economic outlook for many people worse. We reported yesterday about the wealth gap  between whites and minorities, and the link between unemployment and the ability to create generational wealth. And we have blogged about the uneven economic recovery, in which some communities have lagged far behind others and in which income inequality has continue to grow. Payday  lending would only exacerbate these trends, by opening up the door for desperate people to dig themselves further into a financial hole. Rather than taking us backward, our state’s decision makers should be focusing on policies that help to strengthen– not deplete– communities’ resources, wealth, and health.

February 21, 2013 at 11:05 am 1 comment

Impact of Unemployment on Wealth Retention in Black Communities

As we have covered in the past, this economic recovery has not affected all communities equally.  The general fact is that the recovery is helping those high earning families, while failing to help the lower-income and minority communities. In fact, the recession caused the wealth gap between whites and minorities to increase by 20%, as reported by the Pew Research Center.  This drop caused the largest wealth gap since the government began tracking this information. 

The enormity of the wealth gap is in part due to the compound effect unemployment is having on our minority communities.  Thanks to the Bureau of Labor Statistics, we can see that this recession has left more minorities unemployed than whites.  As of the most recent numbers released for January 2013, the unemployment rate for Blacks was 13.4%, where the white unemployment rate has dropped to 7.0%.  Over the last year, the unemployment rate for Blacks is usually about 6% higher than for whites.

Due to this inequity in the unemployment figures, Blacks are more likely  to have needy relations than whites.  One recent study found that “Middle-income blacks are more than twice as likely as middle-income whites to have a poor sibling and more than four times as likely to have parents below the poverty line.”   This same study found that Black households are more likely than White households to give money to struggling relatives, and as they earn more money they give a higher proportion of their income to their needy family and community.

Thus, even when Blacks can find the opportunity to succeed and generate wealth, this wealth is usually used to help support their families in ways that are not demanded of white families.  A lack of generational wealth significantly stops the ability of individuals to reinvest into their communities and/or start a business. In fact, the U.S. 2012 Economic Census reports that 60.3% of small businesses are funded at least in part by personal savings.  Without this personal wealth, Blacks small business owners and community leaders are left without the capital necessary to assist their communities; exactly what is necessary to start creating wealth and end the current unemployment gap.

February 20, 2013 at 12:56 pm

Charlotte City Council votes to incentivize affordable housing development

Consultants hired by the city of Charlotte had advised the city council back in October that it needed to create more affordable housing for the city’s lower-income residents.  According tot he consultants, Charlotte is short 15,000 units for residents making less than 30 percent of the median income, but has a surplus of 10,000 units for those making more than 60 percent of the median income. Last night, in response to this recommendation, Charlotte’s City Council voted to provide developers with a “density bonuses”– an allowance to develop more units than what the zoning laws allow– if they incorporate affordable housing into their development. Developers could then build more market-rate units to offset the cost of the affordable units.

Interestingly, what the city council voted on would not actually be targeted toward the city’s poorest residents– the ones, mentioned above, that make less than 30 percent of the median income, and who face a significant affordable housing deficit. Instead, these affordable units would be for those making 60 to 80 percent of the median income.

Zoning laws have often been used to delineate boundaries and exclude certain groups. For example, by regulating minimum lot sizes, minimum home sizes, density, etc, zoning ordinances have effectively been used to steer away lower-income residents. This kind of initiative falls under the category of ‘inclusionary zoning‘– efforts to ensure that development within a city include housing opportunities for a mix of incomes. In many cities across the country, inclusionary zoning has been successful in reversing this segregation. Inclusionary zoning helps to incorporate affordable housing across cities, rather than letting it get clustered in certain areas, as it currently is in Charlotte.

The density bonus program approved by the city council is an example of voluntary inclusionary zoning. Developers are given the bonus if they choose to build affordable units, but they don’t have to. Other cities have implemented mandatory affordable housing programs, where developers are required to set aside a certain percentage of their units as affordable.

Mixed-income developments are good for cities and communities. The ultimate impact of Charlotte’s new program, however, is uncertain. Since it does not target those residents that are most in need of affordable housing, it is not addressing the root problem identified by the consultants in the first place.  The city’s poorest residents will continue to be relegated to the clusters of low-income housing, and even then will continue to face a shortfall in affordable units. Also, since the new program is voluntary, developers would have to opt into this program. The density bonus may be a big enough incentive some, but it is yet to be seen whether it will it be enough to encourage affordable housing on the scale that it is needed.

February 19, 2013 at 8:00 am 1 comment

Big changes ahead with Raleigh’s new development code

Raleigh’s city council may be adopting a new 300-page Unified Development Ordinance (UDO) tonight, which will set forth new guidelines for the development of the city’s urban cores. This is primarily the Crabtree Valley, Hillsborough Street, and Cameron Village areas. The idea is to encourage higher-density, walkable, mixed-use development while still preserving a neighborhood feel.

It is encouraging to see that new steps are being taking to ensure that our cities are developing in a more sustainable way. Encouraging more dense development, with shops, offices, and housing in close proximity, means that people will rely less and less on cars. In addition, this will help create a more vibrant public life– with more people out and about, walking and biking, shopping, eating, etc, there will be more activity in our urban areas.

One of the issues that such a plan raises, however, is the lack of public transportation included in the new code– a key piece for encouraging linkages between areas and reducing the use of cars. As the News & Observer reports, public transit investments rely on a half-sent sales tax increase that is supported by Wake County mayors, but opposed by county commissioners. As one councilman put it, “If it still ends up being more convenient to get in your car , it’s going to get more difficult to redevelop these areas.”

There is also the broader issue of access– who are these areas being developed for, and what will the impacts be on surrounding areas? The N&O begins by stating that these neighborhoods currently attract “young professionals.” Along with encouraging a mix of uses, will the plan also encourage a mix of people? Will there be opportunities for lower- and moderate-income people to access housing, business space, or even retail in these areas?

Even in the discussion of public transportation investments, the key is to make sure that the new transit hubs are connected to the outlying areas. As we have blogged before, low-income people are the primary users of public transit. If the urban cores of Raleigh will include opportunities for both recreation and employment, it is essential that public transit provide the connections to allow all citizens access.

It is commendable that the City of Raleigh is working to update its land-use and development codes to encourage more sustainability. However, it is equally important that city planning efforts and big investments like public transit infrastructure encourage the growth, development, and connectivity of all areas of the city.

February 18, 2013 at 12:33 pm 1 comment

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