Organizational Change
Moving Beyond Job Creation:
Defining and Measuring the Creation of Quality Jobs

In most parts of the country, we don’t have an unemployment problem anymore. Our problem is a lack of good job opportunities for most Americans. While millions of jobs have been created since the Great Recession, the fastest job growth has occurred in places such as strip malls and fast food restaurants, where jobs provide people a means of subsistence but not an opportunity to achieve financial security and advance a career. Averaged across all occupations, real wages have not only remained stagnant but have dropped, building on a decades-long trend where workers and their families increasingly cannot afford the basic goods and services they need to get by.

Unfortunately, this trend doesn’t seem to be going away: over two-thirds of the occupations expected to have the largest employment growth this decade are low-skill, low-wage ones.

So What Can Be Done?

Pacific Community Ventures, a community development financial institution (CDFI) based in San Francisco, is committed to creating jobs that are good for workers, good for businesses and good for communities. While we historically focused our investing, advising, research and consulting efforts on supporting small businesses and their investors to create jobs within underserved communities, we’ve realized that just creating jobs isn’t enough. As a first step, we launched a research project called Moving Beyond Job Creation, which sought to answer two questions:

• What are the core characteristics of a quality job?
• How can CDFIs and other impact investors measure and track quality job creation?

To answer these questions, we extensively reviewed the literature on job quality, interviewed over 25 investors, consultants, researchers, and academics with expertise in this arena, and analyzed to what extent existing tools and resources that investors use to measure their social impact (e.g. GIIN’s Impact Reporting Investment Standards (IRIS) and B Lab’s B Impact Assessment metrics) help investors measure and report on job quality.

What We Found

While we encountered many different definitions of a quality job, we were pleased to discover that none were contradictory to one other and were often quite similar. This allowed us to synthesize all of the definitions we found into the following categories below.

Given that the specific elements of a quality job vary by industry, business size, job function, and employee demographics, we offer a flexible definition: a quality job provides at least three (3) of the following five (5) key elements:

• A living wage sufficient to support a decent standard of living — or, at minimum, exceeds the median wage offered within the employer’s industry.
• Basic benefits that increase economic security, improve health, and promote work-life balance among workers. These include paid leave, health insurance, and a retirement savings plan.
• Career-building opportunities that help employees develop the skills, networks, and experiences necessary to launch a career or advance along a career path. These opportunities can include training and mentorship — both formal and informal — and avenues for advancement within the company
• Wealth-building opportunities that enable and incentivize an employee to build the assets they need to manage financial emergencies and achieve long-term financial security for themselves and their families
• A fair and engaging workplace that balances the priorities and wellbeing of employees with the needs of the business. Examples include offering flexible and predictable schedules, treating all staff with respect and dignity, actively soliciting employees’ ideas to improve the business, and helping staff understand how their work contributes to the business’s success.

Interviewees emphasized that creating quality jobs should not be viewed as a static goal, but rather as a continuous journey. CDFIs and the businesses they support should strive to foster incremental improvements in job quality, raising standards in a deliberate yet meaningful way for employees. Businesses and CDFIs should also view the fostering of quality jobs as an ongoing process, and should not “rest on their laurels” — even if the jobs they support already meet three of the five quality job elements.

But How Do You Measure Job Quality?

It’s essential to know what a quality job looks like if you’re an investor seeking to support its creation, but you also need systems in place to measure your performance – or else you won’t know whether your good-intentioned actions are productive. Drawing from what we’ve learned when developing or refining impact measurement systems for foundations, institutional investors, nonprofits and fund managers, we recommend investors take the following three steps to measure their support of quality jobs:

1. Choose questions: Select questions to assess whether a job embodies each of the five component described above, and provide these to borrowers and investees during underwriting or due diligence, and annually after receiving a loan or equity investment. For example, for the Basic Benefits category, does your company offer employees paid leave? Health insurance? A retirement savings plan?
2. Create definitions: Choose your “scoring criteria,” or how you will determine whether a job embodies each component. For example, a company must offer paid leave and either health insurance or retirement savings plans to a majority of employees for it to be classified as a company that offers basic benefits.
3. Analyze results: Determine number and percentage of jobs created that embody each component. This calculation should be determined first at the investee level, and then aggregated to the portfolio level. This number and percentage should be tracked over time so the investor can identify trends in the quality of the jobs they support, as well as opportunities to work more closely with borrowers to improve job quality.

The following graphic illustrates how assessing the percentage of jobs supported that embody each quality component can offer insights into ways an investor can work with companies to improve job quality. In this example, while job quality is generally increasing, the investor may seek to understand why borrowers are providing basic benefits to a smaller percentage of workers in year 4.

Next Steps

Given the scope of this problem, we aren’t going to build an economy that works for everyone without a coordinated effort of businesses, investors, government agencies, and nonprofits. While we are initially focusing our work on the CDFI industry, that’s only a small piece of the solution to this big societal issue. We need to learn from and coordinate efforts with others across the private, public, and nonprofit sectors working on this issue. We need provide businesses with practical tools showing them how to create jobs that are good for both workers and their bottom line. And we need policy changes that incentivize investors to finance the creation of quality jobs, driving change at a national level.

Are you committed to improving the quality of jobs in our country? If you would like to participate in future meetings or projects with us and likeminded organizations seeking to create quality jobs that are good for workers, businesses and their communities, please reach out to us - this problem is too big for us to solve ourselves!