Microenterprise Programs in U.S. Inner Cities: Economic Development or Social Welfare?

Abstract

The microenterprise strategy marries elements of economic development and social welfare strategies and agendas. This article uses case studies of three inner-city microenterprise programs to demonstrate that the results of this blending are over-whelmingly positive. At the same time, working in the interstices of the economic development and social welfare fields is complex, and the results that programs produce do not fit easily into traditional outcome categories. The programs studied do more to help those who exist at the margins of the mainstream economy than those who are completely cut off from the economic mainstream. They help change the mind-set of people by giving them the hope they need to take charge of their own lives. By helping people begin to think strategically about creating better futures for themselves and providing them with the tools necessary to make that happen, these programs shift the focus of policy from maintenance to investment.

Time to Work: Job Search Strategies and Commute Time for Women on Welfare in San Francisco

“…Direct and indirect subsidies to increase wages improve employment outcomes for jobs obtained outside of networks (as for retail jobs obtained through direct application), ease the transition into the workforce for women with complicated child care obligations, and motivate women to leave informal for formal work (Edin & Lein, 1997). Micro-enterprise programs, although insufficient to pull women out of poverty, can provide self-employment training and small amounts of credit (generally less than $1,000), and thus provide a first step toward self-sufficiency or at least the formal labor market (Servon, 1997).…”

Business Incentive Use Among U.S. Local Governments: A Story of Accountability and Policy Learning

“…Small business, microenterprise, and community economic development strategies attempt to focus economic development in neighborhoods with high poverty and lower economic development prospects (Bennett & Giloth, 2008;Clavel, Pitt, & Yin, 1997;Gunn & Gunn, 1991;Servon, 1997). These strategies have become more common over time (Bennett & Giloth, 2008;Florida, 2002;Koven & Lyons, 2006).…”

Building Community Capacity: Self-Assessment Performance Metrics for Canadian Microcredit Programs

“…While the provision of microloans to micro-entrepreneurs is the principal activity, performance metrics that limit evaluation to this function alone will yield results that confirm the inability of the organization to match the efficiency of traditional financial institutions (see Servon, 1997). Output conceived of and measured narrowly as just loan-value amounts or numbers of loans, accounting for the full costs of delivering the program, will reveal a dismal inefficiency in the organization.…”