Bridging America’s Economic Divide with Inclusive Innovation

October 20, 2016

When it comes to achieving inclusive growth in the United States, interconnected challenges – and solutions – are key.

This post was produced in partnership with News Deeply.

The Mastercard Center for Inclusive Growth embarks this month on a multi-city listening tour across the United States, to learn from business people, policymakers, nonprofits and community leaders how America can tackle economic inequality and create growth for all.

The U.S. is facing serious challenges. America’s middle class is no longer its majority income group, and 44 percent of children are growing up in low-income households – half of whom live in poverty. Now, all Americans must adapt to the changing nature of work: by 2020, the percentage of U.S. workers earning income as non-employee freelancers is expected to grow to 50%, while the fourth industrial revolution’s technological advances are predicted to cause a net loss of 5 million jobs worldwide. And despite the fact that 95 of the 100 largest U.S. metropolitan areas grew economically from 2009 to 2014, the Brookings Institution’s Metro Monitor shows that only eight grew inclusively.

In this environment, many low-income Americans are insufficiently connected to the networks of productivity they need to thrive.

Mass transit is serving poor neighborhoods less well than rich ones — and transportation is now understood to be a significant factor in intergenerational poverty. As Americans grapple with increasing housing unaffordability, businesses find their health hampered, as well: the Global Cities Business Alliance (of which Mastercard is member) estimates that there is $7 billion in unrealized consumer spending in New York City alone, due to rents and mortgages eating up more than 30 percent of income for many residents. Poverty is shifting from inner cities towards the suburbs, stranding many low-income workers further away from the jobs they hold and seek. Disadvantaged neighborhoods need – literally – a last-mile solution.

But just as the most challenging problems are interlinked, so are the most promising approaches for addressing them.

Three key elements underpin innovations that drive both growth and inclusivity: collaboration, technological efficiency, and open data tools that empower ordinary Americans to act.

#1: Collaboration that includes all actors unlocks innovation

Collaboration among corporations, startups, academics, non-profits and local governments is one of the most effective ways to bring inclusive growth innovation to life – especially when these partnerships put the power of big data and technology into individuals’ hands.

hybridcar

Los Angeles Mayor Antonio R. Villaraigosa speaks at a news conference about electric vehicles (Flickr/Office of Los Angeles Mayor)

In Los Angeles, a collaboration among the City of Los Angeles, national nonprofit Shared-Use Mobility Center (SUMC), private car-sharing companies and community leaders is placing about 100 shared electric and hybrid cars and charging stations in economically depressed Central L.A. neighborhoods. The areas also rank worst in air quality; the program is targeting not just improved jobs access but also better environmental and human health. It is being funded with $1.6 million in state cap-and-trade revenues intended to reduce greenhouse gas emissions, not economic development dollars; a sign of the intersectionality of the issues.

On-demand transport like Uber and Lyft has not yet become the new normal in low-income neighborhoods, perhaps because marketing most often targets young, affluent clients, the Chicago Reporter writes. On Chicago’s South Side and in Evanston, a suburb characterized by high-income inequality, SUMC has brought in the San Francisco-based startup Getaround to pilot test whether a peer-to-peer car-sharing model can attract community members and meet the neighborhood’s need for flexible, affordable transport – as well as the need for extra income opportunities. Community members are making it work: its first six months, 5,000 car owners and renters joined to trade with each other.

The difficulty low-income Americans have connecting to transit is matched by the barriers they face when trying to access housing. For Americans in the lowest income bracket, the U.S. currently has just 28 homes for every 100 people who need them. Even if someone finds and applies for an affordable unit that is on the market, poor credit histories block the majority from being approved. More than half of Americans have a subprime credit score, and 26 million are “credit invisible” – no score at all.

Real estate website Zillow has harnessed both its technology and its relationships with landlords to improve access to the affordable housing that does exist. It has launched the Community Pillar feature, which enables prospective renters – many at risk of homelessness – to search for properties listed by landlords who are willing to relax their qualification criteria. People who usually face exclusion from the rental market find opportunity instead.

#2: Transparency – especially in data – facilitates tools that empower Americans to act

Making data transparent extends its power from companies and governments directly to the individuals working to fix problems within their own communities.

Graffiti on an abandoned building in New Orleans’s Dixon neighborhood in 2012. (Flickr/Bart Everson, Creative Commons license)

In News Orleans, residents have long dealt with extremely high rates of neighborhood blight. Four years after the 2005 Hurricane Katrina flooded 80 percent of the city, neighborhood leaders who tried to get derelict, abandoned buildings fixed faced a massive struggle. Because several different city departments held different pieces of the data, it was time-consuming and difficult to report buildings and track the city’s response; the only way to find out progress was by attending monthly meetings.

In 2012, city officials partnered with Code for America to create the BlightStatus web application for the city’s BlightSTAT program, which had launched in 2010. BlightStatus enables residents to map and search problem buildings by address and track cleanup progress – simplifying and speeding up neighborhood leaders’ work.

“Citizens are collecting information about their neighborhoods and the state of properties and then presenting it to the city saying, ‘Hey, fix these properties. This is a problem in my neighborhood,” Alex Pandel, a Code for America fellow at the time, told Government Technology magazine in 2012 after he worked to help create the tool.

Giving residents a transparent, actionable view of their city’s data on blight empowers them to lead efforts to improve their neighborhoods’ safety and reduce the downward pressure on property values – and financial stability – that abandoned buildings cause. By some estimates, the BlightSTAT program has helped New Orleans eliminate nearly 30 percent of its blighted homes.

#3: Technology streamlines access to opportunity

For Americans who must manage life on low wages, social safety net benefits like food assistance can be a lifeline. About 46 million people receive Supplemental Nutrition Assistance Program (SNAP) benefits each year – but eight million who are eligible drop out or never sign up.

“It’s intimidating for a first-time applicant to wade through a 27-page form or a daunting website,” Jimmy Chen, co-founder and chief executive of Propel, told the Mastercard Center in an interview earlier this year. “We help people get over that hurdle of knowing whether you qualify, and getting your application in the door.”

Propel, developed during a fellowship with Blue Ridge Labs @ Robin Hood, streamlines the process down to a few simple steps a person can do on their smartphone – saving a first-time applicant about three hours of time and enabling them to access an average of $125 per month for their family’s needs. The app could benefit neighborhood economic health as well. Grocers provide coupons and discounts to Propel users, stretching families’ dollars further – and serving as a valuable tool to drive business to stores in economically-distressed communities.

Interested in taking a deeper dive into the issue? Sign up for updates about On the Frontlines of Growth: a multi-city U.S. listening tour happening October through December 2016. Visit the MasterCard Center for Inclusive Growth throughout the tour for articles about each event and insights from the U.S.’s most innovative inclusive growth leaders.

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