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Microenterprise and Sectoral Employment

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A photo of four workers — two males and two females — wearing blue lab coats and watching a male instructor show them how to operate a large, yellow articulated robot used in factories. Two of the workers are holding clipboards and the instructor is holding an electrical devise that controls the robot. Behind them is a series of offices or classrooms.
Students learn how to operate an articulated industrial robot as part of a manufacturing job training program at Focus: HOPE, a longtime Mott grantee in Detroit.
Photo: Courtesy of Focus: HOPE
A photo of a smiling woman looking at the camera and holding up a quilt that she has made. The quilt’s design is that of large, abstract leaves on which is embroidered abstract features of a face. It is made in shades of green. The woman has long brown hair and is wearing a green blouse. On shelves behind her are various supplies for making quilts.
West Company helped Christine Coles, shown here in 2005, to launch a quilting business in Willits, California. For nearly four decades, the organization, which was renamed West Business Development Center in 2017, has played an important role in the microenterprise field.
Photo: Rick Smith

Highlights

From our earliest days, the Mott Foundation has supported numerous efforts to help people prepare for and obtain living-wage employment.

When a troubled U.S. economy during the 1970s and early 1980s saw the country shed significant numbers of jobs, Mott launched two grantmaking strategies designed to help unemployed and underemployed workers open doors to self-sufficiency.

In the area of microenterprise, the Foundation played a lead role in expanding opportunities for low-income entrepreneurs to create small businesses and cultivate financial strength for themselves and their communities.

Mott’s support for sectoral employment fueled a national shift from one-size-fits-all job training programs to industry-specific initiatives. The latter approach helps meet the unique needs of employers and provides workers with pathways to rewarding, well-paying careers.

The enduring impact of this work is evident today in the organizations, programs and public policies that continue to advance the two fields, offering help and hope to underserved individuals across the U.S.

The Mott Foundation has long recognized that access to economic opportunity — including the chance to gain and maintain living-wage employment — is essential for individuals and, in turn, their communities to thrive.

A black-and-white photo from the 1960s in which two men are watching an instructor show them how to operate a metal lathing machine.
An adult education instructor in Flint, Michigan, demonstrates how to machine metal using a lathe circa 1960. Mott-funded community education in the city included courses designed to help area residents prepare for and obtain jobs. Photo: Charles Stewart Mott Foundation archives

That’s why, in 1938, we added vocational training to a unique model of community schools piloted in our hometown of Flint, Michigan. Over the years, our funding in Flint and beyond also helped young people to acquire valuable work experience, senior citizens to re-enter the labor force and low-income craftspeople to bring their products to the marketplace.

Helping workers in the U.S. to obtain employment and achieve financial stability took on fresh urgency in the 1970s as a series of economic recessions and increasing global competition saw the country shed significant numbers of jobs. Even as the newly unemployed joined the ranks of those already vying for increasingly scarce positions, movements to establish work requirements for people receiving public assistance gained political ground.

By the dawn of the next decade, this perfect storm had intensified the clouds of poverty hanging over many U.S. communities.

In response and aided by the vision and leadership of then program officer Jack Litzenberg, the Mott Foundation launched support in the mid-1980s for what would become two important legacies of our first century of grantmaking: microenterprise and sectoral employment.

While we’ve since concluded our broad body of support for these strategies, each tells a story of enduring impact that continues to unfold today.

Entrepreneurship as a pathway out of poverty

As the economic uncertainty born in the 1970s fueled ongoing turmoil in the mainstream labor market, interest in small business ownership as a route to self-sufficiency surged among the U.S. public and policymakers.

To promote a level playing field of related training, mentoring and financing opportunities for underserved communities, Mott initiated a grantmaking strategy in 1985 to explore, study and expand microenterprise in the U.S.

Occupying a unique niche in the world of small businesses, a microenterprise is typically defined today as having fewer than 10 employees, requiring minimal startup capital — often less than $35,000 — and lacking access to mainstream commercial loans.

Mott’s initial funding supported business-planning, financing and skill-development programs serving low-income entrepreneurs, and the launch of multiyear studies of such initiatives. As those activities began to demonstrate intriguing results, it became clear that a strong, vibrant and connected field of practice was essential to proving and improving the model and subsequently bringing it to scale.

A photo of a woman wearing stylish black-and-white clothes, and standing amid sales racks of red clothing and various hats in white, black and red. She is looking at and talking to someone off to one side of the camera, has a slight smile on her face and is gesturing with one hand.
Small loans helped to catalyze small businesses, such as Gwen Riley’s vintage clothing shop, shown here in Los Angeles in 1992. Photo: Jane Hale

To that end, we seeded the creation in 1991 of the Association for Enterprise Opportunity, the national trade organization for those working in the field of microenterprise development. The association, which we supported through 2017, has since served as a national voice for the sector and provided its members with a forum to exchange experiences and best practices. Its impact is evidenced in the more than 2 billion small businesses created in the U.S. with the aid of its members.

The Foundation also recognized early on that supportive public policies were essential to fostering microenterprise opportunities, including for those likely to be affected by anticipated changes to the country’s cash assistance programs.

In 1992, we began funding efforts by the Corporation for Enterprise Development — renamed Prosperity Now in 2015 — to advocate for federal and state policies that promote microenterprise as a pathway out of poverty. That work, which we continued to support through 2012, also sought to inform legislation that would expand access to the financing and technical assistance needed to start and operate small businesses.

Aided by the Association for Enterprise Opportunity and other Mott grantees, Prosperity Now helped to inform, in 1996, the federal Personal Responsibility and Work Opportunity Reconciliation Act. Today, that legislation continues to encourage states to recognize self-employment as satisfying the work requirement for public benefits eligibility.

A photo of two women in a salon-like store. One woman is wearing a black blouse, seated in a red chair and is looking at and smiling at the camera. Standing next to her is the second woman, who is wearing a blouse of fabric featuring large blocks of green, blue and yellow colors. She is smiling and looking off to the left of the camera. Behind the two women is a rack of clothing and posters showing fashion models with various hairstyles.
A Mott-supported microenterprise program helped Vanessa Matthews (left) and Andretta Kennedy, shown here in 1998, to launch a makeup-styling business in Chicago.
Photo: George Waldman
A photo of a man and a woman standing outside and in front of a pink-colored wall. The man is looking at the camera and is wearing a light blue sweatshirt and a tan baseball cap. He is holding a shallow white box filled with green seedlings. The woman is wearing a bright blue tank top and dark green pants, and is looking down at a green seedling in a black pot that she is holding in her hands.
Skip Sloan (left) and Nicky Bartell, shown here in 2004, opened a tree nursery in California’s Mendocino County.
Photo: Courtesy of West Company
A photo of a woman wearing a light brown blouse and seated behind a white sewing machine. She is smiling and looking off to the side of the camera. Around her are stacks of papers and sewing supplies, and behind her is a rack on which clothing is hung.
Francine Brown, shown here in 1998, started a microenterprise in Chicago selling custom-made clothing.
Photo: George Waldman

Microenterprise programming

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Those efforts also informed federal legislation in 1999 that authorized the creation of the Program for Investors in Microentrepreneurs. Operated by the U.S. Small Business Administration, the program provides nonprofit microenterprise development organizations with resources to build their internal capacity and to offer training and technical assistance to underserved entrepreneurs.

To help nurture new generations of microenterprise programs, Mott supported the Aspen Institute’s launch in 1997 of the Fund for Innovation, Effectiveness, Learning and Dissemination. The Business Ownership Initiative, as the fund was renamed in 2019, has since studied and disseminated best practices within the enterprise field, fostered innovation and sustainability among development organizations, and advanced the role of business ownership as an economic opportunity strategy.

Its current projects include the Microfinance Impact Collaborative. Born out of Mott’s grantmaking to the Aspen Institute from 2008 to 2015 to help bring microenterprise to scale, the collaborative is identifying and promoting effective lending programs and practices for low-income business startups.

While we concluded the Foundation’s formal support for microenterprise development in 2017, the work of these and other Mott grantees continues to ensure that entrepreneurship offers a pathway to economic opportunity for low-income individuals and their communities.

Sectoral employment: A market-based approach to sustainable jobs

After more than a decade of financial turbulence, the onset by the mid-1980s of a period of economic recovery sparked the welcome appearance of help-wanted signs across much of the U.S. Yet for many unemployed and underemployed people, the evolving labor market posed new challenges.

The rapidly expanding use of advanced technology, including robotics, in factories — long a source of employment for untrained workers — fueled increasing demand among manufacturers for applicants possessing specialized training and experience. Similar qualifications also began to define entry-level job opportunities in direct care, construction and other industries that had historically been open to the country’s low-wage workers.

A black-and-white photo showing a man wearing a white lab coat and using an electrical devise to operate a large articulated robot used in factories. In the background are other industrial machines and computer hardware.
A worker interacts with an articulated industrial robot circa 1986. Photo: UL Digital Library / Wikimedia Commons

Recognizing that a one-size-fits-all approach to job training, which was common in workforce development programs at the time, was outdated, the Mott Foundation began making grants in 1986 to explore, test and cultivate an alternative strategy.

Sectoral employment, as it came to be known, sought to engage employers from selected industries in designing job training programs that met their unique needs, while also increasing the quantity, quality and accessibility of living-wage jobs in underserved communities.

As with microenterprise, the impact of the Foundation’s related grantmaking and the efforts of our grantees remain visible and vibrant in the field of workforce development today.

One such example is Cooperative Home Care Associates, a Bronx-based organization that prepares individuals for living-wage careers as home health aides. Launched in 1985 as an employee-owned social enterprise, it quickly emerged as an innovative approach to sector-based workforce development.

A photo of a young woman dressed in a white medical smock and wearing a stethoscope around her neck. She is watching a female instructor check the blood pressure of a third woman.
Launched by Cooperative Home Care Associates in 1991, PHI helps workers like Evelyn Rosario (center) prepare for rewarding careers in the direct care field. Photo: Courtesy of PHI

From 1987 to 1989, Mott funding helped the organization to increase the number of workers it trained and employed, and to bolster the wages and benefits they received. The resulting improvements in worker retention and quality of client services soon fueled similar changes in employment practices throughout New York City’s home health care sector.

To promote such impact in other communities, the organization created the Paraprofessional Healthcare Institute — now known as PHI — in 1991. During the next quarter century, the institute, with support from Mott, developed a multi-state network of programs that follow the Bronx approach. Today, PHI and its affiliates and partners continue to open doors to living-wage work and career advancement for direct care workers around the country.

In the Foundation’s home state of Michigan, Focus: HOPE — a longtime grantee located in Detroit — launched its Center for Advanced Technologies in 1989. Working with area employers, including the region’s automotive sector, as well as universities and other partners, the center provided residents of the Motor City with advanced training in industrial machining. It also capitalized on Focus: HOPE’s longstanding social programs to help workers address issues of transportation, child care and other potential barriers to obtaining and maintaining employment.

A photo of a man wearing a yellow construction worker hat, a yellow safety vest and camouflage pants. He is outside and is suspended in the air by a safety harness and rope. He is using his feet to help him climb a large, brown wooden pole.
A Detroit-area resident learns the ropes for a potential career clearing trees and debris away from electrical lines. Launched in 2021, the Tree Trim Academy is a partnership of DTE Energy, the International Brotherhood of Electrical Workers Local 17 and Focus: HOPE. Photo: Courtesy of DTE Energy

In time, Focus: HOPE adapted its sectoral programming to meet the changing needs of the region’s labor market and today provides job-training and -placement opportunities in such fields as construction, health care and information technology.

To better understand the potential role and impact of sectoral employment as a workforce development strategy, Mott funded a series of formal evaluations of the approach. That research, conducted between 1996 and 2008, consistently revealed that, on average, graduates of sectoral programs saw significant and lasting impacts on their annual earnings. It also found that, when compared with workers who had not participated in a sectoral program, graduates were more likely to maintain year-round employment and to obtain positions that offered such important benefits as employer-supported health insurance.

Such findings helped to spark keen interest among the country’s policymakers and saw the approach adopted in legislation and public workforce development programs. For example, the federal Workforce Innovation and Opportunity Act, passed in 2014, requires states to include sectoral strategies among their workforce activities. Today, nearly every U.S. state is actively advancing industry-specific training partnerships at the local level.

A photo of a man in his twenties and, on his right, a man in his fifties. Both men are wearing light blue work shirts and dark blue pants, and they are working on a diesel automotive engine. Behind them is a black semi-truck.
A student (left) at Project Quest receives hands-on instruction in diesel engine repair in 1997. Project Quest, located in San Antonio, joined other workforce development programs in a series of Mott-funded studies of sectoral employment strategies between 1996 and 2008.
Photo: Patricia Beck
A photo of two women who are smiling and looking at the camera. The woman on the left is perhaps in her seventies and is sitting in a recliner-type chair. She is wearing a bright pink dress with blue flowers in the design. The woman on the right is in her thirties and is wearing a blue medical smock and pants.
PHI, which also participated in the evaluations, helped Detroit resident Linda Hudson, shown at right in this 1999 photograph, to embark on a career in home health care.
Photo: Rick Smith
A photo of a man bending down in front of a drill press and watching it drill a piece of metal. The man is wearing safety goggles and a red, black and white pullover shirt.
Cleveland-based Wire-Net helps a worker, shown here in 2003, to hone the industrial skills needed by area manufacturers. As a participant in the Mott-funded studies, the organization — renamed Manufacturing Works in 2018 — helped to demonstrate the value of the sectoral approach.
Photo: Diana McNees

Sectoral programming

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In addition to supporting research and demonstrations of sectoral models, Mott funding through the 1990s and early 2000s fostered opportunities for practitioners to connect, share lessons learned and explore new approaches. We helped to engage the nation’s community colleges in offering certification- and degree-level job training in specific industries. We also provided ongoing support to PHI, Focus: HOPE and other sectoral programs, both regional and local.

A photo of a woman wearing a white medical smock with blue, pink and green flowers in the design. She is standing in a hospital patient room and behind her is an empty hospital bed. She is holding a file folder and looking at the camera with a slight smile on her face.
The Flint Healthcare Employment Opportunities Program helped Nina Harris, shown here in 2005, to launch a rewarding career in nursing. Photo: Rick Smith

The enduring impact of that broad body of grantmaking, which we formally concluded in 2015, is seen today in many of the sectoral employment policies and initiatives supporting unemployed and underemployed workers across the U.S. One such example, located in our home community, is the Flint Healthcare Employment Opportunities Program.

The Greater Flint Health Coalition, a longtime Mott grantee, worked in collaboration with area healthcare providers, educational institutions and other community partners to launch the initiative in 2002. Today, it remains a key resource for helping local residents to embark on rewarding, living-wage careers in the health care field.

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