Back

Article Topics

Blog

Steve Grossman expands the fight to narrow the wealth gap

This article originally appeared in the Boston Globe, By Larry Edelman Globe ColumnistOctober 7, 2019 

Steve Grossman, 73, is five years into the latest leg of a long career that has included a stint on Wall Street, running the family business in Massachusetts for 35 years, and then winning election as state treasurer. In 2014, after losing the Democratic gubernatorial primary to Martha Coakley, he could have easily retired.

Instead, Grossman signed on as chief executive of the Initiative for a Competitive Inner City, a Roxbury nonprofit founded by Harvard Business School guru Michael Porter after the 1992 Los Angeles riots.

ICIC grew out of research by Porter showing that inner cities, while struggling economically, had advantages — including access to transportation hubs and a sizable pool of potential workers — that could be leveraged to spur growth and narrow the wealth gap. Porter wanted ICIC to have a bigger impact on communities.

“I just knew it was the right thing to do. Life is about writing a series of chapters,” Grossman said in a recent interview, adding that his 97-year-old mother, Shirley, still works two days a week at Grossman Marketing, the company started by his grandfather in 1910 as Massachusetts Envelope Co.

Since taking over at ICIC, Grossman has expanded its flagship training program from three to 14 cities — including Boston, Philadelphia, Chicago, and Los Angeles. The program, called Inner City Capital Connections, trains small-business owners in economically distressed neighborhoods to develop strategic plans, create good-paying jobs, and raise capital.

The program, cofounded with Bank of America, accepted more than 1,000 companies this year, up from 160 when Grossman arrived, and has increased the percentage of participating women-owned businesses to 55 percent from 37 percent. Minority-owned firms make up 70 percent of participants.

The organization’s budget, provided by fund-raising and partnerships, has grown to $6.5 million from $3 million, and the staff has increased to 40 people from 14.

ICIC came to mind on Friday as I sat in on an economic conference hosted by the Federal Reserve Bank of Boston. Called “A House Divided: Geographic Disparities in 21st Century America,” the conference examined why the gap between rich and poor areas is growing, and what can be done about it.

In his opening remarks, Boston Fed president Eric Rosengren highlighted changes that have split the US economy into two very different pieces: one affluent and growing, one getting poorer. Those trends include:

  • The gap in income between poorer and richer states is no longer shrinking, after narrowing through most of the 20th century.
  • Migration from poorer to richer states, once an important response to regional economic shocks, has slowed.
  • Housing costs in thriving areas have become prohibitive to workers in less prosperous places.

In New England, vibrant cities such as Boston, Portland, Maine, and Burlington, Vt., are attracting young, well-educated workers whose incomes are rising quickly; rural areas and what are sometimes called “gateway” cities are characterized by aging and less healthy populations, poorer educational outcomes, and stagnating incomes.

“The solution is not to throw up our hands and give up,” Rosengren said. Instead, “let’s experiment and see what works and what doesn’t work.”

The Boston Fed launched a grant competition, the Working Cities Challenge, in 2013 “to help people in struggling, post-industrial communities address chronic problems by building leadership and collaboration across sectors, on shared goals.”

According to Rosengren, the first cohort of winning cities has leveraged $1.6 million in award grants from foundations and states into $11 million in follow-on funds. He cited gains in jobs and education in Lawrence and declines in crime in Chelsea as evidence that the approach can work.

Grossman’s ICIC is also making an impact.

The Inner City Capital Connections program offers one-day training seminars, webinars, coaching, assistance in putting together capital-raising pitches, and participation in an annual national conference, which is coming to the Hynes Convention Center on Nov. 13.

“It’s a mini-MBA on steroids,” Grossman said. “We provide the tools to build a winning business strategy.”

In Boston and other communities in Eastern Massachusetts, more than 400 companies have created nearly 1,300 jobs and raised $45 million in debt and equity in the past five years, according to a survey by ICIC.

Nationally, the more than 2,200 alumni of the program from 2005 to 2017 have averaged 160 percent growth in revenue, created nearly 20,000 jobs, and raised $1.92 billion in capital.

Of course, there is no silver bullet for the economic apartheid that has left a widening swath of our country struggling to get by.

Efforts by ICIC, the Boston Fed, and countless other organizations are essential — the “thousands points of light,” to appropriate George H.W. Bush’s oft-maligned phrase.

But the sprawling scope of the problem also means that “big, structural change” — to steal from Elizabeth Warren — is also needed.

Share on:


© 2019 ICIC. All rights reserved.