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New study shows economic impact of Cincinnati Works has been $35 million over the past 20 years

'It's important for our economy'
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Posted at 12:10 PM, Sep 21, 2016
and last updated 2016-09-21 13:25:02-04

CINCINNATI – Helping people lift themselves out of poverty pays off.

That's the conclusion of an economic impact study that the University of Cincinnati's Economics Center conducted for Cincinnati Works.

Cincinnati Works is a nonprofit organization that, for the past 20 years, has helped people living in poverty learn the skills they need to get decent jobs and become self-sufficient.

"If all you care about is whether this is a good investment, we ran the numbers," said Jeff Rexhausen, senior research associate at the Economics Center. "And absolutely, yes it is."

Cincinnati Works commissioned the study to determine what impact the organization has had on the city of Cincinnati since Dave and Liane Phillips started the nonprofit in 1996. The study was released during a luncheon at Xavier University's Cintas Center to commemorate the organization's 20th anniversary.

The luncheon also featured keynote speaker Jamie Dimon, CEO of JPMorgan Chase, who talked about the connection between poverty and the nation's economy.

But for anyone who has ever questioned the financial logic behind why any organization should pump thousands of dollars into helping poor people, the economic impact study was the star of the show.

The study noted that Cincinnati Works has helped 5,813 people find work over the past 20 years at a cost of $24.9 million.

But the return on that investment has been $34.62 million – nearly $10 million more than what it cost to help those thousands of people.

"This highlights the value that this basically untapped workforce can provide the community," said Peggy Zink, president of Cincinnati Works. "It's not just helping these people out as charity. It's helping these people out because it's important for our economy."

How the savings add up

The economic impact is based on how much additional tax revenue successful Cincinnati Works members have generated because they're working. It also takes into account how much government money is being saved because they don't need as much subsidized help as when they were chronically unemployed, Rexhausen said.

The savings are based on reduced spending for:

• The Supplemental Nutrition Assistance Program, or SNAP, formerly known as "food stamps"

• Medicaid

• Government-subsidized housing

• Assistance for paying utilities

The study also breaks down the savings based on the types of people who get help from Cincinnati Works.

The median age of Cincinnati Works members is 33. More than half – 56 percent – are women, and the rest are men.

Of those clients, 80 percent are black, 15 percent are white, and 5 percent are various other races.

The vast majority of clients – 80 percent – are single. And 72 percent have no children in their home.

A total of 66 percent rely on public transportation.

And 44 percent have some sort of criminal record.

Only 11 percent lack a high school diploma or the equivalent. But 77 percent lack a post-secondary degree or credential.

Helping people with so many complex challenges can be long hard work, Zink said.

"It does take time," she said. "As people advance up the economic ladder and start to earn more money, there is more economic benefit. But it does take time to work up the ladder."

But the effort pays off, the economic impact study found.

Cincinnati Works members with serious criminal backgrounds – either seven misdemeanors or any felonies at the time they apply for the program – have the biggest challenges in the job market.

But each of those people who finds a job saves society $4,820 per year in the government subsidies he or she would otherwise be using, the study found.

And that doesn't even include how much is saved if that person doesn't end up back in prison, Rexhausen said.

"It's obviously different for each person's situation," he said. "But somebody who has a criminal background – they're just more likely to go back to jail if they don't have a job."

Thousands more need help

The study also did not try to gauge the impact that the organization has had on the children of the organization's many members.

Several of those members spoke on a video during the luncheon. They included a woman who had lost everything but got help from Cincinnati Works and is now working as a phlebotomist and a man who had been homeless and now, after help from Cincinnati Works, has a job he loves at the barbecue restaurant Just Q'in. 

Dimon applauded both jobs -- noting that the woman has a job that requires specific skills and the man ha a job that many would refer to as "unskilled."

JP Morgan Chase CEO Jamie Dimon speaks with Western & Southern Financial Group CEO John Barrett during the Cincinnati Works luncheon.

"That job (at Just Q'in) -- that's not a dead-end job," Dimon said. "You gave someone a job and a life. That's the first rung of the ladder. He may open a franchise someday."

Even with more than 5,800 people helped over the past 20 years, Zink noted that there are thousands more people  living in poverty who could use an investment from Cincinnati Works, too.

The organization, she said, will be there to help them.

More information about Cincinnati Works is available online.

Lucy May writes about the people, places and issues that define our region – to celebrate what makes the Tri-State great and also shine a spotlight on issues we need to address. Childhood poverty is an important focus for her and for WCPO. To read more stories about childhood poverty, to go www.wcpo.com/poverty.

To read more stories by Lucy, go to www.wcpo.com/may. To reach her, email lucy.may@wcpo.com. Follow her on Twitter @LucyMayCincy.