The Mindful Marketplace with Joel Skene

Addressing Income Gaps with Ownership Initiatives

• Joel Skene / Sibley Simon

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Can employee ownership change the game in addressing income inequality? Discover how this transformative approach can lead to better wages, improved working conditions, and enhanced company performance as we explore the growing challenge of limited wealth-building pathways in America. Drawing insights from a compelling Forbes article and economic forecasts, we delve into the cautionary views of experts like Albert Edwards, who warn against market complacency, prompting a search for alternative investment opportunities outside Wall Street. And don't miss the inspiring story of Dakin Kramer, a fifth-grader whose heartfelt initiative raised over $7,000 to clear his classmates' lunch debts, underscoring the power of community support.

As we shift our focus to the severe housing crisis, particularly in California, we confront the daunting need for over two million additional homes just to match the national per capita average. The staggering housing costs have far-reaching consequences, forcing young adults to live with family and complicating hiring for local businesses. Join our conversation with Sibley Simon from New Way Homes, as he introduces innovative solutions for providing affordable housing while offering returns on investment. We also tackle the intertwined challenges of social safety nets and historical racial discrimination in housing, advocating for equitable solutions that bolster community growth. This episode promises a comprehensive exploration of how community-driven efforts and local investments can foster sustainable change and economic resilience.

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Joel:

What if investing in each other could change the world? I'm Joel Skeen with bizradious and this is the Mindful Marketplace. Welcome, welcome to another edition of the Mindful Marketplace here on Biz Radio US. I'm your host, joel Skeen, if this is your first time with us. On this program, we talk to the entrepreneurs, advisors, industry leaders, investors and economic experts who are questioning the assumption that there's just one bottom line. It's where we learn how to connect our money and businesses to our values, our community and ourselves.

Joel:

Today I'll be talking with Sibley Simon from New Way Homes about how they are solving the housing crisis with community investment. But first the balance sheet the assets, liabilities, debts and investments. Okay, first, in the assets column, I want to talk about an article in Forbes about how there's a growing problem of limited pathways for Americans to build wealth and assets. Income and wealth inequality in the US are at unprecedented levels, with the top 1% controlling more wealth than the entire middle class and low-income Americans owning just 3% of the country's wealth. But many see new alternative models for ownership as a pathway to wealth creation. Social innovators are leading efforts to promote employee ownership. Ownership, as opposed to just higher wages, enables the accrual of equity and wealth over time, providing more control and choice, for example, research has shown in the article. It talks about how employee-owned businesses lead to better wages, working conditions and company performance overall. Expanding ownership could be a force for adjusting the economy to allow more people to partake in economic growth, potentially overcoming some of the wealth gap issues that we talked about. However, it talks about how achieving this goal will require a significant capital to facilitate employee buyouts, provide low-interest loans and compete with private equity firms. The public sector can play a role through policies and incentives that support the ownership economy, but there are innovators who are guiding the evolution of this economy, emphasizing social enterprises and community development. So if you're interested in this anything we talk about in this show I think you're going to get a lot out of this article.

Joel:

Expanding ownership and wealth building opportunities has broader political support than efforts to expand social welfare. It aligns them more with the American values of equality and opportunity. So in the liabilities column, I do want to hit on the Wall Street boom and bust cycle. So you know there are a lot of economic forecasters that have shifted from predicting a recession to predicting more optimism. But this article in Money Watch talks about how, despite the positive outlook, some experts, such as Albert Edwards, are cautioning against complacency. They argue that while certain economic indicators, such as non-farm payrolls and GDP, have been strong, other less prominent readings, like the Chicago Fed National Activity Index and Consumer Confidence Surveys, paints a more concerning picture. The discrepancy suggests that the economy may not be as robust as the official data indicates. Additionally, there are concerns about the level of complacency in the market, reminiscent of the period before 2007, when the global financial crisis happened. Even bullish market strategists are becoming uneasy about the exuberance in stock markets, as evidenced by a high level of bullish sentiments among individual investors. The article also mentions the recent performance of the main US stock indexes, which are traded mostly lower after hitting record highs.

Joel:

Given the uncertainty and caution expressed by some experts regarding the economy and stock market, many people are looking for alternative ways to invest their money outside of Wall Street. This search for alternative investment opportunities may stem from concerns around the potential risks associated with traditional stock market investments, especially in light of the warnings about complacency and the historical parallels drawn to the period before the 2007 and 2008 global crisis. Investors may be exploring other options like real estate, commodities, bonds or local and impact investment vehicles that are less correlated with traditional Wall Street boom and bust and that are not solely reliant on the performance of the stock market. That may be a strategy for a lot of people is that individuals are considering to mitigate potential risks and capitalize on opportunities in other sectors of the economy, like their own local economy.

Joel:

All right, in the debts column I have somewhat of a heartwarming and also kind of heartbreaking story of a Dak and Kramer, a fifth grade student from Blue Springs Missouri. Heartbreaking story of a Dakin Kramer, a fifth grade student from Blue Springs, missouri. He's captured the nation's attention because he set out to raise a few hundred dollars to help pay off his classmates lunch debt, but his efforts actually far exceeded his initial goal. This is a, you know, incredible young kid. Though his determined, through his determination and compassion, he managed to raise an impressive $7,370, completely clearing any negative lunch balances for his fellow students and even having a surplus left over. This kind selfless act resonated with people across the country. Donations poured in from various states with amounts ranging from $50 to up to even $1,000. The fundraising efforts not only alleviated his school lunch, the school's lunch debt, but also garnered heartfelt messages from his schoolmates families expressing admiration for his exemplary character and his ability to inspire both children and adults to do good for others.

Joel:

However, the heartwarming story does shed a light on the prevalent issue in America, which is school lunch debt. Many families struggle to afford school lunches for their children, leading to accumulating debt that can place a significant burden on both the students and the school. Dracken's actions highlight the impact of the financial strain and the importance of the community support in addressing it. His success in alleviating the lunch debt underscores the need for a sustainable solution that ensures that no child goes hungry or faces financial hardship due to school meal expenses. Dracn's remarkable initiative not only exemplifies the power of compassion and generosity, but it also serves as a reminder of the ongoing challenges faced by many families providing basic necessities for their children. As Dakin, you know, contemplates his future effort in the transition to middle school, his story serves as an inspiration for communities to come together and support initiatives aimed at alleviating school lunch debt and ensuring that every child has access to nutritious meals without the burden of financial strain. And as a reminder, in order to help combat the debt crisis, my insurance agency, skeen Financial, is providing all listeners of the Mindful Marketplace with a free, customized report on how you can best eliminate debt, based on your unique situation. This report has helped individuals, families and small businesses eliminate their debt, including mortgages, in nine years or less without spending any additional money. So you can get your free customized report on how to get debt-free by going to SkeenFinancialcom and, lastly, in the investments column.

Joel:

So I wanted to talk a little bit about an op-ed in Nonprofit Quarterly. The op-ed highlights unique motivations and challenges faced by Black-owned businesses, emphasizing the importance of freedom, financial stability and the role of collective action in their entrepreneurial journey. It discusses the contrast between the venture capital approach and the foundation of success for Black black owned businesses, emphasizing the historical significance of collective action within the black community. It also delves into the context of the quote black tax and how black owned businesses rely on community support in the face of unfair practices and policies. The piece provides a lot of historical and contemporary examples of how collective action has been crucial for addressing injustice and discrimination, ultimately underscoring the vital role of community support overcoming strategic discrimination. So it also talks a lot about how investment the tides are changing and how there is more collective involvement, collective action, on the investment side of things.

Joel:

So really interesting, really interesting article. Check out that and that'll do it here for the balance sheet the assets, liabilities, debts and investments. All right, I am excited to get to talk with sibley simon of new way home. Sibley, welcome. Thanks for getting to be on the show here today.

Sibley :

Thank you so much.

Joel:

I'm excited to be here, yeah, yeah, really glad to have you. I you know. I think I want to start by asking a little bit. I know New Way Homes is really doing a lot of work to solve some of the housing crisis issues that we've talked about on this show and you know that we've talked about. You know that are just being talked about kind of all over the place.

Sibley :

But first, I guess you know I'd like for people to get to know you just a little bit and I come from farming families that were always doing new things. But then I started a couple of software companies. So I was in tech as a founder and learned a ton through that but really wanted to move my work to something that mattered more to me fundamentally and it was more, a little more based in my own community. So I felt a little burned out after 14 years of working really hard on software startup stuff. It took some time off, had a kid got volunteering. A lot One thing led to another and I started.

Sibley :

I joined the board of the local organization that focuses on addressing homelessness helping families and individuals exit homelessness and was really inspired by leaders there that we needed to change a lot in our system to make better use of resources to help folks who have been long-term homeless get all the way out. Once someone's been homeless for a while, they tend to stay that way a very long time and then die on the streets, and so those folks were being very poorly served by the hodgepodge of a patchwork of social safety net things we have, you know, in the US and that there are cost effective solutions, and so we were learning from elsewhere got into that. We were taking a very business approach of how do we be cost effective and just get more people out of homelessness every month, track it, find the bottlenecks, improve it, you know, change how uh resources are spent, etc. It was all great and again learned from what was working in other parts of the country, had goals and we really hit a ceiling in our county. Uh, 12 people a month or so is what we could collectively get out of long-term homelessness. And the ceiling was really about the bottleneck we couldn't move the needle on was housing, and and so that was a that was one I was like just how do we get some housing, you know?

Sibley :

And then, even when we could pay for it, we could get vouchers, you know, to help someone as they improve their life, get back on their feet. We could pay for the housing, but we'd be competing against 100 people that show up for one apartment, you know, including school teachers, everybody else in our community, and then I see the social services workers who are providing the services to help change someone's life. Who's in that position? And we would have these discussions on the board. Are we employing people into homelessness, folks who are providing these services, you know, who themselves are not getting paid enough to live in really expensive communities in coastal California, you know, and when I learned about a social services worker who was living in a van, I mean it was just like you know. This is a complete disaster for our community. And realizing that climate change goals, you know, health care, all this stuff comes back to housing, so I was just like that's got to be the thing that I want to try to work on. What can we do?

Joel:

Well, you're definitely right about about that point there about service workers, you know, people who are doing the social work and doing the case management. That's where I started. My career was in case management of chronically homeless folks, people who had been homeless for at least a year, and I just remember being in a similar situation where, you know, I wasn't even making 30 grand a year and I had to, like you know, live in Ann Arbor, Michigan, the pretty nice like town, and also the other thing that you mentioned about the competition among for the housing themselves. We would. That was my direct experience. I had a caseload of about 20 clients who were all vying for three or four, maybe five housing vouchers, and so it was really different.

Joel:

We had to we were in an unfortunate position of scarcity to try to figure out okay, how do we pick? Which person is, you know quote unquote worthy of this home, when in my mind, they you know they were much better at getting jobs and, you know, working on their mental health and working on their substance abuse issues once they got that housing. But you're right, there did seem to be that same kind of wall there. It's been 10 years or no, probably 15 years since I've done that, though, I'm curious what you've seen when it comes to the problems of housing. I live in a town where there's a lot of workforce housing issues. There's also a huge homelessness problem, I guess. What do you see as being some of the biggest problems around housing from your perspective?

Sibley :

Yeah, thank you, and what I was describing for me was 10 years ago and now I've spent a decade fully diving into this challenge and I just open any conversation with saying that I see there being three separate housing crises in our country and large parts of our country, and one is supply. There are just not enough homes and there's even a little bit of mythology around like, oh, if there weren't so many vacation homes or Airbnbs and you can have one little place where that's kind of true, but in general that's not the issue. There just are not nearly enough homes, and so California is the biggest area, that's the worst off. But there are many other places in the country where that's true. But a stat that illustrates is an example. You take the entire state of California. We would need over two million more homes to have the same amount of housing per capita that the rest of the United States has. So that's why housing is even more expensive in California, because we're auctioning it. We don't have enough. It's a scarce resource. There's literally not enough for the people who live here Everybody, you know people double, tripled up. The majority of adults under the age of 34 are living with their parents or family members, you know, et cetera. So we've already done all that kind of mitigation measures and we're auctioning it off and it keeps getting more expensive. So you know, scarce good price goes up and plenty of other places in the U? S where that's happening. So that's the supply, like we actually just need more homes.

Sibley :

And second is that social safety net which we were both referring to, that everywhere in the United States there are at least some folks who can't afford any safe housing to live in and so that's a again a social safety net. And it's very hard to get into a better economic position. You may need other things as well, but you have to have a safe place to sleep and live in order to deal with other issues or get employment and keep it, et cetera. So that's a social safety net problem. We have that at a very low income, extremely low income end.

Sibley :

And the third is racial equity and housing is one of the areas in which there's been the most historical discrimination in our country.

Sibley :

That's what we call segregation right, but there are still many effects from that, from the literal redlining that happened, and many of those are still in place today. There are many, many places in the United States where the property tax is higher per, say, $100,000 of home value in places that were redlined than places that were not, because of formulas that are still in place that don't say that, oh, this is a minority neighborhood or neighborhood of color, but it still is, and the formula makes it more expensive on property tech. That's just one, many examples. And so often then, as sometimes you get solutions to the supply problem, which is a bunch of housing getting built in somewhere that is disproportionately displacing a community of color that's the gentrification challenge, and that's not always the case, but it can be the case and then you say, oh, you're solving one of these problems. You might be making one of them worse. You really got to look at all of it together.

Joel:

Yeah, how do you feel like the business communities kind of come into that equation? Do you see an opportunity for sort of the business, local business communities in general to you know, kind of invest in their own communities but also in effect investing in themselves in the long run? Obviously, if there's a stronger community around them, there's more people to you know support their business. Yeah, I'm curious your perspective on that.

Sibley :

Tremendously. So it literally was at a board meeting yesterday of the Santa Cruz County Business Council and there's no question that, broadly speaking, you know, local businesses here see housing as their number one issue because it's very hard for them to hire and retain staff because of the housing costs. Hard for them to hire and retain staff because of the housing costs, hard for them to pay enough for that, and then customers affected by that as well, this amount of disposable income people have, et cetera, et cetera. So there's a business group that has come together and unequivocally support solutions to the housing crisis. Some businesses have the ability to make a financial investment, some don't, and we'll talk later about how we've engaged with that.

Sibley :

But there's no question the business groups and communities and individual businesses coming together because a lot of the supply problem comes back to political issues and the reason it's worse in places you know the reasons a number of places in our country are not nearly as good at creating housing as they are creating jobs is because they put land use policies in place that empower people who live in local neighborhoods, who just don't fear change, don't want things to change, don't want a building to be built down the street, worried about parking, traffic, views, whatever, and they're empowered to just stop it from happening. And businesses can help stand up and say no, but we need this. Let's do it thoughtfully, let's plan for it and then actually do it to provide that balance. Actually do it to provide that balance.

Joel:

Yeah, and it seems like what your guys' approach, which is what I'm really excited to get into in part two of our conversation here. For those of you listening out there, this is going to be a two-part conversation with Sibley and in the second half we're going to get more into exactly how New Way Homes is actually allowing. Earlier, when I mentioned people looking for alternatives to Wall Street investing and looking for ways to invest their money in their local communities, how there's actually ways where you can earn a return on your money but also be investing into affordable housing for your local community. Sibley, is there anything that you can kind of tease us with that as far as just in the next kind of minute or so about what that's meant?

Sibley :

Yeah, absolutely. That's the cornerstone of what we're doing, because the whole reason I got into this is because I did some spreadsheets and realized, well, we can build a housing that's more mixed income, that's affordable to far more folks and return some money to investors. It just doesn't provide the super high returns that a national equity fund, who sees each project as a very risky, that they want to seek, and so we don't have to rely on public funds that are grants for affordable housing. That's great, but there's not enough of it to solve the problem. So that's out there. We don't want to compete for that. It all gets used. There's another model and that's what we're. That's what we set off to create and are having real success with is doing exactly that.

Joel:

Yeah, I'm excited to dig into that. So make sure to tune in next week here on biz radio us on Tuesdays when we air. You can also make sure to subscribe. That's one of the best ways you can help. The efforts that we have here on the show is to subscribe. Leave us a review on Spotify, on iTunes, on Stitcher, iheartmedia, anywhere you get your podcasts, youtube we're now up on YouTube as well. So subscribe, leave us a like and a comment, engage with us and tell us what you think. And in the meantime, make sure to check out newwayhomesorg if you want to learn more about what they're doing. And until next time, remember we are each other.