Why addressing low-income poverty is good for business
Hiring practices, wage policies and affordable, quality products that meet the needs of low-income populations can influence this unrelenting social issue. Read More

For the first time in decades, NGOs, foundations and mainstream media are speaking optimistically about the end of poverty. Between 1990 and 2010 over 1 billion people lifted themselves out of poverty, an upwards-social mobility that Bill Gates argues has “completely redrawn the global picture of poverty.” While abject poverty, defined as living below $1.25 a day, might be on its way out, the increase in low-income poverty and inequality is changing the conversation about what it means to be poor.
Low-income poverty does not mean lack of access, but otherwise lack of access to quality. It does not mean being on the lowest rung of the socio-economic ladder but otherwise being unable to bridge the continuously widening space between low-income and middle class. As low-income poverty continues to be an unrelenting social issue, the business community will be pressed to interact with and account for that population for the following reasons:
Low-income populations are a company’s employees. Addressing poverty among a company’s employees requires changing a company’s wage standards, developing individuals’ capacities and increasing benefits. Proactively doing so increases productivity and has reputational benefits; abstaining is a material risk. Some companies, such as Gap, have increased their minimum wage, while other companies, including Apple, GM and Ford, have committed to redesigning their hiring practices to avoid discriminating against the long-term unemployed. Starbucks has been particularly proactive on this issue, providing employees with decent wages, stock and retirement benefits, and healthcare.
Low-income populations are consumers. Low-income populations have purchasing power. Even if it’s marginal, how and what low-income populations buy affects a company’s bottom line. While it is an unfortunate reality that low-income populations have, in the past, been forced to buy less expensive, lower-quality food, medicine and life necessities, trends suggest that this is changing. A new partnership between City Harvest, NYC health officials, and Cash and Carry (a wholesale warehouse in the Bronx) for example, is bringing healthier food to New York City bodegas, which often service low-income populations. Similarly, governments in India and South Africa are invoking their right to use compulsory licensing to bring down the cost of medicine for their populations. Companies have a choice — they either can improve the quality and price of the products they offer to low-income populations or they can risk losing an important consumer segment as better alternatives emerge.
Low-income populations are the new supply chain. Supply chains are changing. Once defined by labor abuses and lack of career prospects, supply chains are now expected to be workplaces with human rights standards, career development processes and wages that allow for decent living outside the factory walls and farmlands. As access to the Internet increases, supply chain workers are realizing that they have choices and rights beyond a minimum wage. In China, workers are demanding better benefits, wages, and working hours. In farming regions, the children of farmers are choosing to urbanize to find better career prospects that will move them out of the cycle of poverty that often plagues farming generations. To ensure continuity of product supply and labor, companies must work to build capacity, favorable workforces, and career progression programs that will retain employees. Furthermore, increasing career prospects and wages in a company’s supply chain has proved to be financially profitable. Impactt’s Benefit for Business and Workers recently conducted a study on the impacts of higher wages among factory workers and found that increasing pay leads to an 18 percent gain in efficiency and reduced absenteeism by 34 percent.
Low-income poverty always has been a social issue but has often been overshadowed by the prevalence and devastating effects of extreme poverty. Whereas eradicating extreme poverty lay in the hands of NGOs, governments, foundations and aid organizations, eradicating low-income poverty can be most deeply influenced by business. Companies can change their hiring practices and wage-policies as well as develop products that are affordable, high-quality and meet the needs of low-income populations.
Beyond benefiting society, helping bridge the equity gap just makes good business sense.
Top image: Bangladesh garment workers at a Dhaka factory by Primenews.
