Leaping the True Poverty Line

This post goes out to all of my friends who run businesses or non-profits that employ poor women or men in different countries in order to improve their lives. It has one major point: we need to pay them more.

Many such programs making jewelry or bags or hats or shoes or clothes and selling them in the USA are making a positive impact around the world. I know a number of great organizations in Uganda that are using variations on this model to create life change. They’re doing great work, and I think we can do even more.

In my anecdotal research, I’ve found that most American organizations that operate this way in Uganda set salaries or wages to about 300,000 Ugandan Shillings (UGX) per month. This translates to about $130. And though this doesn’t sound like much to American ears, in Uganda this is way above the local standard.

But I don’t think it’s enough. That same UGX 300,000 is about what it takes to put one student through one 3-month term of secondary school in Uganda. So if a family has three children that belong in secondary school (a conservative number, by Ugandan standards), that entire salary is wiped out just paying for school every term. Nothing is left over for food, rent, healthcare, school fees for other children; much less saving for university tuitions or other long-term goals.

Obviously the math doesn’t work. Families need to eat, need a roof, need malaria treatment when someone inevitably falls sick. So students miss terms and whole years of schooling because of money problems.

We can do better.

There is a level of income below which any positive difference made is temporary, and above which real, transformational, generational change can happen. Let’s call this the True Poverty Line, the line between being stuck at your current economic level and having the chance to break through to prosperity.

Someone earning below the true poverty line might be able to provide some schooling and better food and occasional health intervention, but the impact of these changes is relatively small, especially across generations – the next generation is only marginally better off, if at all.

Those who earn above the true poverty line, however, can afford the big-impact changes: consistent schooling through the tertiary level, dependable healthcare, and savings to pursue future goals. These changes not only have a strong impact in the present, but their impact actually increase across generations, as a new generation of well-educated young adults brings their potential to bear on their families and communities.

If we are serious about making a long-term impact in Uganda and elsewhere, we need to be serious about where this True Poverty Line lies, and we need to cross it. Of course the exact line is different for every family depending on how many children they have, where they live, etc, but we can start by calculating an average figure based on the communities we work in, and being sure to at least hit the average.

If we do this, we will be witness not just to thankful friends given temporary reprieve from poverty, but to transformational, generational change, where families go from extreme poverty to university graduates in one generation. Imagine that future.

11 thoughts on “Leaping the True Poverty Line

  1. Good post James. These are great questions to be asking.

    I find myself in the tension between considering what this will do for the individual and what this will do for the local economy. We are probably on the lower end of salary levels among NGO’s (215,000) but we do this so that we aren’t attracting people away from other jobs that rely on the local and regional economy. I probably a bit of a “protectionist,” but i think that a lower salary job that is self-reliant or locally sustainable offers more control (greatest contributor to sustainability) than one reliant on the globalized economy. I see an importance in ensuring that salary levels are not too high to attract people out of jobs and also low enough to make the exit process do-able. This is really important in a come-grow-go (rehabilitative) model like ours.

    On average our ladies are saving 25% of their annual income which leads me to think that it’s not so much an issue of offering more income, but better education and training.

  2. Great points Adam. I think you’ve articulated a really important and industry-standard line of thought, one that I’ve adhered to for most of my time working in Uganda as well. If I’m reading it right, your response has three main points.

    1) Jobs dependent solely on the local economy are more sustainable, and therefore better, even if lower paying.
    2) Using the come-grow-go model, it’s important that salaries are near enough to local standards that when a woman’s time working directly for KKi is up, she can make a smooth transition back into the local economy.
    3) The women you work with are saving 25% of their incomes, so things must be going alright.

    Here’s how I’ve responded to these ideas for myself lately. Maybe you’ll find some thoughts you can build on as well.

    1) Globalization is here to stay, and it’s the most powerful force for economic development since the industrial revolution. I don’t think that local jobs are any longer more sustainable in the sense of being more guaranteed to feed your family in a month or a year. In fact, with the unreliable climate in such an agrarian economy, jobs tapped into the global marketplace might the most reliable ones available just now. Look at the cities and countries globally that have been transformed by the global marketplace.
    2) This is a really good point, and one that I don’t face with our model of ongoing employment. What I would encourage you on here is to check back in with all the women who have left your program after a year and two years and see what their successes and challenges are, and how you can support them and tweak the system for the future. Would longer employment be better? How about higher earnings? Check it out.
    3) On this point I’d really challenge you to do the same math your ladies have to do. Break down costs of not just living, but succeeding. How much are school fees and uniforms and books? How about at the good schools? How many kids are they sending to school? How much are families spending on healthcare, and how much would they spend if they had it? How much does it cost to feed a family healthily? And how much is rent? What happened when I started doing the math was I realized that the costs added up more quickly than the incomes, that something had to be falling through the cracks. Usually it’s school. Often healthcare too. Check it out. If the math works, it works. If not, you’ll see the way forward.

    I started asking myself the question: If the women we work with aren’t able to consistently put their kids through good schools all the way through the tertiary level, then what difference will our work have made a generation from now? The only answer I came up with was to start changing things.

  3. One of the MEND ladies is building a new home for her family with the money she’s saved from work. It’s going to be a three partitioned building, so that she can rent out the other two she won’t need and make a little extra cash.
    http://vimeo.com/24773984

  4. That Jared white is a good one.

    James you are really smart. I’ll take your challenge. I think it will be a wonderful thing to explore.

  5. James, really good thoughts…. Our program is on a bit of a different page, since we’re helping university-bound girls save for their tuition. But this is really good to keep in mind for our year-round women. A few of them have kids and the ones who don’t often support siblings through school. I definitely want Sseko to always be in touch with the expenses our women face, so I think that reevaluating pay on a regular basis is extremely important.

    I think there does come a point though when you have to ask: will the pay they make by with us ever be “enough?” We have a woman on staff that has seven children, several grandchildren, and children in her extended family that she wants to provide for as well. If we’re being really honest, even if we paid her three times the salary she is making now, it probably wouldn’t be “enough.” With some of these women, the needs seem endless. So as a company, we have to ask what our responsibility is here….

    A pivotal question that I’ve had to ask myself is this: are we basing our pay on need or on the work being done? And I had to settle on the side of labor-based pay…. Because I think that is a factor that distinguishes business from charity.

    Definitely thought provoking stuff, James… Thanks for this.

  6. Cameron, really good response. Thanks for this. You’re totally right that your business is unique in bridging the gap between Secondary and University.

    I wholeheartedly agree that, in a business especially, pay needs to be tied to productivity. In the case of many of the orgs/businesses whose work I’ve been introduced to, people are paid per product they make. So in our case, each woman we work with makes a certain number of necklaces each month and gets paid per necklace she completes.

    Most organizations cap the number of pieces that people can make at an artificially low number. So, for instance, if they get paid $1 per piece, an org might cap them at 100 pieces per month when they could easily make 200. They cap it in this way because they believe that $100 per month is a reasonable local salary, and they can employ double the people at this reasonable local rate if they cap it. They can work with 2 people at $100/month rather than one person at $200/month.

    What I’ve learned over the last few years is that reasonable local salaries aren’t actually reasonable in places where poverty is the norm. In fact they can be nearly as limiting in the long term as more desperate looking forms of poverty. I’d rather the one person make $200/month and be able to afford more opportunity, such as better and higher levels of school for their kids, and better healthcare. Because only then will things change generationally.

    I think you captured it really well when you said as companies and organizations, we have to be in touch with the expenses our women face. That’s the key.

    And I agree as well that it’s unwise to take it upon ourselves to pay each person according to their need. What I’m suggesting is that we strike a new, higher average that will give more people the chance to achieve greater change – university, entrepreneurship, etc.

  7. Adam, thanks for your thoughtful responses, bro. I really appreciate being on this whole social entrepreneurial journey with you.

    And Jared, thanks for setting a new standard in comments/hour :)

  8. I totally agree with what you’re saying about limiting workers’ earning potential- that shouldn’t be happening. If someone can work hard enough to earn a certain amount, they should be rewarded, not capped. Really good point!

Leave a Reply

Your email address will not be published. Required fields are marked *