Microenterprise Versus The Labor Market Among Low Income Workers

Microenterprise assistance programs have gained rapid attention in the United States in recent years as one strategy to promote the economic well-being of poor households. The number of programs in the United States has risen steadily (Severens & Kays, 1997) and federal support for microentrrprise initiatives has continued to expand (Meyerhoff, 1997). Among other things microenterprise has been proposed as a strategy for promoting job creation and self-sufficiency (Benus, Johnson, Wood, Grover & Shen, 1995; Raheim, 1997), as an anti-poverty strategy (Balkin, 1989; Banerjee, 1998; Clark & Huston, 1993) and as an alternative to welfare (U.S. DHHS, 1990). Research suggests that microenterprise may increase economic opportunity and improve economic outcomes for a sub-group of the poor. While research is growing and we are beginning to get a picture of the possible outcomes of microenterprise, there are a number oflimitations in the current research. With few exceptions (Benus, et. aI., 1995), most studies are cross-sectional in nature, lack control or comparison groups, and are primarily descriptive. Because research is limited, it is unclear whether microenterprise assistance programs are resulting in improved economic well-being that would not hav