Freakonomics – 538. A Radically Simple Way to Boost a Neighborhood

Intro

In this episode of Freakonomics, host Stephen Dubner explores how Discover Financial Services, under the leadership of CEO Roger Hochschild, took a radically simple approach to boost a neighborhood in Chicago. Discover’s decision to build a call center in a low-income area aimed to provide job opportunities and address the lack of upward mobility in the community. Through this initiative, Discover aimed to be an anti-racist and positive force for social change.

Main Takeaways

Creating Job Opportunities in Underserved Communities

• Discover Financial Services CEO, Roger Hochschild, attended a talk by Ebrim X. Kendi and was convinced that Discover needed to do more to be an anti-racist and positive force for social change.
• Companies often choose locations based on factors like highly educated workforce, low crime rates, and top-performing schools, which perpetuates advantages for already advantaged communities.
• Discover’s decision to build a call center in a low-income neighborhood was based on the belief that bringing jobs to an area that hadn’t had opportunity would be a good business decision.
• Discover faced challenges finding someone with both experience doing things the Discover way and credibility in the community to set up and run the call center.
• Discover spent over $40 million on the renovation, including an on-site counselor, nurse practitioner, free lunch from local restaurants, and a community center.

Impact of Neighborhoods on Opportunities and Quality of Life

• Neighborhoods have a significant impact on a person’s opportunities and quality of life.
• Moving to a more upwardly mobile neighborhood can increase a person’s economic mobility and likelihood of attending college.
• Economists like Nathan Hendren have found that neighborhoods have a significant impact on a person’s opportunities and quality of life.

Addressing Inequality and Poverty

• There is a long-standing debate about the best way to address inequality and poverty: people-based economic policy versus place-based economic policy.
• Most economists have traditionally argued that investing directly in people is more effective than investing in places.
• The role of race in determining which neighborhoods thrive is increasingly recognized.
• Jobs programs have effects beyond the individual and promote stable families and communities.

Positive Changes for the Community

• The Discover call center in Chatham, Chicago, solved a jobs problem and provided opportunities for a veteran leader with credibility in the community.
• The center is creating positive changes for the community, with employees having shorter commutes and more time with family.
• Discover is tackling higher unemployment rates for black men by rethinking recruitment policies and accepting those with criminal backgrounds.

Lessons Learned and Future Outlook

• Engaging organizations in problem-solving can lead to surprising results.
• Policies and procedures need to be examined to ensure success for employees.
• Building wealth not just through discovered jobs, but also through trades, to reflect the black community.
• Companies should experiment with hiring historically excluded populations for large positive benefits.

Summary

Creating Job Opportunities in Underserved Communities

Discover Financial Services CEO, Roger Hochschild, was inspired to take action after attending a talk by Ebrim X. Kendi. Recognizing the need for companies to be anti-racist and positive forces for social change, Discover decided to build a call center in a low-income neighborhood in Chicago. This decision aimed to bring job opportunities to an area that lacked them, challenging the traditional approach of companies choosing locations based on advantages for already advantaged communities. Discover faced challenges finding the right person to set up and run the call center, but ultimately succeeded in providing job opportunities and investing over $40 million in the community.

Impact of Neighborhoods on Opportunities and Quality of Life

Research by economists like Nathan Hendren has shown that neighborhoods have a significant impact on a person’s opportunities and quality of life. Moving to a more upwardly mobile neighborhood can increase economic mobility and the likelihood of attending college. Discover’s call center initiative in a low-income neighborhood aimed to address the lack of upward mobility in the community and provide opportunities for residents to improve their lives.

Addressing Inequality and Poverty

The debate between people-based economic policy and place-based economic policy has long existed. While most economists argue for investing directly in people, the role of race in determining which neighborhoods thrive is increasingly recognized. Discover’s initiative focused on bringing jobs to an underserved community, understanding that jobs programs have effects beyond the individual and can promote stable families and communities.

Positive Changes for the Community

The Discover call center in Chatham, Chicago, has had a positive impact on the community. Employees have shorter commutes, allowing for more time with family, and Discover is actively working to tackle higher unemployment rates for black men by rethinking recruitment policies and accepting those with criminal backgrounds. The company’s investment in the community goes beyond job creation, with initiatives such as on-site counseling, healthcare services, and a community center.

Lessons Learned and Future Outlook

Discover’s experience in building a call center in an underserved neighborhood highlights the importance of engaging organizations in problem-solving and examining policies and procedures to ensure success for employees. The company also recognizes the value of hiring historically excluded populations, understanding the large positive benefits it can bring to both individuals and communities. Moving forward, Discover aims to continue creating positive changes in the community and challenging traditional approaches to addressing inequality and poverty.

Conclusion

Discover Financial Services’ decision to build a call center in a low-income neighborhood in Chicago demonstrates their commitment to being an anti-racist and positive force for social change. By providing job opportunities and investing in the community, Discover aims to address the lack of upward mobility and create positive changes for residents. The initiative also highlights the significance of neighborhoods in shaping opportunities and quality of life, as well as the importance of engaging organizations and rethinking traditional approaches to addressing inequality and poverty.