A new path in addressing inequity: Community Currencies.

The New York Times recently published an article about inequality. Recent evidence suggests that the differences in income do not match measures of differences in actual skills, intelligence, personality traits. In other words, most low-wage workers are underpaid, and many of the highest-paid professionals are overpaid according to these metrics.

“The average African-American adult with a graduate degree demonstrates the same level of cognitive ability as the average person in the top 1 percent of income. Yet 99 percent of African-Americans with graduate degrees do not have incomes high enough to be in the top 1 percent.”

The authors identified several factors contributing to this inequality, including well-connected interest groups manipulating markets for their constituencies’ benefit, professional organizations blocking access to jobs by requiring credentials to perform specific tasks, and zoning boards blocking access to housing markets  perpetuating social segregation.

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Working and middle-class families increasingly lack the resources (time and money) to secure a stake in a professional field of which they may have interest and expertise. The example of a family below  illustrates these obstacles.
 
Derek is a black man married with four  kids ) with two of his kids under 6. He has an HS diploma and works in a factory; his wife works retail.  They struggle to make ends meet on both salaries. Their jobs are tenuous, with both having faced blatant discrimination in access to promotion opportunities and poor job conditions. 
 
What many people do not know about Derek is that he is an incredibly talented artist, mechanic, and entrepreneur. Artist skills are hereditary--his dad is a fine artist as is his sister. Other skills are self-taught. He learned to fix cars and can fix just about anything else by going on YouTube. He does these things as “side-hustles” to help make ends meet, through informal barter or cash transactions. The formal traditional market economy does not recognize Derek’s many assets and skills, to the detriment of Derek, his family, and his community. 
 
Some might ask why Derek did not get a formal credential in either mechanics or art earlier in life or why is he not considering this option now. I suspect that the answers to these questions are complicated. However, we do know that one of his sisters is the first in his generation to graduate from college, so perhaps college was not on his radar or he did not believe he is college material. Lack of money to pay for college was likely a factor as well. The bottom line is that taking out loans to go back to college for art or to a trade school for mechanics is not going to happen given his current life circumstances. At this point, the barriers to formal entry in these fields are too high for Derek to consider. 
 
Finding a Better Way. Local communities are looking for innovative ways for community members to earn a living that align with their skills and interests while at the same time addressing unmet needs in areas such as education, senior services, child care, and waste management. They are seeking ways to match unmet community needs with local underutilized resources. These unused resources have traditionally not been viewed as valuable in the market economy. . To address this mismatch, local leaders are developing complementary community currencies that recognize the value of  these untapped or underutilized resources,  creating a new marketplace for them. By adopting these  currencies, people can have new ways to work, obtain resources and pay for services that are woefully lacking in communities.
 
What are complementary community currencies? They are  mediums of exchange outside of recognized legal tender (e.g., federal money) that are used to pay for products or services within specific groups defined by geographical boundaries or specific, shared interests. These mediums are unregulated and increasingly are digitalized, managed by self-managed associations, usually involving a range of community stakeholders. There are many different types of currencies; they can be paper or virtual, purchased and backed by legal tender or not; used by businesses transacting with other companies; citizens transacting with other citizens or for multi-usage, interconnecting and transacting across groups.

Community currencies are often developed with a goal in mind, to help address a social problem that the market economy is failing to address. They can focus on meeting the social needs of the elderly, determining new ways for the unemployed or underemployed to have access to resources or to help address environmental challenges. Although still viewed by many as way outside the mainstream, the use of community currencies is rising nationally and internationally with more than a thousand active community currencies worldwide. The Berkshare in Western Massachusetts, and the Ithaca Dollar in Ithaca, NY are two of the best known and established community currencies in the US. A recently launched time-based currency in Pittsburgh managed by a web application and host organization (involveMINT)  provides new ways for community members to contribute to their community and area nonprofits. Proponents attribute the crises in the mainstream global economy and new possibilities enabled by information technology as the main explanations for the growth of community currency projects worldwide
 
The key to developing a community currency is to identify, catalog, and make redeemable underutilized resources and mobilize these resources to meet  unmet needs. Going back to Derek, if a community currency is developed in his locality and it is designed in part to meet the economic needs of folk like Derek that are underemployed or episodically unemployed, his art and mechanic/handyman skills would be cataloged and accessible to members of his community. He would be paid in the alternative currency by folks that wish to advantage his untapped skill set. Serving as a mentor to young people involved in the juvenile justice system with interest in art may be one way to use his skills to address a social need. Serving as a handyman to help seniors “age-in-place” might be another. In exchange, Derek would use the alternative currency to pay for needs that he and his family have which are currently not being addressed because of lack of resources. . These needs may include child care, tutoring for his youngest daughter or someone to help him drywall his basement.
 
Derek might want several questions answered as he considers participating in this alternative marketplace.

• Is it financially beneficial for him to participate in this marketplace instead of earning money on the side without paying taxes on goods and services rendered?
• Can he trust that fellow citizens will honor the community currency?
• Will there be sufficient goods and services available to him and his family  so he can use the alternative currency that he has accumulated?
• What are his  goals in this marketplace?
• Do he see  earnings in alternative currency as supplementing his  income in national money or over time, replacing a good portion of his  earnings?
• Lastly and perhaps most important, how can he be assured that  this marketplace will be around in a few years, sustainable to ensure that his investment in time and resources exchanging in the alternative community currency makes sense?

 
The latter issue is often a barrier for the adoption of community currencies. Many currencies come and go, unable to sustain themselves over time. For example, time banks house community currencies that using time as the unit of account for all exchanges, with individuals accumulating time credits for services provided to their neighbors and can use these hours to access services they and their family need.
 
Unfortunately, time banks come and go. In the UK, there have been hundreds of  times banks that started and died since time banking was introduced around 20 years ago. Researchers are beginning to identify factors that are associated with community currency sustainability. Factors include the inability to attract significant numbers of individuals and organizations, including government and anchors, to participate in the new currency exchange as well as capacity limitations on the part of communities and lead organizations in administering and growing the currency. Identified capacity limitations include the ability to attract diverse and sustainable funding; governance challenges in establishing policies for currency issuance and usage, lack of functionality of tech systems to help manage and track the currency; leadership shortfalls in strategically planning for growth and attracting necessary community partnerships to meet strategic objectives and recruiting, deploying and funding a capable workforce to help market and sustain the currency including addressing roadblocks and barriers that come to the fore.
 
Is there a role for Implementation Science to further identify the key ingredients and their intersectionality needed to effectively implement community currencies in new settings? 
 
What would organizational structures including new possible configurations, look like to promote the quality implementation of currencies and ensure high levels of sustainability? What best practices, policies, or processes can be gleaned from successful community currencies that could be adapted by new jurisdictions wishing to move forward with community currencies?
These questions will be explored in subsequent blogs on community currencies, which hopefully will spark dialogue on how communities can be best supported in experimenting with these new tools to address systems inequality.  ​

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Michael Marks

Michael Marks is a community researcher and faculty member with the Wanderman Center