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Schmidt, Michelle Cranwell

MPA Program

2006

M.P.A.

This thesis reviews literature on microenterprise development (MED) in the United States and Vermont, the impact of these programs on clients, and factors that affect client success. Based on Carol Weiss's (1998) model of program theory, this thesis attempts to understand what leads to client success in MED programs and develop a model of program success theory, specifically looking at the effects of client characteristics, short-term program outputs, state welfare legislation, and welfare and MED agency relationships, on clients' achievement of longer-term success through selfemployment. This thesis uses a mixed methods approach and data triangulation, incorporating quantitative data from clients of the Vermont Micro Business Development Program (MBDP) and qualitative data from staff at the management and policy level at MBDP and the Vermont Reach-Up Financial Assistance (Reach-Up) welfare program. A path regression analysis is conducted with data from 302 MBDP clients to examine the relationships between client characteristics, program activities, interim outcomes, and impacts. Model fit statistics demonstrate excellent model fit to the data. The model showed that improved personal well-being was related to access to more sources of capital, being partnered, and being younger, and mediated by course completion. Business start was related to not receiving food stamps, access to more sources of capital, and mediated by improved well-being. Experiencing an increase in annual household income was predicted by clients with previous business experience and those who also experienced an increase in assets. Increased income was also mediated by improved well-being and having started a business. Reduction in public assistance was related to course completion, more sources of capital, not being in poverty, and increased assets. Increased assets were related to more education, not being in poverty and more sources of capital. Being older, having more sources of capital, a larger family, and improved well-being led to creating other jobs. Overall, access to more financial resources enabled clients to meet personal and business goals and work towards selfsufficiency. The results suggest important implications for public policy regarding client access to capital through alternative lending sources. Through interviews with Vermont Reach-Up district managers and MBDP coordinators, this thesis also presents staff perspectives on self-employment as an option for Reach-Up recipients. Client characteristics influence self-employment viability, including strengths, barriers, length of time on Reach-Up, and location. Reach-Up managers are supportive of self-employment for clients, yet support can be inhibited by the need to get clients off of the welfare system as quickly as possible. MBDP staff noted receiving various levels of support for self-employment from Reach-Up staff, with level of support and frequency of client referral linked to the level of personal relationships established. Interviews suggest that Reach-Up district managers are possibly more supportive of self-employment as an option for clients than case managers. Vermont legislation is supportive of self-employment, however time limits within work phases potentially inhibit self-employment. The federal "work first" philosophy and use of federal minimum wage to determine welfare benefits have negative impacts on selfemployment. Suggestions for improving agency relationships, communication, and education, and recommendations to simplify and change legislation to further support self-employment are discussed.