Imagine this: Local grocers, bookshops, and bakeries – once the backbone of our communities– vanish, unable to compete with the overwhelming dominance of a few increasingly tech-driven firms. A single algorithm decimates visibility, traffic, and revenue of a local business, turning Main Street into a ghost town governed by digital arbitrage. Millions of workers are either displaced or earn lower wages and working fewer hours under the silent control of algorithms. Gig work becomes survival work devoid of benefits, rights, or dignity. Meanwhile, economic and social inequality reach historic extremes threatening the very foundations of our economy and social cohesion.
This isn’t science fiction. It is the economic future unfolding before us – one driven by a few dominant firms that use data, digital gatekeeping, and advanced technologies, shaping the distribution of opportunity and wealth across our economy. If left unchecked, this trend, propelled by the advances in AI, may soon extinguish the promise of a fair shot at economic mobility – the very American Dream that my family and I moved here for – one that remains increasingly out of reach for too many.
While this future is fast becoming our present, it does not have to be our destiny.
As the CEO of Pacific Community Ventures (PCV), my career has been devoted to empowering entrepreneurs and strengthening the fabric of our communities with economic mobility and dignity. In that work, I continue to see a powerful counterforce to the troubling trends of growing market power concentration: small businesses. From high growth start-ups to community-rooted businesses, these are not romanticized underdogs but distributed engines of wealth, economic mobility, dignified work, and innovation.
And as a co-founder of Socos Labs, a responsible AI think tank prior to PCV, I have seen firsthand that technology, when harnessed with intention, can unleash the economic potential and innovation of our communities and small businesses – transforming the economy and the future of work to be more inclusive and human centric.
And this is exactly what we have been working towards at PCV for the last couple of years.
In this, and the next two articles, I will be conveying a vision of an inclusive AI-powered economic future and the steps that PCV is taking to realize this vision.
Small businesses are the backbone of dynamism, but some worrying trends are unfolding
Doubling down on our support for small businesses, especially those from historically underserved communities, may sound idealistic at this pivotal moment for our economy and society. But it is, in fact, a pragmatic, powerful, and evidence-backed path to reclaiming and reimagining the American Dream for all and unlocking the full potential of our country and economy.
Small businesses remain the backbone of the U.S. society and economy, employing nearly half of working Americans, with two-thirds of Americans expressing a great deal of trust in small businesses, and the latest data showing their continued lead in job creation. They also play a powerful role in promoting economic mobility and generating community wealth, with much of their revenue staying within communities where they operate. Research also shows that areas with dense networks of locally owned businesses experience higher income growth and lower poverty rates. Moreover, community-rooted entrepreneurs, often deeply invested in their communities, help promote local well-being and resilience. These community-level gains translate into broader generational benefits, as Raj Chetty’s research demonstrates, with economically healthier communities yielding upward mobility outcomes for children.
Expanding small business opportunities in historically underserved communities yields especially strong economic returns. A recent Brookings analysis showed that between 2017 and 2022, the minority-owned employer businesses added $738 billion to the economy, creating 1.9 million jobs.
More broadly, small businesses and entrepreneurs help stoke market competition, generating new ideas and innovation. For instance, small businesses engaged in R&D produce more patents per employee than larger firms and their inventions tend to catalyze greater knowledge diffusion, especially in emerging industries. Though often overlooked in traditional measures, small businesses continually innovate their operations to stay competitive, attract consumers, and keep prices affordable. A dynamic, competitive small business ecosystem may also offer more choices for workers in terms of job selection.
Yet, rising market power concentration among a few dominant firms over the past thirty years, compounded by the rise of platform technologies and advances in AI, have counteracted the innovative power of small businesses. While some argue that it is not bad news for our economy due to efficiencies gained from economies of scale, research suggests that rising market concentration in our economy has reduced competition, productivity, investment, and led to weakened bargaining power and stagnant wages for workers, costing them roughly $1 trillion in lost aggregate labor income between 2000 and 2019.
The impacts of a handful of tech firms controlling vast data troves, advanced models, and computing infrastructure have been rippling through the economy with new entrepreneurs often facing insurmountable barriers to entry, small businesses that once thrived on relationships and local networks having to pay complex and increasing fees to reach customers through the platforms, and gig economy, once touted as a flexible work option, leaving many workers in precarious roles without basic labor protections. With access to top talent, large training datasets, and computational power, these firms are poised to monopolize AI, risking further harming competition and exacerbating wealth inequality.
We need to and can change course urgently, or AI could widen disparities and reduce human creativity to a commodity optimized by extraction. As Dr. Vivienne Ming aptly points out, “Almost every technology is inequality increasing because the people who are best able to make use of it are those who need it least: 99.999% of the world’s population has no say in how any of this is used. We need to think of AI as a human right, the same way we think of judicial review and access to vaccines.”
Powering the engines of our economy with technology and innovation
That is why at PCV, we strive every day to ensure that small business entrepreneurs have the resources they need to thrive, particularly as they face powerful economic headwinds from federal policy shifts and accelerating technological transformations. From delivering affordable capital and business advising to small businesses, particularly those historically excluded from traditional financing, to designing forward-looking strategies and cutting-edge tools for climate resilience and quality job creation, we work to strengthen the very foundations of our economy – that lead to national innovation and competitiveness, one small business and one good job at a time.
Our Good Jobs Innovation Lab is proof of what’s possible. We work with entrepreneurs to design quality jobs – not just any jobs – but those with living wages and benefits, stable schedules, opportunities for advancement, and a voice at work. It’s not only the right thing to do, but good business. Workers who feel valued stay longer, perform better, and help companies grow – and our “Good Jobs “employers exhibit the best financial and growth outcomes.
Now, imagine amplifying these impacts through the power of technology. PCV is one of the first community development financial institutions to extensively harness technology and AI to advance economic opportunity in bold and innovative ways. To date, we have explored or adopted the following use cases:
- By leveraging an AI-supported tool, AIKKA, we have been collecting voice-based feedback from workers and the community, incorporating the sentiment analysis findings, not easily captured through traditional surveys, into the design and delivery of our programs, sharing the insights with our small business owners to support them as employers, including the Good Jobs Initiative;
- Unlike algorithms used by the big banks to screen out “risky” loan applicants, we have joined a growing community of mission-driven leaders in flipping the script, designing impact underwriting, and now predictive models, that are not only highly accurate but allow us to deploy more impact-aligned loans faster into underserved communities. To achieve this impact, we ensure that the models are built by experts who lead in finance, engineering, and cultural competence.
- With our annual impact survey of small businesses and jobs conducted each winter, our data analytics team have been able to craft better insights into synergies between capital and advising, and to improve economic mobility among our small businesses into more predictive Good Jobs Journeys
The result of these AI-supported activities? More tailored solutions and restorative capital are deployed, leading to more small business entrepreneurs staying in the game of innovation and disruption, creating more jobs with dignity, as more communities prosper.
The next steps
AI will shape the future, as it already is our present – and PCV envisions a vibrant future economy where this technology is in the hands of communities, workers, families, and entrepreneurs, and we are stepping up to shape it through a non-extractive and inclusive AI-powered reality.
An innovative, human centric economic future augmented through equitable AI is possible, backed by data and fueled by belief made tangible through investment – if we want it.
While certain actions must come from the government, our collective action is critically urgent now. There has never been a more important time to invest in our country’s entrepreneurs and workers, our innovation and competitiveness, and the ethical use of AI. To ensure that a reimagined American Dream that allows economic mobility through the power of entrepreneurship and a good quality job is still possible, and that we co-found the social fabric we want for our future and our grandchildren’s future. Together, we can build a future that uplifts human potential and fosters economic vibrancy and social cohesion.
In our next article, I will be sharing more about how we are building an AI-powered, inclusive economy through our work at PCV, and how readers can engage.
Bulbul Gupta is the President and CEO of Pacific Community Ventures, one of the country’s first impact investing funds and a community development financial institution. Prior to PCV, she helped co-found Socos Labs, an ethical AI think tank in Berkeley, CA, and worked in the impact investing field supporting inclusive entrepreneurship and good jobs for the future of workers, in the U.S. and abroad.
