National Evaluation of the Welfare-to-Work Grants Program: Final Report. Analysis of Economic Development in Indian Country (Hillabrant, Earp, Rhoades, and Pindus, 2004)

09/01/2004

American Indian tribes and Alaska Native villages have embraced the goals, objectives, and programs associated with welfare reform, but the lack of jobs threatens the success of tribal programs such as TANF and WtW. Recognizing the scope and importance of this problem, the federal government has promoted business and economic development (BD/ED) in Indian country. This last component of the tribal study examined: (1) examples of BD/ED activities and the federal initiatives utilized by a convenience sample of eight tribes and two Alaska Native Regional corporations, (2) the legal, historical, and cultural context of tribal BD/ED, and (3) the challenges tribes/Native corporations face in pursuing BD/ED, as well as the promising approaches they are developing to minimize or overcome them.

Every tribe/Native corporation in the study benefited from one or more federal programs promoting BD/ED; however, no single program/initiative was especially beneficial to all tribes in the study. The most helpful were gaming, USDA rural development programs in combination with the Empowerment Zones and Enterprise Communities (EZ/EC) program, and the Small Business Administration 8(a) and HUBZone programs. Some tribes identified the Indian Gaming Regulatory Act(5) as the federal initiative with the greatest impact on their BD/ED. In 2001, 201 of the 561 federally recognized tribes had gaming operations, with total revenues of $12.7 billion. While gaming has transformed some tribal economies and provided a stimulus to others, most tribes do not participate in gaming operations and some that do participate have been unsuccessful or have produced only modest profits.

The tribes/Native corporations in the study have developed a wide range of BD/ED activities that build on their natural resources and other favorable conditions  for example, location near such tourism and recreation attractions as national parks and monuments. These tribes have developed businesses in the service sector (gaming, tourism, banking), manufacturing, farming, natural resource management and development (mining, forest products), and more. Two tribes in the study have experienced significant success, transforming their economies, creating jobs, and dramatically reducing unemployment and poverty on their reservations. Another gradually developed a diverse and strong economy and has achieved one of the lowest unemployment rates (10 percent) in Indian country. Other tribes, often using innovative and aggressive BD/ED planning and operations, have developed new businesses and industries and created jobs.

Yet despite some notable successes in the area of economic development, the number of jobs created and the wealth produced in Indian country continue to be outpaced by the large numbers of tribal members who lack employment and live in poverty. Many Indian tribes and Alaska Native villages experience levels of unemployment exceeding 45 percent, and levels of poverty exceeding 36 percent. Study participants in seven of the eight tribes and one of the Alaska Native corporations in the sample reported unemployment rates exceeding 45 percent  with the highest at 80 percent.

The study participants identified four critical challenges to their BD/ED efforts: (1) legal and administrative barriers such as zoning regulations, tax policies, and/or incomplete commercial codes, (2) pressure from elected officials or tribal stockholders on business activities that is inconsistent with long-term planning and investment, (3) lack of investment capital (debt and equity financing), and (4) poor coordination of business-related activities within the tribe and with neighboring cities and counties.

Endnotes

(1) Public Law 104-193, section 103, August 22, 1996.

(2) Public Law 105-33, section 5001, August 5, 1997.

(3) Public Law 102-477, 1992.

(4) For example, facilitating the use of state TANF reporting systems by tribal grantees could make the required quarterly reports easier to compile. In addition, waivers or other procedural changes could facilitate participation by tribal TANF recipients in state-run Food Stamp, Medicaid, and SCHIP programs.

(5) Public Law 100-497, 1988.

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