By: Alex Shohet

Entrepreneurship is the blog of Alex Shohet, who is the CEO and co-founder of the ONE80CENTER in Beverly Hills. Shohet studied system science engineering at UCLA but left college in 1984 because of his addiction to heroin and cocaine. In 1988, he entered a long-term treatment center in Pasadena where he found the path of recovery.

Would Microcredit Work in the Recovery Community?

Mar 30, 2011
Microcredit (microloans) is a financial innovation that is generally considered to have originated with the Grameen Bank. The Grameen Bank and its founder Muhammad Yunus won the 2006 Nobel Peace Prize for helping seven million people in poverty receive loans; since the founding of the bank about $6 billion has been loaned and the repayment rate is 99 percent.

What can microcredit do for the recovery community? How can it help?

Many recovering addicts have horrible credit, have ruined their professional reputation and have exhausted the support of their families. In effect, many recovering addicts start rebuilding their lives in poverty. Feeling financially hopeless and overwhelmed at becoming self-supporting, early sobriety is a minefield for relapse. Imagine how difficult it is to find a job—especially one that can alleviate years of financial wreckage—if you’ve just spent three to six months in a treatment center. I don’t think most employers view treatment as a form of higher education. (Not yet anyway. ?)

For any business owners reading this article, would you hire an addict in early recovery? What if I told a you that 40 to 60 percent of all addicts in early recovery are going to relapse?

Let’s analyze this statistic from the perspective of the employers. We’re asking them to endanger their companies to a person who may not show up for work, may use drugs or alcohol while on the job, or may lie or steal to enable their drug or alcohol use. Asking the typical employer to hire an addict in early recovery is quite an obstacle to overcome.

What about asking recovering employers? Would an employer who once was in the exact same position of being in early recovery be more willing to hire an employee in early recovery? The answer, in my informal research, is no. I originally assumed I would find more willingness within my group of recovering entrepreneurial friends to help. I assumed sayings like “one addict helping another” would extend to hiring an addict in early recovery. Evidently, it does not. 

So what does one do in early recovery for work? Is it reasonable to assume that family, friends, charities or the government are helping addicts in early recovery? Is this a problem that needs to be addressed? My experience is that addicts in early recovery find employment really, really challenging.

The National Institute of Drug Abuse reports that more than 20 million addicts need treatment. During the last couple of years, the national unemployment rate has hovered around 9 percent, or 14 million people. Unemployment rates for individuals with serious mental illness are as high as 90 percent. There are many myths about addiction but the difficulty people in recovery have in pulling themselves up by their own bootstraps is not one of them.

A study conducted by John J. Heldrich Center for Workforce Development at Rutgers, the State University of New Jersey, entitled the “The Anguish of Unemployment” sought to produce a representative view of unemployed workers' attitudes. An overwhelming majority of the survey's respondents said they feel or have experienced anxiety, helplessness, depression and stress after being without a job. Many said they've experienced sleeping problems and strained relationships and have avoided social situations as a result of their job loss. (Click here to see a copy of the report.)

At ONE80CENTER, the treatment center I co-founded last year, I watch feelings of hopelessness, anxiety, depression and stress lead addicts into relapse every day. In my opinion, unemployment contributes to relapse. 

We need a way to create more jobs for addicts in early recovery. How? What amount of money would equalize the risk of hiring an addict in early recovery? Could an organization equalize the negative effects of hiring an addict in early recovery on the competitiveness of the company by providing a microloan?

Would a recovering business owner hire a person in early recovery if they were given a
What Is Microcredit?

Microcredit (or microloans) is the extension of very small loans to those who do not qualify for traditional forms of financing. The borrowers usually lack collateral or a verifiable credit history and therefore cannot meet even the most minimal qualifications to gain access to traditional credit.

Microcredit is designed to spur entrepreneurship. Microcredit emphasizes trust building, which can enable micro-entrepreneurship which, in turn, can generate employment and help people to help themselves.
“low” interest loan of $1,000, $5,000, $10,000 or $25,000? This may be of significant value to a recovering employer who would not typically qualify for a loan.
The studies that have examined microcredit programs demonstrate that recipients of the loans create larger enterprises, experience an increase in personal income, have personal savings, and feel a greater sense of empowerment and higher self esteem.

Why extend credit to recovering business owners? What can we expect in return? What are the requirements to qualify for a loan?
  • We can require our recovering business owners and entrepreneurs to have multiple years of continuous sobriety and help them maintain their own sobriety with increased accountability to the microcredit organization.
  • We can ask our borrowers to pay back the loans with interest and participate in our entrepreneurship classes and business education programs.
  • We can ask recovering entrepreneurs to hire addicts in their first year of recovery.
  • We believe the newly sober person working for an entrepreneur in recovery would receive more support, accountability and understanding than from a traditional employer.
I believe a microcredit organization would be an effective tool for reducing some of the billions of dollars of damage that occurs every year in the United States from addiction. For information on the economic damage caused by addiction, please see this 1992 report from NIDA. I've not seen a more recent report but I'm quite sure that the fundamental economics remain the same. I'd like to be able to look back in another 20 years and and see that we were able to reverse the trend.

I welcome your comments or suggestions in the section below or by email.



Advertise with Renew

Renew Your life, Better