Win-Win: How Employers Can Drive Socio-Economic Mobility Through Conscious Hiring

BY MARINA ZHAVORONKOVA AND JONATHAN HUI

If you are born poor in America, the way up is through a good job. Low-income workers are disproportionately minorities or women, and both groups are historically underrepresented in the middle-income workforce. More than 54 percent of African American and almost 60 percent of Latino workers make less than $15/hour, compared to only 36.4 percent of white workers, according to a 2015 study by the National Employment Law Project. Women are 46.9 percent of U.S. workers, but they make up 54.7 percent of workers earning less than $15/hour.

The government can prohibit discrimination, but it’s more difficult to affirmatively regulate hiring behaviors. Policies can tell employers that they can’t discriminate against a candidate based on gender, but policies can’t force companies to hire more women. Moreover Congress has declined to continue funding a successful subsidized work program targeted towards minority communities, passed as part of the Recovery Act of 2009. Employers have responded to this inequity – Citigroup and JPMorgan’s foundations have committed millions of philanthropic dollars towards workforce readiness initiatives for low-income youth and communities with high rates of long-term unemployment. These dollars will go into the hands of organizations that will train workers and move them towards self-sufficiency.

Yet, beyond generous donations, what job seekers really need are employers who are willing to hire them. Both Citigroup and JPMorgan Chase employ approximately 240,000 individuals, but fast-growing small businesses also play a vital role creating new jobs. So for employers both small and large looking to provide high-quality jobs to traditionally underrepresented, low-income individuals, why not accomplish this goal by revamping your own workforce at the entry level, where qualification requirements are lowest?

Here are just a few ways employers can benefit from hiring outside traditional talent pools for entry-level jobs:

Diversify the workforce. Hiring from non-traditional labor pools for entry-level positions will diversify the workforce, and a diverse workforce is not only trendy – it gives a competitive advantage. A 2011 Forbes study found that diversity drives creativity in development and execution of new products and business processes, and a 2013 Harvard Business Review study noted that employees at diverse companies are more 70% more likely to report that their firm captured a new market in the past year. Simply put, diversity forces a company to consider new ideas and grow outside of traditional operating norms. And, diversifying the workforce is easiest – and most meaningful for socio-economic mobility of job seekers – if done at the entry level, where the opportunity to shape the future workforce is greatest.

Customize the talent pipeline. In an economy where 45% of employers cite lack of skills as the main reason for job vacancies, training programs for non-traditional talent pools create a reliable, consistent pipeline for talent. In New York City, IBM launched the P-Tech school model and partnered with schools to develop training programs for students. A pipeline can also reduce recruitment and retention costs: rather than expending time and money to train new employees on the job, industry partners work with schools to train future employees through curriculum and paid internships. Not only are students better prepared academically, but employers are able to shape the curriculum to reflect the skill set they demand from their employees.

Improve retention. Non-traditional talent pools can improve retention in high-turnover positions. Wegmans, a grocery chain with roots in Rochester, New York, is known for its happy, productive employees, and is beloved by customers (as the authors of this article can wholeheartedly attest, Wegmans is the best place in the world). Wegmans is regularly featured in Fortune’s list of 100 best companies to work for – in 2005, it was number one. According to a report released by the Workforce Institute, Wegmans’ average employee retention is seven years, compared to an industry average of 14 months. The company looks outside of the traditional talent pool of employees with prior grocery store experience, and focuses instead on an applicant’s “aptitude, attitude, and corporate fit.” Wegmans then invests in training, and higher retention can improve morale and lower recruitment costs in the long run.

Utilize federal and state funds for mutual benefit. Employers, particularly small businesses, can reduce costs by leveraging extensive federal and state funding for training programs that reflect industry needs. The 2015 Every Student Succeeds Act (ESSA) allows for federal Title II funds to be used to integrate career technical education (CTE) programs in schools; the expansive Title I program further allows part of its $14.4 billion allocation to be used for high school concurrent and dual enrollment programs that can include CTE elements. Initiatives such as Linked Learning in California develop industry-specific consortia of businesses to partner with schools to lead the design of curricula. This is especially important for small businesses that might otherwise lack the capacity for their own training programs. Through participation in industry consortia, these businesses can also define their needs and work with schools to ensure that the future labor market reflects those demands.

Convinced? Here are a few ways how employers can make this happen.

Hire for potential. According to the Harvard Business Review, employers should hire for potential, not experience or competencies. This is especially true for entry-level positions. Non-traditional candidates often lack access to the same type of internship experience, networked connections, or academic credentials as a college graduate from a traditional middle-class background. Businesses must look deeper. Has the candidate successfully balanced school, work, and cared for siblings and children at the same time? Then he is organized and can manage competing priorities. Has she overcome significant barriers to finish a high school or Associate’s degree, even after periods of absence? Then she is resilient and determined.

Start with middle-skills talent pipelines in select departments. Start with IT, operations, administration, or a department with entry-level positions where employees can be trained on the job or through a partner training program (see strategic partnerships, below). Focusing on one functional area allows employers to develop a strategy for widen their talent pools, build recruitment partnerships, and assess ROI on new hires.

Build strategic partnerships with  ….non-profits. Non-profits such as Year Up and Per Scholas partner with employers to train employees from traditionally underrepresented backgrounds for entry-level internships and positions a variety of functional areas, with a focus on IT. To build the pipeline even earlier, programs such as the PENCIL Fellows Program and Futures and Options connect high school students from historically disadvantaged backgrounds to paid summer internships. Both PENCIL and Futures and Options are based in New York, but similar programs exist in almost every metropolitan area.

…Career Technical Education (CTE) programs and schools. Some of the highest costs in human capital – recruiting and training – can be mitigated by working with schools and CTE programs to ensure that students are adequately prepared when they enter the workforce. Through a strategic partnership, employers have the opportunity to define the skills they want from employees before they even enter the company. Furthermore, schools have an acute understanding of each student’s strengths and skills, providing employers with an avenue to identify candidates with potential.

…community colleges. Businesses looking to train slightly more experienced candidates can work with local community colleges to develop comprehensive pipeline programs that combine the academic rigor of postsecondary education and the technical expertise of businesses. For example, the Kentucky Community and Technical College System established AMTEC – the Automotive Manufacturing Technical Education Collaborative – a coalition of community colleges and automotive industry partners that collaborate to design college courses that meet industry needs. Employers provide pipelines for entry into the industry, while colleges provide extensive academic and technical training to prepare their students.

Employers that exercise conscious hiring and expand their source of talent can benefit their bottom line, improve workplace culture, and contribute to an equitable society.

Marina Zhavoronkova is a Master in Public Policy student at the Harvard Kennedy School. She completed a Dukakis Fellowship in Massachusetts Governor Charlie Baker’s office, where she worked on labor and unemployment initiatives and managed the PENCIL Fellows Program, a youth workforce development program in New York City.

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Jonathan Hui is a Master in Public Policy candidate at the Harvard Kennedy School. Previously, he taught social studies and directed community development initiatives, including youth employment and career readiness programs, at a public high school in Detroit, Michigan.

Photo by user Verne Ho via Unsplash.

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