DIFFERENT APPROACHES TO YOUTH SUBSIDIZED EMPLOYMENT

Paul McLain-LugowskiApril 13, 2012

2012 National Transitional Jobs Network Conference – Baltimore, MD

◦ Employment subsidies are being cut; terms are tighter (smaller subsidies for shorter periods of time)

◦ All at a time when more people than ever need transitional employment, their barriers to employment compounded. Our appetite for locking people up creating just one

of many barriers

◦ Churchill to his Generals: Gentlemen, we’ve run out of money; it’s time to start thinking …

◦ Why transitional jobs? Teach the fundamentals of employment – learn work

by working – in a safe and supportive environment.

◦ Prerequisites to successful employmentthen

◦ Talk about some employment subsidy models

What’s more important – the subsidy, or the preparation of the individual to be subsidized? Client preparation should be the focus. After all, if the investor in employment subsidies has a good experience, more investment is likely; if not, the opposite will be true.

Who are we preparing for the job market?

Many have grown up around – ◦ Generational poverty◦ Few know the meaning of independence, or its

value; they have come to depend on: Government, for basic needs Housing Food General Subsistence

◦ Correctional system has created dependency: Incarceration rates more than tripled in the US since

1980 (not just increased with population growth) 60-80% recidivism rates (so, once in, can’t get out)

◦ A range of addictions, crippling to employment opportunity.

◦ The result of such dependency is devastating to the individual, their families, neighborhoods, and our economy. People are unemployed

Lack work ethic, attendance expectations, or relational skills Don’t pay taxes Don’t pay for groceries (SNAP) Don’t pay for child care (TANF, HS) Pay minimally for housing (Section 8) Lack the skills to repair and maintain their homes Don’t complete high school Don’t go to college (one zip code in Fresno with only one college

graduate)

Fractured families ◦ Lack of 2-parent homes◦ More specifically, lack of caring, involved fathers

Majority of single parent homes headed by a female According to the census, the absence of fathers is

most profound in African-American families – just 33% are in 2-parent homes.

US Dept of Education research points to a clear connection between father-absence and child discipline issues. 24 million children live apart from their biological fathers

2/3 Black children 1/3 Hispanic children

Few role models ◦ The Princeton Ford story

Anger, no personality – 6’5” 280 lbs Operating engineers presentation

Why Princeton? (Uncle) Airport meetings from a CAT! Princeton, the husband, father, homeowner,

Financial Planner Oh, and he’s nutrition-aware

No more Where’s the grease?

So, what are the pre-requisites?

◦ Education Remedial support, tutoring Study skills

◦ Life skills (soft skills, the hardest kind) Take nothing for granted – some of the less obvious

Driving habits Dress and deportment Financial literacy

Use of banks not payday lenders, or pillow vaults Establish credit, not RTO accounts The $400/month living room set

Fitness Energy levels

Rest Home maintenance, a health home

Reduce asthma Cleanliness, to reduce illness

◦ A mentor – the key We all have mentors, friends, colleagues that help us

identify our life and career goals, advise us, and give us the confidence to achieve them.

Government subsidies ◦ OJTs◦ Try-out employment◦ Tax credits for hiring in empowerment, enterprise

zones◦ Volunteer programs such as AmeriCorps◦ Internships

Year Up (Gerald Chertavian)◦ Works with major firms on Wall Street (Google,

Cisco)◦ Firms pay a wage, plus premium to Year Up to

get screened candidates for a year’s employment

◦ Again, participant preparation is the key to this model, as are the relationships Chertavian built while he was on Wall Street

◦ Chertavian started the program after he bonded with a foster child that drove home for him the importance of a framework in which preparation for employment occurs.

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More Wall Street◦ Social impact bonds (new source of capital with

higher accountability standards) Investors provide working capital to programs

delivering a social/economic service If the service meets its predetermined performance

metrics, the government repays the investor, plus profit.

When it works, everyone wins (participant gains employment skills, the investor gets a return on investment, and the public sector realizes a net savings on the cost of the public service)

◦ Tracy Palandjian of Boston-based Social Finance sites a number of risks associated with SIBs, among them Unreliable and unverifiable data – were metrics met? Inability of government to meet its repayment

obligation. Absence of private investors (her firm had not yet

signed up any investors)◦ She didn’t mention willingness of the government

to outsource solutions to the private sector, and other labor-related issues.

◦ In California, SB 678 (2009 – Leno and Benoit) the Community Corrections Performance Incentives Act In the first year:

23% reduction in probation revocations (probationers returned by counties to state prisons)

Resulted in savings of $87.5 million which was shared by the counties with the lowest non-revocation rates.

In Fresno, at EOC: $3 million grounds maintenance business Demoing old, and installing new playground structures

to meet safety codes Weatherization crews Janitorial – risks (security) Commercial kitchen operations

6,000 meals a day Competitive Razor-thin margins A volume business

Transit sytems (also very competitive, pricey) 150-vehicle fleet Cargo (food) Head Start Children TANF participants to work

Still need a subsidy in many cases ◦ Our YouthBuild crews saved the contractor about

5% Cost of goods and services plus training factor plus

case management and support costs

Salvation Army does this well in Fresno Virtually all their employees are program graduates

Bank partnership in homeownership ◦ Proposal – HOME Partnership ◦ Supporting employment through housing and

family stability

Bikes, yes bikes…and Brokerage Accounts!◦ Purchasing bicycles for youth through returns on

equities ◦ Why bicycles?

Address fitness and obesity Means to get to work Affordable

Saves on fuel, vehicle maintenance, insurance, license Develop will, determination, discipline Competition Team orientation Family bonding Teach maintenance concepts Spur adventure (mountain biking)

Photo by Opacity and used by Creative Commons

◦ Why the capital markets? Government money is drying up Teach youth investment concepts

Ways to make money in the equity markets regardless of cycles Options Bonds Contrarian funds Blue chip dividend stocks, REITS, and mortgage-backed

securities Dollar cost averaging Value investing (buying right) Investment in life essentials: energy (fuel), housing,

health, financials, materials and metals, water, technology, emerging markets

Youth need to know that wealth is almost always a function of regular, disciplined investment, not the amount of one’s paycheck.

Capital markets seek innovation, are Motivated by profit Respond to the consumer Unlike the government, the produce something!

Interview with three corpsmembers (supports our theories)

◦ Importance of the family, positive role models, mentors

◦ Development is not in a straight line Importance of a second chance (one came back after

three years, under strict conditions) Importance of a fully supported transitional job The constant allure of big, easy money Development is fragile, peer pressure intense

◦ Development takes time … a lot of time. Even under the best of circumstances!

◦ Confidence and self esteem They all wanted to stay in transitional employment

as long as possible even after they had acquired sufficient skill for the marketplace (those “hard” soft skills)