DIFFERENT APPROACHES TO YOUTH SUBSIDIZED EMPLOYMENT

Paul McLain-Lugowski April 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, weve run out of money; its 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 employment

then
Talk about some employment subsidy models

Whats 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, cant 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

Dont pay taxes Dont pay for groceries (SNAP) Dont pay for child care (TANF, HS) Pay minimally for housing (Section 8) Lack the skills to repair and maintain their homes Dont complete high school Dont 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 65 280 lbs Operating engineers presentation
Why Princeton? (Uncle)

Airport meetings from a CAT! Princeton, the husband, father, homeowner, Financial Planner Oh, and hes nutrition-aware
No more Wheres 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 years 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.

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 didnt 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 bikesand Brokerage Accounts!

Purchasing bicycles for youth through returns on equities Why bicycles?
Address fitness and obesity Means to get to work Affordable Develop will, determination, discipline Competition Team orientation Family bonding Teach maintenance concepts Spur adventure (mountain biking)
Photo by Opacity and used by Creative Commons

Saves on fuel, vehicle maintenance, insurance, license

 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 ones 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)