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Concordia Summit Opening Remarks: Employing the Future

Dr. Judith Rodin Speaking at the 2015 Concordia Summit

Good afternoon, everyone.

It’s a pleasure to be a programming partner for the Concordia Summit. I always come away from these sessions with a greater belief in the power of public-private partnerships.

We are eager to a host a session dedicated to an issue desperately in need of these public-private solutions: the global youth unemployment crisis. You could say we have a long-standing interest in helping young people connect with career pathways.

Our founder, John D. Rockefeller, Sr., started his first job at the age of 16, as an assistant bookkeeper at a Cleveland shipping company. He viewed this milestone with such reverence that for the rest of his life, he would celebrate September 26th as “Job Day.”

But imagine if John D. tried to get hired for that same job today. He had only ten weeks of proper training at a trade school. His father had taught him to draw up business contracts and paperwork, but because the skill was learned so informally, it would likely not be reflected on a modern resume.

And so we can only guess that a recruiting firm or internal HR department today might toss such an application directly into the “pass” pile.

Which makes us wonder, how many future John D. Rockefellers are passed over for job opportunities every day?

How many Standard Oils are not being founded with the potential to transform entire economies?

How many future foundations bearing their name might never have a chance to improve lives all over the world?

Potentially millions.

It also raises the question—how many companies are missing out on the assets that young people bring to the workforce—their dynamism, their energy, and their insights into an entire generation rising in purchasing power?

In this way, we see addressing global youth unemployment not just as an issue of doing the right thing for society, but doing the right thing for business in the long-term.

Yet, all over the world, nearly 75 million young people are not in school or in jobs. In some countries, such as Kenya, as many as 80 percent of youth are unemployed.

In the United States, one-third of all young people are struggling to find employment or jobs that adequately meet their needs. And this is disproportionately impacting young African Americans, with unemployment rates almost double the unemployment rate of young white Americans.

Underemployment has implications that last a lifetime. Since 66 percent of lifetime wage growth occurs in the first 10 years’ of one’s career, early opportunities are critical for a worker’s lifetime earnings and employment. For low-income workers, this can be the difference between weathering the shocks and stresses that come their way, or falling into financial ruin.

The global crisis is only going to get more serious. In Africa, for example, the number of youth is expected to double to 400 million by 2050. Job creation is not keeping pace.

All over the world, the definition of work is changing. The concept of a stable 9-to-5 job with benefits is becoming a way of the past—replaced by less formal and more diversified employment with fewer protections.

In many developing nations, we have seen how high levels of youth unemployment can destabilize entire societies and threaten economic progress. In the U.S., it’s an issue of economic competitiveness.

We need innovative thinking and inclusive solution—and fast.

Almost universally, this means engaging the private sector—the job creators—to pinpoint the specific parts of the system that could open up more opportunities to young people.

We are funding some exciting work to these ends—and I’d like to share a few examples.

Globally, we’re investing in a model called “impact sourcing,” which is the deliberate, targeted employment of high-potential, disadvantaged youth. Already rooted in India, “impact sourcing” is now taking hold in Africa—connecting big employers with talented youth in parts of Africa to do online jobs like meta-tagging digital content, managing search-engine optimization, or maintaining databases.

One of our partners in this work is Microsoft, which has partnered with Kenya-based Samasource to hire disadvantaged youth to support business needs.

In addition, Microsoft is directing the large scale traditional service providers in the Microsoft supply chain to employ high-potential but disadvantaged youth, and they are working with us to design a set of Impact Sourcing metrics that companies across the globe can use to track and report business outcomes.

This hiring approach has the potential to drive household incomes up between 40 and 200 percent in some of the world’s most disadvantaged places. Meanwhile, businesses save money on attrition rates, operational efficiencies, and bottom-line growth delivered by this cadre of driven workers.

Impact sourcing is one tool in our toolbox for addressing youth employment in places like Africa and Asia.

In the United States, we are working to counter the pervasive stigma that hiring disadvantaged youth is too risky or not worth the investment. Just as we are in Africa, we are engaging the private sector to take the lead on solutions.

This represents a change in approach which has traditionally focused on skills training alone.
Our research has shown that these supply-side strategies tend to be “front-loaded”—meaning they prepare youth to become candidates in the job market, but then offer little support once a job seeker is placed.

We believe that systemic change can only be achieved at the intersection of supply and demand: when employers hire well-matched young job seekers into positions where they can excel and then receive the support to do so.

Based on our conversations with and surveys of hundreds of companies, we learned the biggest opportunities for opening up careers to America’s youth are helping the private sector to better recruit, assess, and support young employees.

Put together, we call this model “impact hiring.”

First, recruitment. Companies must re-think how talent is sourced, using strategies that are more inclusive to how young people find and apply for entry-level positions. Staffing agencies can be a partner in these strategies, and we are currently working with Manpower, one of the world’s largest staffing agencies to find ways they can better serve companies in reaching this untapped pool of talent and match them with the right opportunities.

Second, assessment. Assuming young people know about opportunities and how to apply, there are still barriers that keep them from getting the job. For example, in New Mexico, businesses were lamenting a talent shortage—blaming it on job seekers’ lack of educational achievement.

But did the jobs they were hiring for actually require a diploma?

Research from Innovate+Educate—a nonprofit using research-based strategies to close the skills gap in the U.S.—suggested not. Rather, it found that assessing candidates’ cognitive-based skills—literacy, the ability to understand and work with numbers, the ability to critically observe and listen, and the competency to understand and apply data and—chartswas five times more predictive of worker success than their degree.

By testing for these skills with a group of New Mexico businesses, Innovate+Education increased the pool of eligible applicants by 32 percent! Now, we are funding them to bring these kinds of innovations in assessment to more companies in the U.S.

This shift in assessment can give disadvantaged young workers—whom we call opportunity youth—a fairer shot at getting hired.

But what happens once they are placed? This is where employment services usually end, although the challenges facing younger workers do not.

That’s where the third part of impact hiring comes in—support. Opportunity youth are known to have more out-of-office challenges that can impact their work life—from childcare considerations to long commutes.

Consider the story of Barry, a twenty-one-year-old who works the night shift at a warehouse and attends pharmacy school during the day.

His bus ride to work is more than two hours each way. And when he gets home, he has to care for his infant daughter.

Companies can work with local nonprofits to connect employees like Barry to publically-funded services like child care assistance or loans to purchase a car. Imagine how Barry’s productivity on the job might increase, and if scaled across a company, how turnover could be diminished.

This is critical as recruiting and onboarding new hires can cost companies around one-fifth of the departing worker’s salary. If turn-over is high, those costs add up over time.

Companies working with wrap-around employee services firm The Source saw returns of investment around 300 percent. That’s the kind of win-win solution we want to see taken to scale.

And so we worked with Starbucks to better understand what it would take for companies to adopt impact hiring practices more broadly. We spoke with Walmart about their need for a more flexible workforce.

The enthusiasm of two powerful, influential companies—joined with dozens of others and became 100,000 Opportunities Initiative, which we helped to formally launch this summer in Chicago. The initiative is now a collaboration among 34 of the top U.S. employers—and growing—together committed to engage 100,000 opportunity youth in jobs, internships, and apprenticeships.

We are committed to working with these companies to implement “impact hiring” practices to achieve these commitments in the U.S. And we continue to work with companies to expand “impact sourcing” in other parts of the world.

We’d welcome the chance to work with all of you, as well, whether or not you’re a part of the initiative or looking to hire in the U.S. or abroad.

Through the take-up innovative models such as impact sourcing and impact hiring, and with employers taking the lead, we believe that businesses can keep their bottom lines booming, and ensure that future business leaders, philanthropists, and industry tycoons will be celebrating their own “Job Day” for decades to come.

Thank you.