Monday, March 9, 2015

VIEW FROM THE TOP: How Do We Solve the Long-Term Unemployment Crisis? by Larry Gigerich

Managing Director

As appeared on Inside Indiana Business

The United States continues to struggle with how to help people who have been unemployed (including ex-offenders) for a lengthy period of time. It is important to the future of our nation and economy that we implement innovative ways to address this vital issue. So, how do we do it?

There are not any easy answers to this problem. Employers are often concerned about hiring people who have been unemployed for a long period of time. Issues, such as educational achievement, dependability, work ethic and drive, factor in when companies look at candidates. While not necessarily fair, the stigma is real.

Many states are implementing creative ideas to try to solve this issue. The federal government can certainly provide financial support to help in this endeavor, but cities and states are best positioned to shape initiatives to help its residents. Several states are attempting to address the issue:

1. New Jersey: The state has implemented the Jobs4Jersey training program that not only helps with the training of its citizens, but also matches companies and candidates, links people to training resources and provides information regarding skills required for different types of positions.

2. Utah: The state has implemented an innovative training program to upgrade the skills of the unemployed to be positioned to fill job openings from growing businesses. Funding can be used directly by individuals for education, credentials or certifications.

3. Connecticut: The state has partnered with non-profit, The Workplace, to launch the Platform to Employment program statewide. The program works with regional Workforce Investment Boards throughout the state to help unemployed people who have exhausted their unemployment benefits to upgrade their skills.

In particular, the Platform to Employment program has gained significant momentum throughout the United States. Today, approximately 40 states are testing this program on a local, regional or state basis:

1. Pays the worker’s salary for the first two months of employment. This helps mitigate the risk a company takes in hiring someone who has been chronically unemployed. This component of the program reports a 90 percent success rate nationally.

2. Works with people who have been unemployed for a long period of time to boost confidence and help with job preparedness skills.

3. Accepts people into the program that have demonstrated work skills in the past. Sometimes, these candidates need skills upgrade, but most often, preparing a resume, social media training and confidence in using computers are the biggest impediments that they face.

4. Funds come from private donors, foundations and governmental entities (local, state and federal).

5. Works with candidates from all socioeconomic backgrounds, educational achievement levels and previous job experiences.

In a report by the Pew Research, a recent study sent thousands of mock resumes to employers with job openings and found that the longer a candidate had been unemployed, the less interested the employer was in interviewing the candidate. The drop-off was extremely sharp if someone had been out of work for six or more months.

Based on Bureau of Labor Statistics data, there are approximately three million people who have been unemployed for more than six months. This represents approximately one-third of everyone who is currently unemployed. This is the highest in the history of our country; the previous high was 26 percent. This shows that the challenge that our country faces is even greater than one may think and a solution is critical.

In a Brookings Institute report, only 11 percent of chronically unemployed people who have found work are continuously employed, meaning that the remaining 89 percent are either employed on a part-time basis or are employed, laid off and then rehired on a sporadic basis. In addition, the most recent five-year economic downturn has been different than previous recessions. In the past, workers were rehired in similar positions. The most recent recession has resulted in employees accepting positions that they are overqualified for and/or at a much lower salary level.

Indiana is currently implementing some elements of the Platform to Employment program. In the next few years, Indiana should be able to evaluate how the state is faring with this new program. However, it is important for local and regional areas to embrace this effort. They are the ones closest to the problem and are best suited to help prescribe a solution.

In summary, we have an economic and moral obligation to collaborate to solve this issue. Every member of our society has value and we have a responsibility to implement solutions to help the chronically unemployed. The cities, regions and states that solve this problem first, will be the economic winners in the future.

About Larry Gigerich: Larry Gigerich serves as Managing Director of Ginovus, an Indianapolis-based economic development advisory services firm. Ginovus is a leading provider of national site selection, public policy development, community comparative analysis and economic development incentive procurement & management services to private sector, educational, governmental and not-for-profit organizations. Click here to visit the Ginovus website.

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