Untapped Talent

How Second Chance Hiring Works for Your Business and the Community

Jeffrey D. Korzenik

• Publisher: HarperCollins Leadership
• Year: 2021
• ISBN:
  9781400223107
• Topic: Personal Development
• Subtopic: Careers

Tens of millions of people in the U.S. with criminal records are highly talented, reliable, and eager to work. Implement these second chance hiring practices to give your company a significant competitive advantage over those that do not.

Researched, tested, and written by the chief investment strategist of one of the country's leading business banks, Jeffrey Korzenik includes dozens of examples of businesses that have successfully implemented the second chance hiring practices outlined in this book.

Korzenik shows those companies that have learned to go beyond the label and to evaluate the qualities of the individual applicant have tapped into an often-overlooked source of loyal and productive talent.

In Untapped Talent, you will:

• Understand what goes into a successful second chance hire, from the support that will be needed internally to the resources that are available from outside agencies.
• Learn how businesses from a variety of industries have instituted successful second chance hiring programs and how this has positively impacted their culture and bottom line.
• Gain practical onboarding and coaching strategies that will help ensure a smooth transition and a productive, happy new employee.
• Acquire relevant knowledge of the criminal justice system to provide context in identifying the potential of second chance hiring.

Your path to a loyal, engaged, and productive workforce starts with the clear competitive advantage you'll gain by implementing the second-chance hiring practices within Untapped Talent.

1

THE HEART OF GROWTH

I’ve got some bad news: growing your business is going to get harder in the decades ahead. You may have already experienced difficulty in finding enough employees to fill all available jobs; that difficulty is going to get worse. And, unfortunately, falling birth rates don’t just mean that workers will be harder to find—consumers will become harder to find, too, and the economy will grow more slowly. A slower-growth economy is a more vulnerable economy, with higher uncertainty and risks.

Over the next two chapters, I will show you the size of the problem we face. And then, over the rest of the book, I will explain the solution you and your business should consider.

First, some basic economics to put our situation in perspective. The potential for any nation’s economy to grow boils down to two factors: 1) How fast can it grow its employed labor force, and 2) how quickly can it grow the productivity of its workers. The product of this sum is the long-term growth potential.

The concept of growth potential only plays out over the course of an economic cycle and rarely defines the actual growth rate in a single year. In recessions, growth is far below potential, and in the early years of recoveries, growth tends to exceed that limit as employers start to take up the slack from the previous downturn. It is only in the final period of growth in a cycle, as the economy pushes against full employment, that the potential growth rate is more likely to align with actual growth. Changes in workforce size and productivity are the twin throttles that dictate long-term growth, even if this is not apparent in any given year.

Figure 3, with data produced by the Congressional Budget Office (CBO), shows both historic and projected gross domestic product (GDP) growth in the modern US economy in terms of workforce (the dark gray bars) and productivity (the light gray bars). Many important social trends are captured in these statistics: the post–World War II shift to a consumer economy, the growth of the number of working women, and the growth of the internet, to name but a few.

Figure 3: US Potential GDP Growth

Fifty years ago, our grandparents enjoyed GDP growth of, on average, close to 4 percent. In fact, growth only slightly lower than this, and over 3 percent, continued until 2001. The post-2007 hangover resulted in only 1.5 percent average growth for almost a decade.¹

Whatever the trends of the past, the CBO calculations point to this future—US potential growth is slowing and projected to be just below 2 percent.² This trend extends a historically low era of growth. Two questions arise in response: “Why?” and “What can we do?”

Productivity Considerations

One answer has to do with productivity.

The natural business response to a tougher environment is, “How can we do more with less?” Economists call that productivity, and it is an important driver of profits and even societal wealth. Productivity growth should be part of every business’s strategy, but achieving those benefits can be costly or outside a leader’s control. The focus of this book is not on the productivity component of potential growth, but rather on the dynamics of our labor force. However, for the sake of completeness, it is important to understand the nature of productivity growth and where it intersects with our emphasis on workforce strategies.

At its most basic, productivity is our GDP divided by hours worked. While hours worked is a fairly straightforward concept, GDP is far more complex. The accepted definition of GDP is the total value of final goods and services adjusted by our net exports in a given year. While simple in concept, the “value” ascribed to many goods is not simply the price; it also involves arcane adjustments for quality and technological advancements.

The calculation of GDP is not a complete measure of other things we might value. While it would include the purchase of environmental control equipment, for example, it does not measure a cleaner environment. Even in the measurement of material goods, value calculations do not capture what economists call “consumer surplus,” benefits consumers derive without having to pay more (think of all the flavor choices you have at the ice cream parlor that cost no more than the vanilla cone). Despite these concerns, GDP and productivity are highly representative of what is going on in the economy, with productivity being the multiplier factor, taking worker hours and turning them into goods and services valued by others.

Accepting GDP at face value, what factors drive greater production of goods and services for each hour worked? The single most important short-term driver of productivity growth is capital investment—traditionally land, buildings, and machinery, which most certainly includes software and other technology. Many of these investments require large initial outlays and long payback periods, requiring high levels of confidence and access to financing. Because confidence and financing have cyclical characteristics, such investments come and go. In general, sluggish productivity growth in the United States in the past decade can be attributed to weak investment and aged capital stock. The good news for businesses today is that, for those who are willing and able to invest, updating old equipment provides outsized returns.

Innovation also plays an important role in productivity growth. The United States has long been fertile territory. High levels of entrepreneurship, strong commercialization of academic research, and a robust venture capital ecosystem all help support productivity growth, but none of these strengths should be taken for granted.

Finally—and most important for this book—there is a human element to productivity growth. Providing workers with education and training can lift productivity. Even demographic factors can play a role. Workers in their thirties and early forties go through a rapid acquisition of new skills, experience, and career commitment that are associated with higher productivity, evidenced by their ability to earn much higher levels of compensation—the biggest jump in adult pay occurs during these years. The millennial generation, the largest component of our workforce, may provide a meaningful boost to US productivity growth in the years ahead.

Hiring, training, and retaining workers will become the most critical steps the business leaders of the future can take to increase productivity.

Measuring Our Workforce Potential

The best solution to a nationwide growth challenge is found in human capital—more and better workers. Fortunately, a low unemployment rate doesn’t mean our labor force is tapped out, and wise leaders can exploit this potential. But first they have to understand it.

We know from the discussion of birth and fertility rates in the Introduction that the growth of the size of the working-age population will become increasingly constrained. This assumes, of course, no change to our immigration policies; given dwindling fertility rates abroad, even immigration may not offer an easy solution.

Birth and fertility rates are drivers of the size of the future working-age populace. Our initial formulation that potential growth is dictated by productivity growth and workforce growth suggests that working-age population is an insufficient measure—we must also incorporate the degree to which this group is “in the game” and ready to be employed. To measure our efficiency in tapping today’s labor pool, economists use a metric called labor force participation rate. This is defined as the percentage of noninstitutionalized civilians age sixteen and older who are either working or actively seeking employment. The Federal Bureau of Labor Statistics, an arm of the Department of Labor, is the definitive source of this data. Figure 4 shows the history of this metric since 1948.

Figure 4: US Labor Force Participation Rate

It should come as no surprise that our greatest decades of rising labor force participation, the 1980s and 1990s, were also among our strongest years of GDP growth.³ Those decades included two large and beneficial trends—the entrance of the baby boomer generation into the workforce and rapidly rising rates of female participation in the labor force. When we utilize an ever-greater percent of our population in the production of goods and services, we benefit.

Conversely, the falling labor force participation rate since 2000 is linked to the generally lackluster rates of growth. Once again, demographics are a big part of the story. The denominator of the labor force participation rate has no age limit; thirty-year-old and hundred-year-old people are assessed alike in calculating this metric. When a growing percentage of our adult population exceeds retirement age, everything else being equal, the labor force participation rate will fall. In 2001, the oldest of the baby boom generation (those born between 1946 and 1964) turned fifty-five. At this age, retirement becomes increasingly likely, and more than half of workers age sixty-two have already left the workforce. Given the impact of retirement on labor force participation and the massive size of the baby boomer demographic, it’s natural that participation rates would decline.

But not that much. In fact, not even close to that much. There’s a “missing” labor force—a missing segment of our population absent from the workplace and causing labor force participation rates to fall well below what would be expected.

The successful business leader is the one who can reframe “missing” as “hidden potential.”

Full Employment and the Current Gap

About 160 million civilians (technically, nonfarm civilian workers) are working in the United States.⁴ (For ease of explanation and because our economy is constantly changing, I’ll use big, round numbers.) The most important measure, and the one associated with growth, is the annual change in that number.

The economic expansion that began in 2009 has added about 2.5 million workers each year to grow at the roughly 2 percent annual pace that has characterized the business cycle that only ended with the 2020 COVID-19 pandemic. Given that this rate of growth is close to the long-term assessment of US growth projected by the CBO, that 2.5 million annual addition of workers is a very good estimate of average future needs as well.

Where did these new workers come from?

Some came from other employers. There is “churn” in the labor markets, with employers finding workers already employed by others. But economic growth rests on the net additions to the payrolls, and thus our ultimate interest is in the employment of those without a job. So, other than other employers, where do new employees come from?

In times of higher unemployment, generally during the down period of an economic cycle, employers can fill many of their needs by sourcing from the ranks of unemployed job-seekers. In an environment with an unemployment rate of 6 percent or more, hiring managers can often find candidates with strong experience, requisite skills, and perhaps someone with whom they have a personal connection.

Employers also rely on new additions to the workforce. New additions are one of two things: immigrants or new adults. In any given year, between 1 and 1.5 million new workers come from immigration and natural growth of the working-age population. That immigration number includes programs like the H1B visa (85,000 granted each year), legal immigrants, and (to use as neutral a term as possible) unauthorized immigrants. The natural growth of the native-born, working-age population is the most significant component of new workers, by far—but the fact that the birth rate started to decline a generation ago suggests that this is already becoming a less fruitful resource.⁵

If growth progresses at a sufficient pace, “full employment” is achieved. This is not when the unemployment rate reaches zero, but rather when labor resources are so efficiently used that the only remaining unemployment is the result of natural friction. There’s always some small level of people between jobs, facing structural barriers, or enjoying voluntary periods without work. Although different in each cycle, post–World War II historic lows in US unemployment give us a sense of where the lowest bound may be: 2.5 percent in 1954, 3.4 percent in 1969, 3.9 percent in 2000.⁶

Whenever that lower bound to unemployment approaches, the US economy becomes at a very real risk of running out of room to grow. This usually resolves as a tight labor market drives wages higher, well past the point they can be offset by productivity, in turn driving inflation beyond tolerable limits, and thus leading to higher interest rates (either driven by markets or central bankers), which choke off growth, ending the business cycle.

Once full employment is reached, the annual shortfall of workers is simply the difference between annual growth needs and the number of new workers from immigration and new adults.

We were at one of these points in the final quarters of the 2009–2020 economic expansion—technically full employment. We can quantify our annual shortfall of workers faced by US businesses—it’s the difference between our annual increase in labor needs (about 2....

Table of contents

• Cover
• Title Page
• Copyright
• Contents
• A Note to the Currently Incarcerated
• Preface
• Introduction
• 1. The Heart of Growth
• 2. The People We Call “Criminal”
• 3. Reentry
• 4. Success Is Not Random
• 5. Implementation, Challenges, and Refinement
• 6. Case Study—JBM Packaging
• 7. Policies for a Second Chance and a Thriving Economy
• 8. The Second Chance Society
• Appendix A: JBM Applicant Screening
• Appendix B: JBM ODRC Recruiting Document
• Appendix C: JBM Fair Chance Coaching Documents
• Appendix D: Resources
• Acknowledgments
• Endnotes
• Index
• About the Author