Hiring Incentives Won’t Solve America’s Talent Problem

Earlier this year, the United States House Committee on Education and the Workforce convened a roundtable discussion about the business case for hiring opportunity youth—the nearly six million young adults not in school or in work. “Increased employer investment in opportunity youth,” said Representative Bobby Scott, “is a win-win position for youth and businesses.” These young adults, the congressman continued, “who are diverse, creative, and energized, are a high-value asset for employers that wish to improve retention, spur innovation, and fill entry-level positions.”

Finding ways to connect opportunity youth with companies that need their talent is not just an American challenge—it’s a global one. The Organization for Economic Cooperation and Development estimates that more than 35 million 16-29 year olds are neither employed nor in education or training across its 35 member countries. Skills have become the global currency for 21st-century economies, but until we resolve the talent marketplace failure in countries such as the United States, the competitiveness of companies and the standard of living for workers will continue to weaken.

Consider: While millions of aspiring American workers remain unemployed, American employers still struggle to fill open positions for jobs that require more education than a high school diploma but less than a four-year college degree. A report released last month by Georgetown University’s Center on Education and the Workforce highlights these “middle-skills jobs” and concludes that, despite increasing attention to the indignity and economic anxiety many working-class Americans feel, there are still 30 million good jobs in the US economy that do not require a bachelor’s degree.

These good jobs—defined as jobs with a minimum earning of $35,000 for Americans under age 45 and which paid an average of $55,000 per year in 2015—are increasingly available in skilled-service industries, such as health care, finance, and information technology. Yet while the number of good jobs has grown for workers without a bachelor’s degree, employer practices continue to perpetuate mismatches in the labor market. As a result, opportunities for talented and motivated Americans to get ahead are moving further out of reach.

American employers already recognize that their traditional hiring practices are not delivering the talent or diversity they need. According to an Accenture survey, more than half of employers said trained talent and candidates with sufficient experience were difficult to find. It’s no surprise then that as policymakers search for scalable and sustainable solutions that can deliver positive labor market results for Americans, they often land on employer tax credits as a way to incentivize more hiring from populations employers don’t normally consider.

In the current US Congress alone, Senators Cory Booker and Tim Scott introduced legislation that would increase apprenticeships through a new federal tax credit for employers; Senators Maria Cantwell and Susan Collins introduced a bill aimed at closing the national skills gap by creating powerful incentives for businesses to embrace apprenticeship programs; and Senator Dick Durbin introduced legislation that would address youth unemployment through employer tax credits. In fact, even the Democratic Party’s new economic agenda, “A Better Deal,” which is meant to appeal to voters in 2018 and 2020, proposes more tax credits for job training.

But these interventions are unlikely to catalyze the talent pipeline changes employers ought to be making in today’s economy. Moreover, because employer tax credits are not designed to change the way employers source talent, they miss the critical part that comes before hiring even happens: talent acquisition.

Grads of Life, a national talent-development pipeline initiative focused on the historically overlooked talent pool of opportunity youth, is trying to change this. Launched in 2014, Grads of Life consists of a multi-media public service announcement campaign, a website, and a broad set of thought leadership and employer engagement activities. The campaign aims to shift employer perceptions of opportunity youth, as well as encourage employers to learn more about the business benefits of working with these youth and change the way they source talent.

Recently, Grads of Life introduced 7 Second Resumes—short videos that capture the practical business value that opportunity youth offer employers who are looking to build a 21st-century workforce. These videos, which are seven seconds long because that is the average time a hiring manager spends evaluating a resume, feature opportunity youth highlighting the qualities they have acquired along their life journeys that add value to them as employees.

(Image courtesy of Ad Council and 22squared)

The good news is that market signals indicate these types of perception-change initiatives are working. For example, State Street Corporation partnered with Year Up, which connects low-income young adults with livable-wage careers in high-growth industries in a single year, and created a multi-pronged business solution for their diversity and recruiting challenges. AT&T, aspiring to decrease labor costs and diversify its workforce, partnered with Genesys Works, a training and corporate internship program for disadvantaged high school students. SK Food Group, a food service and manufacturing company in search of entry-level employees for a new facility, partnered with LeadersUp, a talent-development intermediary that works to connect young adults with career opportunities. And Gap Inc. announced that This Way Ahead, its internship program which helps young adults gain the skills and experiences they need to be successful in their first jobs, will be the source of five percent of the company’s new entry-level store employees by 2025.

These new talent-pipeline examples cast doubt on the idea that a $1,200 or $9,600 reimbursement from the Work Opportunity Tax Credit is the most effective way to ensure that companies see opportunity youth and other overlooked Americans as economic assets, rather than social liabilities.

But if employers are open to changing their perception of talent, they will need to start changing their legacy hiring practices. Some of those changes could include: getting rid of four year degrees as a proxy for hire, creating competency-based job descriptions, highlighting success of candidates with diverse educational backgrounds, identifying C-suite level leadership to champion youth employment strategies, creating advocacy networks to support candidates who lack traditional training, integrating corporate social responsibility initiatives into a company’s hiring practices, working with internal management teams to identify policies that restrict or prevent youth hiring, and developing partnerships with nonprofits to support ongoing soft skills development.

In today’s evolving labor market, pathways to good-paying jobs have clearly become more complicated for all Americans, especially for those locked out of the economy and looking for a hand up. Despite all this, millions of talented young adults remain driven and motivated. “Growing up where I did, a lot of things could have gotten in the way of my goals,” says Johnnie Parker in his 7 Second Resume. “But I learned to push through. And that’s what I bring to work every day.”

Perhaps one day, a more-functional US Congress will consider a large skills-training piece of legislation—a new GI bill of sorts—that would provide any American that needs job training free access to community colleges that can prepare them for local, in-demand, middle-skills jobs. Until then, however, American policymakers should spend existing funds on helping businesses remove hiring blind spots so that they don’t miss out on the talent sitting right in front of them.

Read more stories by Jonathan Hasak.