WorkSquare

Exploring Job Creation in Haiti...

2011-09-20T10:04:00.005-04:00

The Vanessas (Alix and Bartram) hopped AirFrance 3989 to Port-au-Prince last month in order to explore opportunities for job creation and economic development in Haiti. We were lucky enough to have a series of meetings with hotel and internet entrepreneurs, USAID and NGO workers, and leaders of the country’s largest microfinance organization and farmers’ cooperatives.

With reconstruction dollars just beginning to trickle in (18 months after the earthquake), many of the capital’s streets are still consumed with rubble, while parks and parking lots overflow with USAID tents that provide meager shelter for hundreds of thousands of people. Meanwhile, the government remains largely anemic, without income or infrastructure necessary to provide basic services including schools, health services, even trash collection. It is a challenge.

So where to start? Well… jobs. Moving over half million people out of tent cities will require that these individuals have sustainable sources of revenue with which they can build or rent shelter elsewhere. And who creates jobs? Businesses. People willing to invest (and risk) time and money in growing enterprises. But here comes the rough part … there is no commercial financing in Haiti. Banks do not lend to business. Instead, companies must bootstrap all growth, using whatever small profits they have to slowly build their business. Under this scenario, economic growth that should take ten years – and juice the fiscal system that needs to be developed in parallel, providing funding for schools, health, infrastructure – will take five times as long, or likely as much as a century. Public investment has no choice but to follow the private sector’s timeline, as redistribution of wealth first requires generating some wealth.

As we drove the winding roads (stopping for some roadside tasso kabrit of course), we passed Wyclef’s entourage of SUVs, en route to a new hotel he is rumored to be building in beautiful Jacmel. I can think of no greater form of patriotism than private sector investment at this moment. Base of Pyramid Enterprises (WorkSquare’s parent company) now has the challenge of figuring out how to provide the resources and incentives for more Haitian entrepreneurs to do the same. Pou yon Ayiti pi bel.

Do Your Employees Need New "Ways to Work"?

2011-09-19T13:22:00.007-04:00

Forget the bus pass, the transit delays, the Metromover’s midnight curfew, the inability to recruit workers when your company is off Miami-Dade’s challenged public transportation grid...

This month, South Florida Urban Ministries launched a local affiliate of the national “Ways to Work” program. Ways to Work, originally started in Minneapolis in the mid-1980s, is now a national not-for-profit that has provided $50 million in auto loans to over 27,000 low-income working families. Employees able to access these loans – and who complete budgeting and other financial training as part of the process – report important increases in workplace advancement while decreasing tardiness and absenteeism. What a win-win.

Check out WaystoWork.org for more information and click here for eligibility requirements. The program is specifically designed for individuals with poor credit history, relying on a volunteer panel of loan officers who interview applicants to establish character and credit-worthiness. Kudos to the SFLUM team for bringing this much-needed program to South Florida!

Reflections on Green Job Training

2011-05-02T07:52:00.003-04:00

WorkSquare was invited to participate in a conference last week in Birmingham, Alabama on developing green job training programs for low-income workers. The conference was kindly put on by Wider Opportunities for Women and sponsored by the Ms. Foundation for Women.

I attended as a skeptic... with a not-so-small part of me wanting oh-so-much to believe in this... and then watched my skepticism grow. Reflections as follows. Dissent is welcome and encouraged.

1. Few if any of these training programs are demand-driven (e.g., designed in response to the direct hiring needs of real employers). Until employers state a need for a specific position and an inability to find that skill-set, training programs will continue to produce unemployable graduates. It is a waste of time and resources, not to mention a wild source of frustration, to train individuals for positions that do not exist. The millions of Recovery Act dollars that were wasted in misguided training programs is offensive, most of all to the low-income individuals who spent their time participating. If you don't believe me, I have several partipants I can gladly introduce you to.

2. In markets that DO show demand for green skills, this demand is still reliant on subsidies. Weatherization and solar panel installation are promising services given that consumers can finance large up-front expenditures and capture return on investment in the form of lower energy costs. That said, two significant risks still exists. Firstly, if subsidies disappear, jobs will go with them. Second, service providers noted that the need for consumer education was immense and well beyond expectations. This continued need to educate consumers on (1) the environmental importance of the product/service, (2) the projected financial benefit, and (3) how to apply for and receive a tax credit in a no doubt bureaucratic process, all create additional marketing and administrative costs that would be prohibitive in most business models.

3. All green training programs emphasized the importance of work-readiness skills as a precursor to industry-specific training. This strengthened my belief that education and training dollars should be spent on basic work readiness long before specific skill training. For every one employee who may be terminated for his or her lack of deft skill in solar panel installation, one hundred others are terminated for inability to get to work on time, find adequate childcare, or manage workplace conflict appropriately. Employers are willing to train good employees with industry-specific skills...but bad employees -- skilled or otherwise -- are useless.

4. Post-training placement remains a huge obstacle and bottleneck -- trainers struggle to connect with employers. Many of the organizations providing green job training (CBOs, social service orgs, worker rights orgs, etc.) reported much difficulty in reaching employers and convincing them to hire graduates. Given this challenge, it was particularly noteworthy that there was next to no private-sector representation in the entire conference (I saw one representative from a for-profit construction general contractor). If we're trying to sell to these people, wouldn't it make sense to get their opinion? Several organizations have employer councils, which is a step in the right direction, but the overall dialogue lacks the much-needed input of private-sector employers.

We are sadly still a long way off from making this an effective workforce development strategy, much less a tool in spurring current job creation.

Dear Obama...Why Small Businesses Aren't Hiring

2010-09-20T11:44:00.003-04:00

Pundits and politicians alike (well, at least half of the politicians) have drilled down to a key word to explain the continued lag in our nation's unemployment.... UNCERTAINTY. Add my name to the long list of hundreds of thousands of small business-owners who have not wanted to hire in the past several months due to uncertainty.

Uncertainty... regarding payroll taxes attributable to a broken unemployment insurance system. Our payroll cost for SUTA (state unemployment tax) increased 300% in January of this year, raising our payroll costs by more than $20,000 relative to last year. With this additional $20k, we would have been thrilled to hire another employee, but not while we're busy subsidizing Florida's bankrupt UI system.

Uncertainty... regarding impending changes to the healthcare system and how this will affect payroll costs.

And... drum roll please for my favorite....

Uncertaintly... regarding the very programs that were designed to put people back to work. We have delayed hiring two full-time employees in order to take advantage of the Florida Back to Work program, which draws down federal stimulus funds to subsidize employment of individuals receiving unemployment insurance. This is a great plan.... in theory. After applying to the Florida Back to Work program three months ago, South Florida Workforce -- the agency charged with administering the program -- maintains that our application is 'in process' with no sign of approval prior to the initial expiration of fund availability on September 30th.

Had we -- and doubtless countless other employers -- had been given realistic expectations of how ill-equipped South Florida Workforce was to execute on this federal program, we would have hired *un-subsidized* employees three months ago and started stimulating our local economies. Instead, the poor execution of and uncertainty surrounding this program has delayed employer action -- leaving qualified unemployed individuals on the federal dole -- while employers sit on their hands watching their businesses stagnate rather than grow.

Thoughts on Yesterday's Interview Process

2010-07-16T07:32:00.004-04:00

Remembering yet again yesterday how much I love what I do! Incredible to do twenty-five interviews back to back, access to the dreams and aspirations of really distinct individuals. A real time documentary in which I get to participate. Among the highlights -- a jobseeker who shared my passion for economic development, particularly in the international environment, and another jobseeker who -- after some probing -- confessed that the job he most wanted was in funeral services. Amazing! There is indeed a special job out there suited for everyone.

Some reminders to job seekers:

1. The return on a smile cannot be underestimated. This is the simplest and most important thing you can do in an interview.

2. Don't tell me you'll take *any* job, "whatever's available". The job I'm offering is SPECIAL. It's an OPPORTUNITY. And you should have taken the time to research the position and be able to explain why you value that and how you would excel in it.

3. Let me know how this job is part of your bigger plan and career development. Your applying for this job needs to make sense to me in the context of your longer-term plans. For instance, my new friend let me know that he was passionate about funeral services, taking classes toward that goal in the evening, and was excited for a daytime positon that leveraged his past experience while allowing him the schedule and income to continue to pursue a career in funeral services.

MDRC Releases Opportunity NYC Results

2010-04-30T11:38:00.003-04:00

After closely following the success of Vicente Fox's Oportunidades anti-poverty program in Mexico over the past decade, I was thrilled to see that Michael Bloomberg had pursued a similar approach for New York City. Opportunity NYC is a conditional cash transfer (CCT) program intended to alleviate poverty and change behaviors that propagate poverty while improving low-income residents' economic, health and education outcomes.

While I give Bloomberg, MDRC, Seedco and the rest of their team enormous props for actually daring to measure and report program outcomes, the results were lackluster. Particularly in light of the success CCT programs have had elsewhere. I'll continue to follow results but in the meantime some hypotheses about why an anti-poverty program could work so well in one context and not in another. If others have ideas, I would love to hear them.

1. Many participant children in Mexico - particularly in rural settings - who are not in school are frequently engaged in the family's productive activities (e.g., agriculture, domestic production) and helping to generate income. For these children to go to school --rather than work -- each day is likely an easier behavioral change than is going to school each day instead of passively staying at home.

2. Several of the health and education indicators were already remarkably high (e.g., how many participants have a primary care physician that they see annually) among the control population, leaving Opportunity NYC little room for impressive results.

3. The program is still young. We'll give them that....

4. ???

More to come....

Three Ingredients to Improving Returns to Low-Wage Labor

2010-01-09T15:12:00.002-05:00

A big bravo to Fredrik Andersson, Harry Holzer, and Julia Lane, for their book Moving Up or Moving On: Who Advances in the Low-Wage Labor Market, published by the Russell Sage Foundation. This book is among the few data-driven and market-oriented approaches to understanding the dynamics of the low-wage labor market, how workers most frequently transition out of low wages, and what sorts of policies would best encourage this same trajectory for low-wage workers overall. The findings support a “work-first” approach (which they note is facilitated by temp agencies) and explicitly highlight the need for more efficient means of matching low-wage workers to better firms and jobs.

Three Ingredients to Improving the Returns to Low-Wage Labor: Early Work Accumulation, Job Switching, and Identifying ‘Good Jobs’

Early Work Accumulation: Despite the criticism of temp agencies as a dead- end for welfare-to-work participants following 1996 welfare reform, the authors found that low-wage earners working through temp agencies did experience increased earnings in subsequent positions, even if wages earned through the temp agencies were low. Specifically, initially working for a temp agency was found to increase subsequent earnings by 6 to 10 percent (1). The authors note the importance of labor market intermediaries – temp agencies, non-profit placement organizations, etc. – in improving the quality of ‘matches’ between employers and employees by overcoming informational, geographic and attitudinal barriers(2). Further, they argue that this improved matching does not merely place some workers in good jobs while displacing others (assuming a world with a finite number of ‘good jobs’), but actually helps increase the overall supply of ‘good jobs’ by reducing employers’ costs associated with hiring and managing employees.

Job Switching: As discussed in a prior blog, the authors reveal the importance of job switching for low-wage earners looking to improve wages, noting that low-wage workers have a much better chance of increasing wages by changing companies than they do by staying with the same company and waiting for wage growth via tenure. A first job, according to this theory, provides a signal to other employers that the employee is work-ready and has the basic skills required by a particular position. What then becomes critical is this employee’s ability to market herself to another employer who is willing to pay more for her services.

Identifying ‘Good Jobs’: The authors find that economic benefits to job-switching are possible because wages and compensation policies differ significantly among firms, even firms within the same industry. What is illogical on the macro level (why would a firm pay more for the same labor?) has played out on the firm level (think Wal-Mart versus Whole Foods) as employers take a more self-enlightened approach to the costs of turnover, training, sick days, poor morale, etc. For a low-wage worker, this means that she may be compensated significantly higher by a different employer for doing exactly the same job she is already doing, if only she could easily locate that employer. The authors find that obtaining one of these ‘good jobs’ (jobs that pay higher wages and frequently offer more on-the-job training and paths for advancement) is the single most important factor in a worker’s ability to transition out of low-wages (3).

The positive effects of providing improved market data as to how firms compensate their low-wage workers are many. If firms that pay wage premia relative to competitors were systematically recognized and rewarded with the best employees (and consequently with lower turnover and HR costs), it is reasonable to assume that more firms would pay higher wages. Additionally, those workers in low-wage positions would have a transparent and much-widened path for advancement as they move across firms, not just within a firm. Finally, workforce development practitioners could begin to distill which employee attributes make low-wage workers most successful in obtaining and retaining ‘good jobs’, thereby dramatically improving the costly (and frequently ineffective) education and training programs currently provided to the hard-to-employ.

(1) Andersson, Fredrik and Harry Holzer and Julia Lane, Moving Up or Moving On: Who Advances in the Low-Wage Labor Market? (New York: Russell Sage Foundation, 2005), p. 100.
(2) Ibid, p. 145.
(3) Ibid, p. 105.

Safety Nets - How to Incentivize Work When There Are No Jobs?

2009-07-13T11:05:00.008-04:00

Barbara Ehrenreich, of Nickel and Dimed fame, raises the important point that 1996's welfare reform -- brought about to rightly incentivize work while discouraging dependence -- failed to imagine what our country's social safety net would look like in some distant future (at the time inconceivable) of high unemployment.

Suddenly, TANF and EITC benefits that are linked to work are available to only a tiny fraction of the population in need, as evidenced by relative stagnation in enrollment. Compare this with the rising ranks of those receiving Food Stamps, which are not tied to employment. Food Stamp enrollment has grown from a then record-high of 29.1million in July 2008 to 33.2 million in June 2009. This is ONE in every NINE Americans.

Ehrenreich also notes the changing perception of public benefits among individuals who were -- as recently as last year before losing their jobs -- middle-class. She describes their humiliation when going through a bureaucratic application process that requires finger printing in four states, and is more than likely to bring feelings of self-defeat in the remaining forty-six. Clearly we need to deter benefits fraud and incentivize work and independence, but it's worth exploring application and delivery channels that begin to help empower rather than merely running over the downtrodden once more.

A private sector solution perhaps??

http://www.nytimes.com/2009/07/12/opinion/12ehrenreich.html?_r=1&scp=4&sq=barbara%20ehrenreich&st=cse

"Less Educated Take the Worst Hit" - WSJ 6/7/09

2009-07-03T09:18:00.003-04:00

The June 7 Wall Street Journal reported that the least educated are taking the biggest hit as unemployment numbers continue to rise, with the unemployment rate for workers over 25 who have not gone beyond high school rising to 10% in May, almost double the rate year-on-year. The picture is still bleaker for workers who haven't completed high school -- an unemployment rate of 15.5%, up from 8.4% last year.

The spread has stimulated demand for community colleges (remember when they used to accept new students??) and GEDs as employees try to fill gaps in resumes. Also notable was how acutely current job loss has hit less educated men over women -- construction and manufacturing jobs down with mild growth in education and health has meant that men have a jobless rate of 10.5% compared to women's 8.0%.

Hoispitality Institute featured in Miami Herald

2009-06-22T16:10:00.006-04:00

Thrilled to see the Hospitality Institute featured in May 19th's Miami Herald! Check the link below for more information.

Kudos to Julie Grimes, Jeanne Westphal, Maria James, and all involved for their hard work on this great program.

WorkSquare is proud to be an employer partner of the Hospitality Institute and encourages other local employers to do the same!

http://www.miamibeginswithme.com/Hospitality_Institute/images/HospitalityInstitute.pdf

Fast Company says "Hold the Interview"

2009-05-14T08:12:00.004-04:00

Great article in this month's Fast Company mocking what they refer to as the "Official Hiring Process of America", which invariably culminates in the all-important interview. The final seal of approval. The intuitive capturing of that certain je ne sais quoi. The moment when interviewer peers into interviewee's soul and instantly -- as argues Malcolm Gladwell -- assesses work ethic, cultural fit, and latent potential....Or so we like to think.

Decades of research indicates that interviews are not predictive of on-the-job performance. Rather, they tell us how adept candidates are at - well, interviewing. Yet we continue to rely on them as the most critical step of the hiring process, in large part because we in the hiring world like to believe ourselves particularly skilled at it. Psychologist Richard Nisbett calls this the "interview illusion" -- the certainty that we're learning more from an interview than we actually are.

So how to tell if a candidate will stack up on the job? Fast Company recommends peer ratings, job-knowledge tests, even intelligence tests. But the number one indicator? A work sample. Potential salespeople need to make an on-the-spot pitch. Potential admins need to handle some incoming calls and give instant minutes of the meeting you've just had.

And when you're looking at a potential service worker or laborer, WorkSquare recommends inviting them for a working interview and have them actually do the work. Two days on the job and you'll have far more valuable hiring information (and at negligible cost) than eight hours of interviews could ever provide.

Earnings Growth and Job Mobility Among Low-Wage Workers

2009-04-07T15:57:00.005-04:00

In The Brookings Institution’s article, “Encouraging Job Advancement Among Low-Wage Workers: A New Approach”, the author demonstrates that earnings growth for low-wage workers is much more likely to come from switching to a different company than it is from staying with an employer and waiting for a wage bump or promotion. If this is the case – and Miami-Dade’s dearth of mid-level jobs suggests that it would be particularly acute here – we would expect savvy low-wage workers to be putting in time at one job while eyeing where they could go next.

For a low-wage worker, even a modest increase in wages can make a significant difference in lifestyle and future prospects. Making $9.00 an hour instead of $8.00 is an effective raise of 12.5% and an additional $2,000 annually – enough to have a car that could get you to a $10.00 an hour job, or to enroll in classes for a marketable skill or certification.

So what’s inhibiting this upward mobility? Several things – all of which WorkSquare is working to change. First, little information exists as to available jobs, how to apply for them, what characteristics the employer requires, et cetera. When employers do post job positions publicly, they are often overwhelmed at the quantity of candidates (qualified and not) that they then have to sort through. I have seen more than a few hiring managers grab the top several applications and dump the rest in the recycling bin for lack of time. Accordingly, the search for a low-wage position becomes more about luck (or a personal referral) than it is about merit.

Secondly, the job search process in the low-wage sector remains costly and time-consuming when it involves juggling a current job, unreliable transportation, and family and other commitments. Scheduling time off for the interview and hiring process may well jeopardize a current position or be financially burdensome in terms of time spent, wages lost, childcare arranged, and transportation.

Third, we’re lacking reliable and standardized metrics for employee performance that would allow employers to target high-performers. Proxies such as job longevity exist, but all the same, it remains a challenge to ascertain whether a low-wage employee excelled or merely got by in prior positions. High turnover in low-wage retail and service settings means that references from supervisors or co-workers are frequently unavailable. Add to this the fact that online job boards – CareerBuilder, Monster, Craigslist, etc. – don’t provide effective ways to screen for available low-wage employees.

Finally, employees’ success in jumping jobs is inhibited by their own inability to market themselves well. Even when they have the experience or characteristics an employer is looking for, they may be screened out of the process due to an imperfect resume or professional appearance, or – most critically – their ability to give a convincing ‘elevator pitch’ to explain why they’re the best candidate for the job. Lack of interview experience can also be an impediment, as the interview setting can be sufficiently intimidating to make job-seekers uncomfortable and unable to put their best foot forward.

In sum, better information on available jobs and candidates is critical to helping both sides make more informed and successful decisions. Reducing turnover through intelligent hiring, along with successful retention strategies once employees are in place, has potential to save South Florida employers significant time and money. This, combined with an effective platform for low-wage workers to promote their employability and enhance their interview performance, would be nothing short of revolutionary. We’re working on it!

Enabling Opportunity for Temporary Workers

2009-03-29T22:32:00.007-04:00

The temporary staffing industry likes to market itself to job-seekers as a launchpad to permanent employment. Both traditional operators and Alternative Staffing Organizations (“ASOs”) operate under the assumption that temporary jobs increase an individual’s long-term job market prospects by providing job experience, on-the-job skill training, and an introduction to a potential employer.

Yet statistics on the long-term benefit of temporary employment at the lower end of the wage scale are mixed at best. In an article entitled “Temporary Agency Employment: A Way Out of Poverty?”, David Autor and Susan Houseman demonstrate that temporary employment did not improve the chances of escaping poverty over the long-term for a sample of welfare-to-work participants that they followed.[1] These individuals enjoyed a brief burst of additional income in the short-term, only to find themselves back at square one when their assignment ended.

This scenario is unfortunately all too familiar for low-wage job-seekers at labor companies and temp agencies. Add to this the fact that an estimated 15 to 40 percent of participants in government employment programs for low-income individuals go to work in this sector, even though the temporary help industry represents only 2 to 3 percent of the country’s total employment.[2] As a nation, we’ve managed to channel low-income job-seekers into the temporary sector as a band-aid solution, rather than figuring out how to turn these opportunities into a shot at long-term economic stability.

Why is it that most temporary jobs offer little future? For starters, many low-wage temp jobs are – by nature – only temporary. Laborers on a construction project or housekeepers in a hotel may only be needed until the project wraps up or high season ends. Second, traditional temp agencies impose a number of barriers – fees, minimum hours – that reduce employers’ incentives to hire on their workers. (Note WorkSquare’s “no temp-to-perm or minimum hour policy” – our way of encouraging employers to hire on and for workers to put their best foot forward.) Employers often think it more cost-effective to recruit low-skilled workers directly rather than incur fees, particularly when minimal training is required. Additionally, most temp agencies do not have the ability or the will to allow employer feedback in the selection process, leaving employers to gamble on the quality of employees they receive and reducing the likelihood of a successful match.

So, what can be done? How can we better turn temporary assignments into a path to prosperity for low-wage workers? How can we better ensure that temporary jobs result in permanent positions and long-term financial stability? How can we change the industry to incentivize good performance, reduce barriers to contracting between employers and employees, and allow for open access to information on the relative quality of temporary employees? Sounds complicated, but this is all feasible. It requires better tracking of longitudinal employee performance data; the provision of a platform from which employees can market their profiles to potential employers; and the inclusion of employer input in the selection of employees.

Third-party tracking and publication of performance data for temporary employees would enable differentiation among low-wage temp employees. All too often, high and pitiful performers alike have the same long-term job prospects because employers have no information with which to identify high performers, and employees are limited in their ability to effectively document and communicate their work experience and qualities. Differentiation would mean that high performers can be identified and recognized for their skills, work ethic, reliability, etc. (via temp agency and employer feedback), while low performers can also be identified and – ideally – targeted for skills training or other supportive services that can better help them succeed. Critically, employers will have the information they need to choose among an A, B or C team, and the option to pay wages commensurate with the quality of the employees they select.

Providing a standardized online platform for employees to market themselves directly to employers – utilizing the performance data discussed above as well as additional metrics – reduces the role of the staffing intermediary and allows employers and employees to capture value in the form of reduced fees and higher wages, respectively. With an online profile that outlines job history and performance, temporary employees are no longer at the mercy of temp agencies’ sales and matchmaking efforts. Rather, they can make the sell themselves, backed with third-party verified data and references, and market their services to a limitless audience of employers.

Finally, allowing employers to access performance data and play a part in selecting temp or temp-to-hire employees would greatly increase the probability of making a successful and long-term ‘match’ between employer and employee. Hiring managers who are unable to articulate the characteristics are skills that make employees successful within their organization may still be able to recognize these intangibles in candidates’ resume, profile or personal statement.

These simple measures have potential to revolutionize the low-wage labor market and our country's understanding of the 'Working Poor'. It could make employees increasingly accountable for the quality of their job prospects, while saving employers immeasurable time and money through intelligent and cost-effective recruitment. At a very minimum, the aggregation and publication of low-wage temporary employee data is sure to challenge how our publicly-funded workforce development programs define success and require us to revisit how we can more effectively provide very low-income individuals with a real opportunity for prosperity.

[1] Autor, David and Susan Houseman, “Temporary Agency Employment: A Way Out of Poverty?,” Working and Poor: How Economic and Policy Changes are Affecting Low-Income Individuals, ed. Rebecca Blank, et al. (New York: Russel Sage Foundation, 2006) 312-337.

[2] Ibid.

WorkSquare Prosperity Day - February 21st!

2009-02-10T13:25:00.002-05:00

WorkSquare is thrilled to partner with the Prosperity Campaign and sponsor Citi to present our Members and the Miami community with WORKSQUARE PROSPERITY DAY on Saturday, February 21st, 10am to 2pm!

In addition to free tax prep and benefits screening, WorkSquare will have an in-house resume workshop and information on low-cost banking opportunities.

More information to follow. To request an appointment for free tax prep, contact Oscar at (888)815-9994.

A huge thank you to our community partners -- Human Services Coalition, South Florida Urban Ministries, and World Relief -- and to our sponsor Citi for making this possible!

We're looking forward to a great and prosperous day!

Employee Referrals and the Power of Social Networks

2009-01-23T09:11:00.003-05:00

I had a great conversation with a hiring manager of a large Miami hotel earlier this week. One idea that we discussed was his company's success with an employee referral program for front-line workers -- current employees are compensated for referring a friend or acquaintance who they know would be a good fit.

This is the power of the 'vouch'. Why does this work? What does this mean for social networking and leveraging the social capital of front-line employees?

Employee-referred candidates are likely to have realistic expectations for what the job entails. They also may feel more incentive to 'stick with it' as they have a role model who has done it before them and who will be disappointed if they do not.

Employee-referred candidates have a built-in 'support system' in the employee who referred them. The questions and uncertainties endemic to a new position and new team can be addressed to their friend -- rather than managers or HR. This is particularly crucial when communication with direct managers is a challenge, as it often seems to be.

Front-line employees have social capital and knowledge that can be hugely valuable to HR and management. They often know more about the requirements of their positions and the types of personality that would excel than does management or HR. They may know how to communicate better with their co-workers to get the job done than does their manager. Finally, they're more likely to have the social networks that can attract good employees than do their managers or HR. The results -- reduced turnover, happier workforce, enhanced employee commitment, improved intra-team communication -- equal increased value for everyone. Let's tap it.

Graph on Income, Work Supports, and Non-Bank Services

2008-10-19T16:13:00.000-04:00

A graph on income that I put together. Discussion to follow. Please note that figures are estimates and need to be fine-tuned.

Employment and Social Networks of Low-Wage Workers

2008-10-06T09:28:00.001-04:00

I've become increasingly interested in the role that social networks play in low-wage workers' job searches. Specifically, are some groups, say recent immigrants, more likely to recognize and leverage their social networks than their American-born counterparts? Are certain demographics more accustomed to developing and using social networks to obtain employment? Are social networks utilized for education, training, and career development, or merely to get into any available job?

I was excited to recently come across a 2005 paper entitled “Getting Connected: Strategies for Expanding the Employment Networks of Low-Income People”, written by Shayne Spaulding and published by Public/Private Ventures.[1] This was a great primer on the importance of social networks to low-income job seekers. Spaulding cites research indicating that more than two-thirds of low-income job seekers find jobs through personal connections, compared to 40-50% of all job-seekers. Another study he cites reports that 88% of hiring managers for low-skilled positions rely on internal referrals from employees already working with them and that 64% use this as their primary recruitment method.

Spaulding then goes on to describe the challenges to effective utilization of social networks by low-wage workers. Among these challenges are; the small size of many job seekers’ networks; a reluctance to let peers or acquaintances know that they are looking for work; the homogeneity of employment situations among social networks (many unemployed or low-wage earners have social networks that include only other unemployed or low-wage earners); and a lack of awareness on how to take advantage of social networks in order to obtain employment. The paper then discusses a variety of programs implemented by workforce development agencies to train low-wage job seekers to use networks, most involving the development of an “elevator pitch” and business cards, and providing opportunities for job seekers to mingle with individuals in the jobs or careers they hope to obtain. The most novel solution was one by Street Tech in San Pablo, California, who worked with LinkedIn to develop an online networking application for low-wage workers. I plan to investigate this tool further, so more to come on that.

Spaulding also discusses the difference between ‘weak ties’ and ‘strong ties’ in employment networks, which he says is a concept put forth by Mark Granovetter in a 1973 work, “The Strength of Weak Ties”. Granovetter explains that information on available jobs often comes from ‘weak ties’, or individuals that do not know the job seeker well and who cannot necessarily vouch for the employability of the job seeker. Clearly, the value of employment networks would be greatly enhanced for both job seekers and employers if a trusted intermediary were able to vouch for the job seeker’s work ethic and reliability.

This concept of “vouching” in the job search is fascinating, as it ties in with the critical role that social capital (one’s reputation and social network of acquaintances, co-workers and friends) has played in microfinance. When low-income people do not have collateral for the loan they are taking out, their reputation and social network can be put on the line instead. This insight, that the risk of losing one’s reputation and social network can be a powerful motivator to repay obligations, is the foundation of Grameen and other microfinance and group lending models. Clearly, the importance of losing one’s social capital in an urban environment – where new friends and contacts are readily available – is less acute than it is in a small village where transgressors must live among, and be punished by, the transgressed for years to come. Yet, I still believe that tying “vouching” to an individual’s social capital in a meaningful way could be prove a powerful way to recruit quality employees.

Do employees who refer another employee feel a risk to their own credibility if the employee they referred does not perform well? How can employees be incentivized to only refer those employees that they know will perform well? How can we formalize this “vouching” in order to leverage its power on a larger scale?

[1] Spaulding, Shayne, “Getting Connected: Strategies for Expanding the Employment Networks of Low-Income People”, Field Report Series, Public/Private Ventures, November 2005.

Income Inequality in Miami-Dade. Does it Matter?

2008-09-22T10:48:00.000-04:00

As a collective, United States voters have traditionally felt more comfortable with the idea of income inequality than have our counterparts in other countries. Inequality is fine - most of us reason - because we are the land of opportunity where one's socioeconomic status is overwhelmingly determined by how hard and smart an individual chooses to work, and not by the social class that person was born into. Income inequality is socially acceptable because it is assumed that we have the tools to move between these classes at will. But what exactly are these 'tools' that enable social mobility? And what relevance does this conversation have for Miami-Dade?

Our nation's historical narrative is rife with American Dream success stories, many of which continue to permeate the popular consciousness today. For generations, we Americans have been famous for getting ahead by aggressively taking advantage of a variety of tools that enable social mobility. These tools are the classically American institutions like quality public education available to all; companies with histories of CEOs who started in the mailroom; banks that lend for small businesses or first-time home ownership; public transportation that allow workers to access jobs beyond their neighborhoods; and social networks that allow those who are struggling to learn from those who have 'made it' or even just 'made it out'.
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Miami-Dade's high level of income inequality presents an interesting context in which to examine the quality of our tools of social mobility, given that our income inequality is well above that of the U.S.'s as a whole. The U.S. has seen its Gini coefficient rise steadily over the past forty years, from 0.39 in 1968 to 0.45 in 2007(See Note 1). Miami-Dade has a Gini coefficient of 0.49, as reported by the County's Department of Planning and Zoning in May 2007(2). Compare these figures with those of countries like Canada (0.32), Spain (0.32), United Kingdom (0.34), India (0.37), and Japan (0.38)(3). If our high income inequality means that Miami-Dade's social classes are separated by schisms, this means that residents must rely all the more heavily on these tools of social mobility if we expect them to be capable of jumping from one class to another.

So, how do we stack up in Miami-Dade? Let's start with education. Americans generally acknowledge that a strong public education system, coupled with accessible financial assistance for higher education, has historically provided the backbone for economic mobility in our country. Yet in Florida, we spend the least of any state on state on per capita education, precluding our public schools from becoming the springboards that they ought to be, and instead, fostering demand for private schools that are inaccessible to the majority. Without the resources for a private education, even the most eager and talented young learners will struggle through our state's notoriously weak school systems. Current budget cuts for Miami-Dade schools make mitigation of this situation unlikely at best.

So what role can companies play in allowing workers to move up the social ladder? Unfortunately for South Florida, jobs where employees can move from the mailroom to the boardroom are virtually non-existent. Our top industries - tourism, retail and other services - are dominated by low-wage hourly positions, making even a mailroom-to-mid-level manager paradigm improbable. Despite the efforts by a variety of South Florida advocates to attract large companies with mid-level jobs, our education system has proved sufficient to scare most of them away. And hard work, at minimum wage, yields a whopping $13,580 annually. If a worker can maintain a second job that provides another 20 hours weekly for a total of 60 hours each week, he can bring home an annual income of $20,370. This leaves him still wishfully far from middle class, and even wishfully far from being able to provide his children the education that would allow them to someday strive for CEO.

Now for access to capital. Access to small business loans, mortgages, and even credit cards, has allowed many American entrepreneurs and first-time homeowners to bootstrap their way to the middle-class and beyond. However, many of Miami-Dade's low-income do not participate in the mainstream financial sector, using high-cost financial services like check cashers, bill payers, and pay-day loans, rather than relatively low-cost checking and savings accounts, credit cards, and ATMs. This means that much of Miami-Dade's low-income population lacks the financial history required for a home mortgage or to take out a small business loan. Without steering low-wage workers away from non-traditional financial services and into mainstream financial institutions through financial literacy education and business outreach, most of Miami-Dade's poorest will be unable to access the credit they would need to ever buy a home or start a business.

As for public transportation and inter-class social networks, Miami-Dade leaves much to be desired here as well. A weak public transportation system, together with strong geographic segregation among socioeconomic lines, makes getting to work a challenge for most low-income residents. Add to this the recent hike in bus fares when many estimate that low-income residents already spend nearly 10% of income on transportation. Does inter-class socializing - imagine churches in days of yore - provide opportunity for exposure between different socioeconomic classes? Consider that Miami-Dade is home to one of the country's wealthiest zip codes and the nation's very poorest and that they're only miles from one another. Fisher Island (33109) has an estimated household annual median income ("AMI") of $228,679, which was nearly five times the AMI for the U.S., while Overtown (33136), has an AMI of $17,566, or approximately one-third of the U.S. AMI(4). Do residents of these zip codes work or socialize with one another? Not likely when not even Domino's Pizza will go to Overtown.

In sum, Miami-Dade's income inequality becomes a much more critical issue when we lack the necessary quality and depth of underlying institutions that could otherwise allow low-income residents to move into a middle class and beyond. And we voters have allowed this to happen. Income inequality and social immobility are the logical conclusions of under-investment in education and regressive fiscal policies. It should be no surprise that companies capable of bolstering our middle class and tax base have no interest in relocating here. Miami-Dade has unwittingly become a testing ground for a new version of America where the divide between classes becomes more distinct, the institutions that enable social mobility are left to wither, and the American Dream can be hung out to dry. At a very minimum, we have an obligation to incorporate this reality into our local political dialogue.

Notes:

(1) The Gini coefficient is the primary indicator of income inequality among a given population. Gini coefficients range from 0.00 to 1.00, with 0.00 reflecting a population where every household has exactly the same income, and a coefficient of 1.00 representing a situation where one household has all of the income and the rest have none. Source: U.S. Census Bureau, 2005 American Community Survey, http://www.census.gov/.

(2) "Overview of the Socioeconomic Condition of Miami-Dade County", Social and Economic Development Council, Miami-Dade County Planning and Zoning Department, May 2007, http://www.miamidade.gov/planzone/pdf/overview%20of%20the%20Socio-economic.pdf.

(3) CIA World Factbook, https://www.cia.gov/library/publications/the-world-factbook/fields/2172.html.

(4) U.S. Census Bureau, 2005 American Community Survey, http://www.census.gov/. Estimated from 1999 figures, assuming 1.5% compounded annual growth rate.