KEESA
Today I'm speaking with Jeffrey Korzenik, who is chief investment strategist for one of America's largest commercial banks, responsible for the allocation guidance for over one. For over $40 billion in investments. He is a leading expert on the RE employment of people with criminal records and the author of the new book Untapped Talent, How second chance hiring works for your business and the community. Jeffrey, I am so excited to chat with you. We've been chatting about chatting for a very long time now. Welcome to the podcast.
JEFFREY
Thank you so much. Delighted to be here.
KEESA
And you know what? All things work together the way they're supposed to work. When we start talking, we're in a different economic situation.
The marketplace looks a bit different right now today. Jeffrey, as you know we're in a labor shortage, so let's talk about second chance hiring in the context of that, and is why is it so important for companies to focus on this in the midst of that shortage?
JEFFREY
Because this labor shortage is not going away, there are some impact on the labor force that's been created by the pandemic. What what economists call reallocation, friction, jobs have moved from industries from geographies and it takes the labor market time to adjust. But more profoundly, we have a demographic challenge. In the United States.
And really, in the entire Western world, we stopped having enough children decades ago, and so this labor shortage has the baby boomers retiring on average over the next decade.
At 10,000 retirees at day, the millennial generation is largely all in and we just don't know how.
Have enough workers coming up through the demographic ranks so the answer becomes we must make the best use of our existing population and make sure that everyone who has been marginalized by the workforce is given an opportunity to participate.
KEESA
So if we're looking at some of the current trends or factors talking about the post pandemic workplace also is something that comes to mind. If we look at the statistics looking at the market right now, when it comes to second chance hiring if we look at the statistics pre pandemic. Versus looking at the statistics now, could you say they've improved? Or are things being worked on? Where are we?
JEFFREY
One of the things that you find out very quickly in investigating this area is there's a lack of data. We do have one data point from prior to the pandemic and that showed that the average unemployment rate for those who have exited prison in the United States was 27% and that was at a time that the national unemployment rate Was three or 4%. That gap likely has not closed. But we're starting to get momentum. There have been a couple of notable Events that are showing that the American business community is ready start to start looking at this and implementing this when I'll highlight real quickly.
By way of example, is the new second Chance business coalition. This is 30 odd of some of the most prominent American corporations. The They are committed Not just to saying they're going to be doing a fair hiring, they're actually committing to pilot programs and data sharing and best practices.
Sharing among this large group of companies that is new, and I think that's important leadership from the business community.
KEESA
So we're talking about the American business community we're talking about what's going on in the US. Are things quite different in other parts of the Western world or in other parts of the world in general I'm just wondering if the way that we engage with the population that population is different.
JEFFREY
Across the world, it's a particularly important issue in the United States because of the size of our justice impacted community, roughly 19 million Americans have felony convictions on their on their on their on their records And that's a huge impediment. No other Western country has any anywhere near that kind of size of population. Of course, you flip that, That means we also have this enormous potential resource. Other countries appear to have less problems with reintegration of people from the prison system. Again, data is a problem there, but in the US you have the big obstacle as well as the big population, so that's why the focus is in the US. But I'm seeing interest in the book. It's showing up in Libraries in New Zealand and in Australia. This is an international issue. We all face the labor shortage. We all should be making the most of our current population and I think it's fair to say that every country can do better.
KEESA
And that's why I'm so excited about the work that you're doing, Jeffrey, the research that you're doing. Let's talk about this in context of how this is impacting at a societal level. You know we talk a lot about ESG, environmental, social governance. We talk about investments in ESG, how corporations are responding and integrating ESG, can we talk About do we expect this to at one point be a component of the S? The social factor? For example, you mentioned the lack of data. ESG data is. Coming into his moment, we're seeing a lot more of it. Do we see this as being a part of a company questionnaire in the future, and it comes to how they're answering those questions.
JEFFREY
I, I think that's clearly the direction it makes so much sense. There are few actions that a company could take that can have more impact on the societal level than second chance hiring. It's a path to so many better results, not just corporate bottom line results, but it helps address racial inequality. One in three black men in America has a felony convict. It helps address income inequality. We've seen things like expungement of records increases, incomes in the University of Michigan, study of those whose whose criminal records have been expunged. See a 25% increase in in income over a two year period. So income inequality, racial inequality. All these things require second chance. Hiring to move forward. So yes, I think it will increasingly be part of an ESG scoring.
KEESA
This sounds so wonderful. This sounds like it will really take us to where we need to get to in society. I can't imagine that there are detractors that there are those who oppose this idea, but I'm not that naive, so tell me who. Where is the opposition coming from do are there really the tractors who are saying no?
JEFFREY
What one of the challenges is that many business people have tried It, but tried it not using the right model of success, so they've actually had a negative experience. True second chance. Hiring requires both a candidate selection process. You have to figure out who is ready to turn their life around and be a good employee, and then critically, it's not just offering them a job, it's having a support network.
Giving people the opportunity, giving them the tools they need to throw Five so you have businesses that went about it. Without that sort of intentional and structured approach. But beyond that you have fears of negligent hiring liability. We're of course a fairly litigious society in the United States, even though it's very rare that companies get sued for hiring someone with a criminal record. Who committed some act. That exposes the business to to live additional liability. It's a. It's a legitimate fear. I always tell people I have fire insurance on my house, even though fire houses hardly ever catch on fire. Businesses approach this negligent hiring liability. The same way, there's also fears that the quality of the work is not going to be very good. That's been proven wrong. Time and time again by people who follow this this true second chance model. Second Chance does not mean second rate and then the final fear is our reputation risk and I think that this is something that perhaps is more of an issue. 10 or 20 years ago today, fellow employees and customers of a business want their business to be involved in solving social problems and second chance. Hiring today can be a reputation plus not a reputation net.
KEESA
So in keeping with that Jeffrey, you you are investment strategies. You know the types of things that investors institutional investors are looking for when it comes to investing in corporates, what would be the narrative? The message that a corporation could share with an institutional investor to really say hey This is, this program is really going to help us generate more revenue. This program is going to help us save money. Is there a strong economic argument that can be made for a corporation who's sharing this with their investor as a potential plan?
JEFFREY
We know at the macroeconomic Level that growth is a function of how fast can you grow your workforce and how fast can you grow their productivity at the corporate level. If you are a corporation in the tight labor market that is not constrained by a labor shortage because you've figured out how to tap this, this, this potential labor pool. It gives you a competitive advantage. You can grow faster than your competitors. You can service your clients and their customers better than your competitors and you by gaining this competitive advantage. You can also have some Second, secondary impacts that I found with companies that have done this. The act of opening up your mind to second chance hiring and the kind of innovation and spirit of innovation that is required to make this succeed spreads into other areas of the company. This is this is the heart. The ESG story if you're open to a broader picture of your company and how it can participate in the economy, you tend to be just a better company on every level, and that is, in my observation, particularly true of companies that do second chance.
KEESA
So there's the argument. Definitely if a company employers are interested in resources to implement second chance hiring into their workplaces you just talked about some best practices. What is the best thing they can do to get those resources and I want to just jump in and say, Buy your book!
JEFFREY
Well, thank you and it is meant to to solve that that question. But there are lots of other resources out there. I think it's important to win over the HR professionals on your team. The Society of Human Resource Management, the Global Trade Association of of HR Nationals has created a new certification for second chance hiring called getting talent back to work, and they've made it free not only to share members the side of human resource management members, but even to the general public can do this, so that's that's a starting point. There are other companies and foundations that are second chance employers. Some Have launched resources that are available for the public Daves Killer Bread Foundation. Daves Killer Bread is a bakery in a multi state.
The bakery that has long been a second chance employer and advocate the Daves Killer Bread Foundation has a playbook for employers with some great resources. As checker. A background check organization that not only is the second chance. Employer but can help help other employers properly narrow their search parameters. For a background check to make sure they're not excluding talent. So those are just a few resources out there. There are many more, but those are great starting points.
KEESA
Well, Jeffrey, such a great conversation. I'm hopeful that this will continue to take off an important issue, because 19 million Americans have felony convictions on their record, a huge population and no other Western country has this size, and so we're seeing that other countries have less of an issue really reintegrating people into their systems and this Way second chance hiring creates a path to racial equality, creates a path to address income inequality. So another reason why this is so import. And also the reputational risk that people thought that employers thought existed. Actually it's the flip of that. They're really showing that as employers they're involved in solving social problems, which is huge. Bigger talent pool means that you can grow faster. You can service customers better and I love your.
And I'm going to quote this, Jeffrey, your thought that second Chance hiring does not mean second rate, but it really exposes a employer to the spirit of innovation. And it really spreads to all areas of the business, which can help with profitability. Jeffrey, thank you so much for joining us today.
JEFFREY
Thank you great to be with you.
