Sunday, August 18, 2013

AARP partners with private sector in innovative initiative to address long term unemployment among older workers

This week, Bloomberg News highlighted an innovative private and non-profit sector collaboration to address the issue of long term unemployment in the United States in the wake of the 2008 financial crash.  According to an April 2013 report of the Joint Economic Committee of Congress, almost 40% of the currently unemployed in the U.S. have been looking for work for more than 6 months and over 25% of the unemployed have been searching for over a year.  While youth unemployment has declined over the past year and young people have exited the labor market to pursue education and training, older workers (especially those over 50) find themselves over-represented amongst the long term unemployed, as do African American and Hispanic workers.  Official statistics do not fully capture the real number of people who have been unemployed for one, two, three or more years because once a person stops "looking" as officially defined, they stop being counted.  In May 2013, Bloomberg News reported that long term joblessness feeds upon itself, as stigma sets in.    The longer a person is out of work the harder it is to find a job.  Those affected are parents with college-aged kids, homes and cars, losing all the perqs of long careers and being productive members of society with homes, cars and retirement funds.  They find themselves without options, having lost everything that gave them status in society and having to start again from scratch - while competing against younger workers and suffering discrimination based on both their age and long-term joblessness.  The plight of older workers who lose their jobs is captured in this August 26, 2013 New York Times article about older workers being shut out of the economic rebound.

The Bridges to Employment program, modeled after Platform to Employment or "P2E", was first implemented in Bridgeport, Connecticut in December 2012 as a joint initiative of the American Association of Retired People (AARP) and The Workplace, Inc. to provide assistance to unemployed persons aged 50 and over to re-enter the workforce.  The AARP has taken an intensive interest in employment issues for older Americans.  In addition to its co-sponsorship of job creation programs like Bridges to Employment, the AARP developed Life Reimagined, a website dedicated to career advice for older Americans, conducts research and publishes studies on age discrimination such as its 2013 report Staying Ahead of the Curve about perceptions of discrimination against workers aged 45-74 and lobbies Congress and State Legislatures to strengthen anti-discrimination protections for older workers.

After completing a 5-week training program, a participant in Bridges to Employment transitions to a job try-out in which P2E pays up to 8 weeks of salary for the participant to work for a private sector employer.  The program is similar to those partially funded by the European Social Fund in the Sensitive Urban Zones (ZUS) in the suburbs of Paris and other major French cities to improve labor market participation of disadvantaged youth, except that rather than public funding of unsustainable public positions that go away after a few years, the hope is that payment of direct subsidies to employers will result in sustainable positions in the private sector.  As reported by Bloomberg, the Executive Director of The Workplace Inc. says employers prefer direct funding to tax credits.  While Americans and Europeans may have philosophical and cultural differences about whether funding should come from private or public sources, the advantage of providing the funds to private sector employers rather than public sector entities is it supports businesses still recovering from the ongoing effects of the Financial Crisis and can provide much-needed cash flow to small- and medium-sized businesses.  There is general consensus among labor market economists that small- and medium-sized businesses are the engines of job creation, as discussed in this March 2013 paper by Michael Grimm and Anna Luisa Paffhausen.

So far, the Bridges to Employment programs seems to be a success.  Not only do participants have high rates of permanent employment, but the program is in the process of being duplicated around the United States.  For example, in Dallas in February 2013, the program was expanded to cover both long-term unemployed and Veterans, with the governmental Workforce Solutions of Greater Dallas, non-profitYWCA of Metropolitan Dallas and private Citi Community Development and the Walmart Foundations joining The Workplace Inc. and the AARP Foundation as funders of the operation.