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How Big Brands Are Trying To Cut Youth Unemployment—And Get Better Employees

Companies like CVS Health and Starbucks are looking to untapped sources of talent in ignored communities.

How Big Brands Are Trying To Cut Youth Unemployment--And Get Better Employees

[Illustration: MaryliaDesign/iStock]

At the Greater Lowell Technical High School in Massachusetts, students are learning what it takes to run a CVS store. The school has a full mockup CVS complete with a stocked pharmacy and shelves full of deodorant, toothbrushes, and notebooks. In the very definition of "hands on," students fill prescriptions, manage merchandise and pricing, and market the brand (though the pills they count don't contain active ingredients).

To Willa Seldon, a partner with the Bridgespan Group, the initiative is a good example of how companies and schools can work together to develop the talent businesses want. CVS Health has a deep need for entry level staff: it hires 1,000 workers a week to keep its 9,600 locations up and running. And recently it's been looking for "innovative ways to leverage un-tapped talent pools," in the words of David Casey, its vice president of workforce strategies. Three-quarters of the students at Greater Lowell are from low-income backgrounds, and, in the past, they might have been overlooked in favor of applicants who have completed high school and already developed workplace skills.

Bridgespan, a consultancy based in Boston, says companies are increasingly meeting their needs by hiring "opportunity youth"—the estimated 6.7 million people aged 16-24 who are neither in school or working. Seldon and her colleagues give some examples in a recent piece in the Stanford Social Innovation Review. State Street, Starbucks, Walmart, JPMorgan Chase, and Gap are all training teens and young adults from low-income communities (sometimes, as in CVS, before youths have left school). Forty-five companies have now joined the 100,000 Opportunities Initiative—a coalition committed to accessing "new sources of talent from communities that have not traditionally been included in our nation’s prosperity."

"There's an opportunity to address both the issues companies are facing but also address the issues of youth," Seldon says. "As we think about our future, these youth will ultimately be in positions that will sustain our economy. Not investing in them is a huge long-term issue."

Research shows that when young people aren't employed for more than a year, it seriously hurts their future. If you compare males with the same background and one gets a job and the other doesn't, there's a 23% difference in earnings 10 years later. And at the moment, many youths don't have jobs. At 12%, the unemployment rate for 16-to-24 year-olds is roughly double the full out-of-work rate.

Seldon says companies are recognizing they can meet their needs while doing good for their communities. "Many companies make some effort to introduce young people to what they do. What's new is that some are now saying 'we actually have a problem finding entry level workers who will stay with our organization' and they are taking a different approach," she argues.

That includes collaborating with nonprofits like Year Up, which identifies at-need urban youth, works with companies to understand the skills they need, and then trains young people in IT, finance and sales skills, as well as soft skills like how to dress for an interview and how to deal with criticism during a personnel review. Seldon says investing in such programs produces a win-win in the shape of higher retention rates and reduced costs from having to repeatedly hire new people. For example, Year Up interns that work at State Street, the financial services firm, stay an average of 45 months compared to just 16 months for 20-to 24-year-olds on average across the country.

Hiring someone with less schooling and training does come with challenges, and companies need different HR strategies than they've used in the past, Seldon argues. That includes screening candidates for native aptitude rather than their formal educational accomplishments. It means more one-on-one mentoring once young people are on the job. And it means more empathy and flexibility around home-life challenges, from childcare to court dates.

But Bridgespan thinks these extra responsibilities are worth it. It estimates companies will have 6 million entry-level positions to fill by 2022. Not to the mention the wider social impact of employing young people. "It’s a business imperative with very real social benefits," says David Casey, at CVS. "By offering opportunities for youth development, companies like ours are able to provide youth with a source of dignity, pride and identity through meaningful work and a more defined career track."

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