Georgetown study argues Employment Social Enterprises significantly mitigate structural workforce issues

The findings from a recent webinar and report suggest that Employment Social Enterprises (ESEs) are significant market-based mechanisms that can address workforce misalignment by supplying employers with skilled workers while increasing economic mobility and addressing structural employment barriers. Business for Impact at Georgetown University’s McDonough School of Business recently delivered the webinar and report on Jobs for All: Employment Social Enterprise and Economic Mobility in the United States.

Business for Impact’s work aims to manage the triple bottom line of sustainable development - people, planet, and profit - and contribute to positive growth for disadvantaged populations. Several key groups have been identified as historically excluded from work in the U.S. These include: people who were formerly incarcerated; people with intellectual, emotional, and physical disabilities; immigrants or refugees; veterans; people from low-income backgrounds; and opportunity youth (defined as those between the ages of 16 and 24 who are neither employed nor in school). Researchers estimate 27-35 million individuals in these population groups want to work, yet face structural barriers to getting hired.

To address systemic barriers to employment and meet the triple bottom line, Business for Impact’s report suggests bolstering Employment Social Enterprises (ESEs). ESEs are “businesses that simultaneously sell goods and services while intentionally addressing employment-related challenges for workers.” Researchers emphasize that ESEs “are not traditional workforce development programs focused on education and training,” rather, they are unique because they offer market-based solutions to employment challenges.

Four ESE models were established in the research:

• General ESEs engage with multiple disenfranchised populations through various programs and services and typically receive significant funding from philanthropic and government grants.
• Targeted ESEs address specific population groups, offer more tailored services, and tend to generate more revenue than General ESEs.
• Connector ESEs place people in jobs by responding to employer demand for skilled workers offering tailored training, language education, supply chain integration, and other complementary support services.
• Corporate ESEs are programs or units embedded within larger companies that employ people from one or more of the key population groups.

Each of these models can be highly effective at employing people traditionally excluded from the workforce and creating pathways for upward economic mobility. They share in common two key programming tools: paid employment for participants, and support services for employees. In addition, Business for Impact’s research suggests that ESEs offer the greatest success in areas of sustained employment, increased individual income, number of individuals served, and financial stability of organizations involved.

The study offers four recommendations to support ESEs to scale up as well as out, which they expect to further facilitate upward economic mobility for groups facing employment obstacles and promote positive systemic change:

• Integrate public policy and enterprise solutions to encourage and support ESEs in offering paid transitional employment;
• Support ESEs in scaling out, which requires greater philanthropic funding and ‘impact-first’ investments, as well as up by developing partnerships with larger organizations;
• Corporations can expand their talent pipelines by creating partnerships with Connector ESEs and working directly with General and Targeted ESEs; and,
• Systems approaches to workforce inclusion should put ESEs at the center of any solution.

However, Business for Impact notes that implementation still presents several challenges, including a reduced eligibility for foundation funding and public program participation because of their structure, as well as a disconnect between ESEs and mainstream private employers. This results in employers “missing an opportunity to tap into a pool of skilled, ready-to-work employees,” and wider labor markets are inaccessible to ESE workers. Nonetheless, their research findings maintain that when different parts of the system work together and enable the success of ESEs, we can achieve greater economic mobility for more people of traditionally excluded groups.