MICROBUSINESSES OFFER MILLENNIALS PATHWAYS OUT OF UNEMPLOYMENT
If One of Every Two Main Street Businesses in Low-Income Neighborhoods
Hired, Trained or Mentored One Millennial,
the trajectories for millions of disconnected youth would be changed forever.
Report to be Released at AEO National Conference
at the Hyatt Regency, Capitol Hill, Washington, D.C.
WASHINGTON, DC– With headlines nationwide raising concern about disaffected youth, particularly in minority communities, the Association for Enterprise Opportunity (AEO) today released a timely report that outlines the critical ways the microbusiness industry can link millennials to economic opportunity.
With about 40 million youth in the U.S., between the ages of 16 and 24, most are working or in school, but an estimated 5.5 million, or 14%, of those youth are unemployed or not in school, many of them living in low-income neighborhoods. “They are disconnected. We call them Opportunity Youth,” said Connie Evans, AEO’s President and CEO. “We need to reach them so that they are tomorrow’s success stories.”
A new report, funded by the Charles Stewart Mott Foundation and entitled, “Linking Young Adults to Microbusiness: Providing New Pathways to Economic Opportunity,” finds that microbusinesses, which employ five employees or fewer, can offer several pathways out of unemployment for these youth. According to new AEO data analysis, released separately from the report, an estimated 10.2 million microbusinesses are in low-income communities.
“If one out of every two Main Street businesses in low-income neighborhoods were able to hire, train or support one millennial, we could transform the lives of millions of young adults who are currently facing limited opportunity, and are at serious risk for falling between the cracks,” Ms. Evans said.
The report includes input from several youth involved in a model program in Chicago, called IT Ambassadors, launched by the Chatham Business Association in 2013. IT Ambassadors gives at-risk Chicago youth, aged 16 to 24, the opportunity to gain technical, office and interpersonal skills by providing technology and marketing services to small businesses, chambers of commerce and others. Since its launch, the Chatham Business Association has trained 34 youth to be IT Ambassadors.
“In Chicago, we are enriching microbusiness and youth in a full-circle way,” says Melinda Kelly, Executive Director at the Chatham Business Association. “We provide opportunity to smart young people, brightening their futures, and, tapping their acumen in technology, they help move our microbusinesses forward. Everybody wins.”
The new report reveals that almost one in two young adults, aged 18 to 24, currently not in school and unemployed or underemployed, are highly interested in starting their own business, but don't know how.
“At a critical juncture in our country’s history for youth, we must return to the spirit of entrepreneurship that buoyed so many lives in America and give our young adults the skills, resources and support they need to realize their dreams, participating in the great American Dream on Main Street as resilient, innovate, creative business owners or employees in our country’s great microbusiness industry,” says Ms. Evans.
The report recommends promoting youth entrepreneurial training that teaches business acumen, life skills, financial literacy and an “entrepreneurial mind-set,” to help youth launch start-ups, join start-up teams and get hired by existing businesses. The report notes that these kinds of opportunities can help stave off unemployment, incarceration, early pregnancy, low income and the cycle of economic hardship that marks the futures of too many vulnerable youth today.
The study will be released at “EconoCon25,” AEO’s national conference and 25th anniversary celebration, running May 18, 2016, to May 20, 2016, at the Hyatt Regency Washington, D.C., on Capitol Hill. Last year, the Charles Stewart Mott Foundation, a philanthropy based in Flint, MI, dedicated to promoting a just, equitable and sustainable society, provided generous support to AEO to underwrite the research initiative with the aim of uncovering new economic opportunities for underserved young adults.
The report notes that youth face unique challenges, including increasing student debt, rising college tuition costs and disturbing rates of unemployment. While the national unemployment rate is about five percent, unemployment for youth, aged 16 years to 24 years, is much higher than for adults 25 years and older, the report says. For teens, the unemployment rates are about four times higher than for those 25 years and older. For youth, aged 20 to 24, the rates are about double.
Younger people and people of color face a “harsher reality,” the report says.
Depending on minority status, the unemployment rate for youth, 24 years of age or younger, ranges from eight percent to 32 percent.
“Disconnected youth are more often from lower-income communities and more likely to be of a minority group,” Ms. Evans said. “It’s critical that we reach them with opportunities that can help them unlock the American dream.”
The report recommends that the microbusiness industry offers millennials a pathway to financial stability by either helping them start a business, providing them training in a microbusiness program or putting them to work in a microbusiness. But, the report notes, there is a “sizeable gap” in the services that nonprofits in the microbusiness industry offer youth. Only about half of the organizations surveyed offered special services for young adults. Less than 15% of clients were aged 18 to 24, the report says. However, in a bright note, the report finds that most microbusiness organizations want to reach youth and help them join their ranks.
The report recommends several measures to support youth, including:
Expanding youth entrepreneurship education, with scholarships
Replicating and scaling existing youth entrepreneurial programs
Targeted outreach to attract more youth
Connecting youth development programs and organizations to existing entrepreneurial programs, as well as employment and training opportunities through small business owners and mentors
Creating innovative financial products, supports and initiatives for youth
The report argues, “This is a very important endeavour and strategies should be implemented now, before young lives veer too far off course, especially for those who have the fewest opportunities.”
In doing its research, AEO conducted a multi-tier survey, which included: youth, aged 18 to 24; entrepreneurs, aged 18 to 64, who started successful businesses in their youth; conversations with business owners about their perceptions of youth, staffing challenges, and opportunities for youth employment; AEO members to assess their current capacity for serving youth; and an advisory roundtable of youth and microbusiness industry leaders.
(To schedule a print or broadcast interview with AEO’s Connie Evans, please contact Michael K. Frisby at firstname.lastname@example.org or 202-625-4328. The full report can be downloaded HEREor contact Mr. Frisby.)
About Association for Enterprise Opportunity (AEO)
The Association for Enterprise Opportunity (AEO) is the voice of innovation in microbusiness and microfinance in the United States. For 25 years, AEO and its more than 450 member/partner organizations have helped millions of entrepreneurs contribute to economic growth while supporting themselves, their families and their communities. AEO members and partners include a broad range of organizations that provide capital and services to assist underserved entrepreneurs in starting, stabilizing and expanding their businesses. Together, we are working to change the way that capital and services flow to underserved entrepreneurs so that they can create jobs and opportunities for all. Learn more about The Association for Enterprise Opportunity at http://www.aeoworks.org/