Microbusinesses Offer Millennials Pathways Out of Unemployment

Microbusinesses Offer Millennials Pathways Out of Unemployment

Says New Report By Association For Enterprise Opportunity

With headlines nationwide raising concern about disaffected youth, particularly in minority communities, the Association for Enterprise Opportunity (AEO) recently 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 was released at the “EconoCon25,” AEO’s national conference and 25th anniversary celebration, which ran on May 25, 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.

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 argues, “This is a very important endeavor 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.

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