How much longer can the U.S. economy continue to grow?
It depends in large part on how successfully the U.S. can bring people off the sidelines and into the workforce, says Jeff Korzenik, chief investment strategist at Fifth Third Bank.
“We are out of labor in the U.S. economy,” said Korzenik, the keynote speaker at IBJ’s annual Economic Forecast event on Thursday morning. “Will we, as a business community, be able to bring marginalized workers back into the workforce?”
The issue is of concern, Korzenik said, because each of the U.S. recessions since World War II has been preceded by a period of falling unemployment. The U.S. unemployment rate in October was 3.7 percent, which in economic circles is considered within the definition of "full employment."
“If we’re indeed at full employment, we have to start that clock ticking—when is the next recession coming?” said Korzenik, adding that his analysis suggests that the economy could hit a recession in 2021.
Those on the sidelines of the job market include adults struggling with opioid addiction.
“We’re missing two to three million people who, by age and sex, you would expect to be in the workforce," he said.
Another underutilized population is the 16 million Americans with felony convictions on their records. They often struggle to find jobs as a result—even those convicted of non-violent offenses.
The good news, Korzenik said, is that employers and the government are starting to tackle this issue. He noted that President Donald Trump this week gave his support to a bipartisan Senate bill that would revise sentencing and prison laws and help offenders prepare for life after incarceration.
At the same time, some employers are rethinking their policies about hiring ex-offenders, potentially opening the door to people whom they would have previously rejected.
“This is a major new trend that you will hear more about,” Korzenik said. “The business community’s getting more savvy about this.”
Two studies indicate that ex-offenders can succeed as employees, Korzenik said.
Johns Hopkins Hospital System and the U.S. military have hired ex-offenders, and studies from both employers showed good success among those hires, Korzenik said.
“If you can find the person who is ready to turn their life around, they are very committed to that process in ways that the average worker is not,” he said.
For employers, the key to success is to be selective in hiring. They should consider the nature of the offense and the person’s life history since incarceration. They also should make efforts to accommodate these workers’ needs.
Ex-offenders often live in poverty, Korzenik said, and poverty can pose a bigger obstacle to success than a person’s criminal record. For instance, low-income workers who can’t afford emergency car repairs and can’t get to work might lose their jobs as a result.
Some employers, Korzenik said, have put their staffs through poverty simulation training to make them more sensitive to these challenges. An employer, for instance, might offer to find alternative transportation or help arrange payment options with a mechanic.
Employers who are leery of hiring ex-offenders might start with small steps, Korzenik said, such as requiring that job candidates’ felony convictions are several years behind them. Employers can also tap into other segments of the population, such as retirees.
“If you’re short of labor, consider other options,” Korzenik said.