March, 2022

 

Ninety-nine percent of all businesses are ‘small,’ representing 80% of employment across the U.S. The Small Business Administration definition for a small business is dependent on three factors – the NAICS code, annual receipts, or the number of employees. Employee size can range from 500 to 1,500, depending on the industry. Does this sound like a small business to you? In my view, workforce development boards (WDBs) should focus on those smaller companies with 10-50 employees (10-50s). Why? The 10-50s represent 86% of businesses and almost 30% of all employment – of the companies with more than ten employees.

However, the reality is this – the 10-50s business segment is typically invisible for most WDBs. Either small businesses are not aware of the workforce system, or WDBs are not aware of them due to limitations of the available labor market information. Ironically, the 10-50s need the support and services of WDBs more than other businesses and likely present the most significant opportunity for building relationships that benefit both the job seeker and have a lasting impact on the business community.

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The 10-50s most need the support and services of WDBs as they likely present the most significant opportunity for building relationships that benefit both the job seeker and the business community.

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The Federal Worker Adjustment and Retraining Notification (WARN) Act protects workers, families, and communities by requiring employers to notify them 60 calendar days before plant closings and mass layoffs. The 10-50s, however, are not required to file a WARN notice with the State. And most do not, creating negative impacts on the economy, individuals, and families. In most instances, all this activity flies entirely under our radar. These “invisible” closures don’t generate headlines.

Not only are the 10-50s under the radar, but they’re also not even on the radar. WDBs have no way to identify who these companies are and, worse, no way to determine the health of these businesses without intrusive and probing questions of the business owner. There are factors contributing to the invisibility of the 10-50s:

• • Aggregated LMI data used for the development of broad strategies, not targeted engagements
  • Companies self-select to participate in the workforce system (i.e., job postings and job fairs)
  • Most businesses don’t even know the workforce system exists
  • WDBs work with the small number of companies they already have relationships within their community

WDBs, to effectively serve their clients, need to work both sides of the equation. On the one hand, WDBs must be willing to grow their business relationships by engaging with these 10-50s. On the other hand, they also need to support the business partners already in the system. The challenge for both approaches is knowing a) who needs help, b) what and where the opportunity is, and c) how to begin. WDBs can easily support this underserved segment using actionable, predictive business data to provide a 20/20 vision.

 

The 10-50s are in most need of WDB support and services.

This business segment consists of companies where the owners wear multiple hats. They may be the company’s accountant, the HR department, facilities manager, product developer, and sales and marketing. These businesses meet the criteria for program support, and honestly, this is where WDBs can make the most impact. Why? Because the 10-50s are:

• • Where the most significant number of employment opportunities for job seekers
  • Not required to file a WARN notice, and hence are under the radar
  • Responsible for 2 to 50 employees, and every action impacts lives (positively or negatively) in a meaningful way – the smaller the company, the bigger the impact
  • Located in hard-to-reach rural communities or hidden within the city boundaries, amplifying the impact of a closure or layoff event
  • Likely to be women, minority, disabled, veteran-owned, or BIPOC businesses

One can quickly understand why this is an important segment for WDBs, with unique challenges. One of the challenges of the priority client groups within WIOA is transportation. It is often a barrier. WDBs need to factor in location, location, location with every placement. Being able to work within neighborhoods or bordering communities is critical. Does your client reside near a hiring business? Are they located on a bus route? Can they ride a bike to work? The more advanced WDBs use a data-driven approach to find 10-50s hiring based on growth predictors and pinpoint employment opportunities within targeted ZIP codes. The ability to do a proximity search of all nearby businesses by zip code, not just the ones registered in your system, with the click of a mouse, is a game-changer for WDBs, wouldn’t you say?

 

The most important sectors for the 10-50s are growing.

As this bubble chart shows, Eating & Drinking and Health Care are the top industries for this business segment – and they have experienced growth over the prior quarter. But what is invaluable to WDBs is understanding who the businesses are behind these industry bubbles and their financial condition. WDBs can then engage in a meaningful way with companies within their priority sectors.

Eating & Drinking Establishments

Not surprisingly, the largest sector in the industry bubble chart for the 10-50s is eating and drinking establishments. Most importantly, this sector is staging a comeback from the pandemic, as noted by a one percent relative growth over the prior quarter. People are eager to go out to wine and dine again. Restaurants are fully open, with booked reservations and wait lines. Summer tourism is around the corner, and in-school and older youth programs are perfect for eating and drinking establishments. These are strong indications of more growth on the horizon, jobs for the 10-50s, and opportunity for the WDB to serve the business community.

That said, compared to pre-pandemic times, this sector is experiencing a significant amount of failure risk, with a ten percent absolute increase in Eating/Drinking companies with medium to high risk of failure since before the pandemic. This combination of growth + failure risk creates an interesting scenario for WDBs – financially vulnerable companies experiencing consumer demand and trying to staff up — and why now, more than ever before, they should reach out and engage with these businesses.

 

Health Care 

Another essential sector to this segment is Health Care, which has seen a five percent relative increase in employment over the last quarter. While small clinics, community clinics, nursing, rehabilitation facilities, physicians, and ambulatory services are vital to this industry, the rising trend in traveling nurses and aging care are likely contributing factors to this growth.

These occupations are all on-ramps into career pathways for the health sector, beginning as certified nursing assistants (CNAs) and licensed practitioners (LPs). CNAs and LPs provide high-touch engagement with the aging population, especially in rural communities, and offer assistance through various telemedicine strategies.

Honestly, I can’t remember reading a local plan in recent years where health care wasn’t a priority sector. The opportunity for on-ramps and career pathways in this sector is clear – so don’t forget to include these 10-50s when planning a job fair.

 

Use cases for the 10-50s span a broad spectrum.

There are numerous successful use cases targeting the 10-50s business segment – from programs focusing on youth, diversity, equity, and inclusion, in rural communities and cities, on-the-job training (OJT), job fairs, and Welfare to Work experiences.

One timely example for this business segment is the food & beverage sector as job sites for summer youth employment.

With Spring around the corner, most WDBs are entering the critical window for Summer job development. In one rural community in California, a WDB needed to place 150 students for the Summer and identify growing businesses that could employ them. The WDB is now partnering with about 100 companies to do just that using actionable data. That’s a significant impact for a small rural community. Using actionable data, WDBs can begin to conduct outreach and immediately set up work experiences to serve older youth and plan for those entering Summer vacation in several weeks and will need to work.

Another target group will be those enrolled in the Welfare to Work (WtW) program. During the pandemic, the Governors across the nation activated a good cause exemption to the WtW program, effectively eliminating the required work component for the last two years. We will have a convergence of events soon – the kids out for Summer break, restaurants fully open, and the good cause exemption removal. WDBs need to be prepared to provide various work-experience job sites for these client populations. We shouldn’t wait until they show up in the Job Center to begin this work. Instead, let’s anticipate the need and build a system that is proactive and actively serving our communities – job seekers and business community alike.

Another important yet often overlooked need for engaging the 10-50 this business segment is Job Fairs outreach. Outreach can be challenging if we only look at job postings on national job boards, representing only a self-selected fraction of the “real need.” Instead, using actionable data to access all 10-50s and then filtering to identify and predict growth will make WDBs aware of many new partners and target a more diverse cross-section of community businesses with good jobs. These 10-50s can also benefit from leveraging the resources and expertise of the Job Center, helping them save time and the cost to find new employees.

 

WDBs can make a lasting impact on the 10-50s.

Every WDB needs to measure what matters. It’s all about outcomes and impact. Actionable data gives you that edge to better understand a business, the business health, and the community overall. Imagine the impact you can have if you save jobs, especially since layoffs have an exaggerated effect on this group, even more so in a rural community. Consider the positive impact on the business and the region:

• • A layoff of five people translates to a loss of half their workforce. You could save those five jobs, stabilize the business and keep the community whole with predictive business data.
  • A restaurant in a rural town that employs 40 local people is not only employing a lot of townspeople, but it’s the hub and heart of that town. And if it’s gone, you don’t just lose the jobs; you lose the sense of belonging and community that a business provides. If those jobs leave that community, the workforce’s economic benefit potentially goes with it. You can work closely with the company on a retention strategy using actionable data.

One final thought, WDBs should rethink and change their mindset toward the 10-50s. WDBs should embrace this segment, seek them out and recognize their importance and the value they represent in contributing to the economic vitality and diversity of the community and the opportunities they present for the WDBs. It is only a matter of access to actionable data. Knowing these finer points can drive successful outcomes and make a lasting impact.

 

PHOTO CREDIT: "More Cafe Bar Restaurant / Trafalgar Street" by Dominic's pics is marked with CC BY 2.0.