Why Entrepreneurs Should Take a Gamble on Young People
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By now, you’ve heard it everywhere: Today’s college graduates face a job crunch the likes of which young Americans have not faced since the Great Depression.
It’s a perfect storm of negative circumstances for 20-somethings: a sluggish economy, a record number of college graduates seeking white-collar work and a recent financial crisis that wiped out the retirement savings of older workers, preventing their jobs from turning over on schedule. By all accounts, the supply of professional jobs comes nowhere close to meeting the demand of young job seekers.
What most people aren’t talking about, however, is the other side of the supply and demand curve. When jobs are in short supply, it's a great time to be a supplier. And with so many qualified, ambitious young people out of work, small businesses have a once-in-a-generation opportunity to recruit from a large pool of top talent.
It’s a matter of simple trickle-down capitalism. The most desirable entry-level jobs -- the positions at Fortune 500 companies that have traditionally attracted the top graduates of elite universities -- are tougher to come as a result of lower retirement rates, industry losses and slow growth, leaving the best and brightest graduates to set their sights on second-tier opportunities.
The effects of the job crunch cascade down the line of graduates, making thousands of young people available to employers that they may not have considered otherwise. In 2000, success meant Wall Street or a dotcom firm. Today, it’s just having a job.
This should be music to the ears of entrepreneurs. Bright young college graduates are willing to take a chance on small businesses and startups. Now, it’s your turn to take a chance on them, even though the risks of hiring in an economy where capital remains tight can be substantial.
The decision to hire a 22-year-old without a lot of work experience isn’t one that's likely to lead to short-term profits. Employers can find it a more time-intensive effort to bring a new graduate up to speed as opposed to onboarding someone who knows their way around the workplace. But when this activity is viewed as an investment, finding the right young person in this job market can be a decision that pays dividends for years.
Young people bring energy, ambition, fresh ideas and familiarity with modern technology to workplaces. They also represent blank slates of sorts for small business owners, as they haven’t been socialized to follow the practices of another company and aren’t set into routines or working styles that more seasoned hires may have a difficult time of shedding. Hiring an employee directly out of school gives employers the opportunity to shape a person's professional growth and development -- an experience that can be rewarding on both a personal and monetary level.
Members of this generation of young people, undoubtedly shaped by the job crunch, have also proved to be exceedingly loyal to their employers, reducing a certain amount of risk by increasing the probability that employers will be able to recoup their onboarding costs.
Tom Nearny, CEO of United States Liability Insurance Group of Wayne, Penn., hires new graduates every year. He recently told The Philadelphia Inquirer that his retention rate in recent years has been near 100 percent. Of the experience of working with young people, he said, "It helps me learn how they see things, how they hear things, how they understand our culture. It helps fuels things. I’ve just been amazed at how much talent there is.”
Politicians have repeated ad nauseum that small businesses and entrepreneurs are the engines that drive job creation. And with the 1.8 million members of the class of 2014 hitting the streets this month, this is entrepreneurs' opportunity to be a part of that engine. The road to recovery begins when entrepreneurs take risks, and the buyer’s market for youth employment has never been hotter.