How Employers Are Using Practices Like Fair Chance Hiring and Apprenticeships to Increase Equity and Upward Mobility in the Workplace

August 11, 2022

This report was authored by Rachael Doubledee, Daniel Krasner, and Molly Stutzman and funded by the Annie E. Casey Foundation. We thank the Foundation for its support. The findings and conclusions presented here are those of the authors alone, and do not necessarily reflect the opinions of the Foundation.

The last few years have laid bare stark economic inequalities and racial injustices across the U.S. and their impact on the country’s workforce. In 2021, a record number of Americans left their jobs – many due to lack of career advancement opportunities, burnout, and low wages. Those who are staying put are asking employers to keep up with market wages and the increased need for flexibility that arose during the pandemic. Across industries, unionization efforts materialized as lack of sustained workforce protections came into focus and the pendulum of market power swung closer to the worker.

JUST Capital’s polling of the American public shows that a majority, across demographics, are continuing to look to companies to take action to address income inequality, create good jobs, and advance racial equity. Our 2022 Workforce Equity and Mobility Ranking, developed with support from the Annie E. Casey Foundation, highlights the companies that are leading on these interconnected issues. This new ranking looks at which companies are disclosing key data points and performance metrics that show how they’re taking concrete action to foster career opportunities and development, as well as improve diversity, equity, and inclusion (DEI) initiatives, particularly for young workers of color.

The companies featured in the 2022 Workforce Equity and Mobility Ranking are setting clear DEI targets, adopting inclusive hiring practices, and prioritizing career development. They recognize that these efforts are not just about creating and filling any job, but about providing access to jobs that offer opportunities for growth, fair pay, robust benefits, and the flexibility and support needed to manage work-life balance. Members of historically excluded groups, including Black and Hispanic individuals, are overrepresented in frontline hourly positions, which do not always offer pathways to advancement and lack most of the elements listed above. Building these pathways and increasing representation across and within industries is imperative to ensure good jobs are within reach for those frequently disconnected from career mobility, including young workers of color.

“It’s about creating a workforce that looks like the world we live in across every level, including senior leadership. It’s about creating an environment where people don’t feel like they need to be someone else from the time they walk into work to the time they leave. And it’s about equity,” Cynthia Bowman, Chief Diversity & Inclusion and Talent Acquisition Officer at Bank of America told JUST, on how the company defines success in this work. “It’s about creating processes that diminish bias, allow you to promote within, generate more inclusion in our everyday practices from the time you hire, how you onboard, how you conduct calibrations, how you retain talent, how you recognize talent, and how talent leads your organization.”

Read on to explore why these are essential efforts for employers committed to equity and mobility and how companies topping the list are leading by example through focusing on apprenticeships, fair chance hiring, and tuition reimbursement among other practices.

Start With Specific DEI Targets

The 2022 Workforce Equity and Mobility Ranking’s findings make clear that employers committed to inclusive mobility must begin by focusing their DEI efforts on specific DEI goals. Leading companies set diversity, equity, and mobility hiring targets to increase diverse representation in a company’s workforce, management, or both. The best-practice examples in our ranking included companies with quantitatively measurable, publicly disclosed, time-bound targets for hiring, workforce composition, promotion, and retention. In fact, 62% of the 100 top-performing companies in the ranking disclose a diversity hiring target compared to only 13% of the rest of the Russell 1000. This means that the 100 top-performing companies are 4.6 times more likely to hold themselves publicly accountable to a diversity hiring target than the other ranked Russell 1000 companies.

Tracking progress on DEI targets to ensure that goals are met is as important as setting the targets themselves. Companies are increasingly aware that diversity is beneficial to both company culture and organizational performance. Hiring individuals from varied backgrounds helps organizations remain agile and meet the shifting expectations of their stakeholders, an increasingly important priority in a time of historically low institutional trust. It is now necessary for companies to invest in upholding their DEI commitments and take actions that many workers see as not only the best thing to do, but also the right thing to do.

The barriers that historically excluded communities face at the intersections of race, class, and educational privilege are often deeply embedded in traditional hiring practices. Network gaps, educational costs, and guarded access to institutional knowledge have hindered these communities’ access to opportunities and career mobility. Recognizing these barriers is the first step to developing hiring practices that can attract and retain talented people from historically excluded backgrounds. Initiatives like apprenticeships and fair chance hiring, which we detail below, open new pathways for young, talented candidates and address barriers that keep people out of the workforce.

Make Hiring More Inclusive with Apprenticeship and Fair Chance Programs

Apprenticeship Programs

Apprenticeship programs, while similarly designed with the intent of developing the future workforce, are distinct from internships. Internships are available to college students and usually focus on entry-level work. Apprenticeships are generally paid, available to individuals who do not have and are not pursuing college degrees, and involve mentorship and skills training that lead to industry-recognized credentials. Apprenticeships are an increasingly common way for employers to ensure that job candidates have the skills they need to succeed in the workplace and to foster a culture of learning and exploration among their own workforce.

As U.S. policymakers contemplate the 43.4 million borrowers who are burdened by federal student loan debt, and as young people skeptically weigh the economic benefits of an academic degree, companies are beginning to recognize the importance of establishing additional pathways to occupational success. Apprenticeship programs offer an opportunity to reach a larger share of young people from historically excluded backgrounds who lack access to formal academic education. Companies and potential employees alike are acting on the promise of such programs for inclusive opportunity. According to the U.S. Department of Labor, between 2012 and 2021 apprenticeship programs registered with the federal government have seen a 64% increase in participants. In 2021, there were nearly 27,000 active registered apprenticeship programs across the nation.

The industries with the greatest representation in our 2022 Workforce Equity and Mobility Ranking are Banks, Commercial Support Services, Utilities, and Software. These industries are among the most likely to disclose that they have paid apprenticeship programs that do not require a college degree. Banks that are ranked in the top 100 are 4.3 times more likely to have an apprenticeship program than Banks in the rest of the Russell 1000. Software companies in the top 100 of the ranking are 12.6 times more likely to have an apprenticeship program than their Russell 1000 counterparts (85.7% compared to 6.8%). Commercial & Support Services and Utilities had a modestly increased likelihood (1.3 and 1.1 times respectively) of companies in the top 100 of this ranking having an apprenticeship program compared with their Russell 1000 peers.

The leading companies’ apprenticeships range from partnering with other organizations to developing internal apprenticeships. Salesforce partners with Year Up to support a portion of its registered apprentices through an apprenticeship to internship model. The model’s results speak for themselves: Salesforce reports hiring 50% of the apprentices-turned-interns as full-time employees. Microsoft’s LEAP program, an internal apprenticeship model, features pathways for various current and future roles that Microsoft and other tech companies may need. In other industries, Lockheed Martin provides full-time opportunities to high school graduates through its T.A.L.E.N.T. (Training Aspiring Locals to Engineer a New Tomorrow) Registered Apprenticeship program and General Motors is currently searching for apprentices who have passed four college-level courses. These programs are registered with the DOL, and apprentices gain the credential of a federally certified program.

Apprenticeship programs are very successful in attracting young and early career professionals. According to the Registered Apprenticeship Partners Information Database System (RAPIDS), which collects demographic data from 48 states that report to the Office of Apprenticeship within the DOL, 38% of apprenticeship program participants were under 24 years of age, and approximately 40% were between 25 and 34. However, these programs have not reached their full potential in attracting people of historically excluded backgrounds: 46% of people hired through apprenticeship programs in the U.S. identified as white, while 8% identified as Black, and 21% indicated that they were Hispanic. There is also a noticeable gap in gender inclusion – only 13% of active apprentices identified as women, and 0.4% did not identify their gender. Addressing equity gaps in apprenticeship opportunities is crucial to ensure the career mobility they generate is realized across demographic groups.

While examples like those of Salesforce and GM represent what is possible when companies prioritize apprenticeship programs, it is important for employers to continue to remove barriers their apprenticeship programs may pose to young adults from historically excluded backgrounds. In particular, companies should increase access to apprenticeship programs by making the programs easy to find and apply for and removing educational and financial barriers for applicants.

Fair Chance Hiring Policies

Many justice-involved youth have trouble finding and maintaining employment, even decades after an initial arrest. Juvenile records are not expunged in most states, and are often left available for law enforcement and employment background checks, which can bias employers against hiring people who have been arrested even if the arrest did not result in a conviction. Despite decreases year over year since 2010, over 700,000 minors are arrested every year. Lack of access to stable job opportunities that keep up with the cost of living following incarceration often results in recidivism.

Given the estimated two million people who are currently incarcerated in the U.S., and the 500% increase in incarceration rates in the last 40 years, these realities have devastating implications for the well-being and financial stability of young adults and people of color.

Fair chance hiring policies give employment opportunities to people regardless of their criminal history. Individuals with criminal records or felonies face more barriers to finding employment and may struggle to break cycles of intergenerational poverty or build generational wealth. However, few companies have or publicly disclose such policies, despite former President Obama’s 2016 Fair Chance Business Pledge initiative and the longstanding “Ban the Box” movement’s efforts to encourage fair chance hiring.

Only 25 companies in our 2022 Workforce Equity and Mobility Ranking disclosed that they had fair chance policies – and of those 25 companies, 12 were in the top 100. Although few companies have fair chance hiring practices, the top 100 companies were 7.3 times more likely to disclose fair chance hiring practices than the rest of the ranked Russell 1000 companies. We also noticed a similar trend in examining fair chance policies among two of the top-performing industries as we saw with apprenticeship program disclosures. Companies in both the Banks and Commercial Support Services industries were 1.4 times more likely to have fair chance policies. No Utilities or Software companies disclosed fair chance policies.

One company that has excelled at inclusive hiring practices is Slack, acquired by Salesforce in 2021. Slack has married the two metrics we analyzed, apprenticeships and fair chance hiring, by creating apprenticeship opportunities for formerly incarcerated individuals. This work began after Slack’s CEO, Stewart Butterfield, visited a prison located near Slack’s headquarters and met with participants in The Last Mile, a nonprofit that provides workforce development programs and computer coding training to incarcerated students. In 2018, Slack started the Next Chapter initiative in partnership with The Last Mile, the Kellogg Foundation and FreeAmerica to host paid apprenticeships for graduates of the program.

Slack also encourages employees to volunteer with The Last Mile at San Quentin State Prison and Butterfield says this initiative gives employees a sense of pride and purpose, which helps with company culture and retention. Perhaps most importantly, this model for fair chance hiring can be easily replicated in other parts of the country. As of June 2022, Next Chapter has expanded to 14 companies, including PayPal, Zoom, Dropbox, and Square. More companies can support their local communities by offering good paying jobs to individuals who need them most. It is not yet clear if Salesforce will scale Slack’s fair chance hiring initiative across its operations, though an expanded policy could mark a significant shift in access to opportunity for people with criminal backgrounds.

Focus on Career Development Through Access to Paid Training and Formal Education

Companies leading on inclusive hiring practices must also prioritize career development so that initial job opportunities can lead to upward mobility for young employees. In addition, a recent study by McKinsey indicates that employees frequently point to lack of opportunity for career advancement as a major contributor to The Great Resignation. Companies can mitigate the barriers to advancement often faced by historically excluded groups with career training and tuition support – and in so doing benefit from a more experienced and diverse team. By providing employees at all levels with opportunities to build skills, gain educational credentials, and capitalize on clear career pathways, companies can lead on inclusive mobility from the frontline to the C-suite.

Professional development and tuition reimbursement programs are two ways for companies to address these gaps and shifting workplace expectations from employees. These programs have the potential to decrease expensive turnover practices and retain talented employees. A study of 2,000 industry-based managers found that companies that offered professional development opportunities had 34% higher retention, and employees were on average 15% more engaged. In addition, 92% indicated that having access to professional development and career advancement resources was important.

These policies were well reflected in the top 100 companies in the 2022 Workforce Equity and Mobility Ranking. We found that tuition reimbursement was a widely adopted strategy across ranked companies; even so, leaders in the top 100 were 1.5x more likely to have disclosed that they have a tuition reimbursement policy for employees. All but four of the top 100 companies disclosed that they offer tuition reimbursement. We also assessed the number of paid hours that companies disclosed offering to employees in job training or career development. On average, companies in the top 100 offered 13 more hours in training or career development per employee (32 hours compared to 19 hours).

How companies are stacking up against the public’s expectations to tackle the interconnected issues of workforce equity and mobility remains difficult to assess, in large part due to a lack of clear and consistent target-setting and action across the private sector. We continue to see a dearth of disclosure on key performance metrics related to inclusive hiring practices and career development. As such, the leaders are often distinguished by their transparency on worker-related metrics and policies in addition to their performance.

When companies think locally and develop policies that eliminate barriers to employment, instead of complicating access to opportunity and mobility, they are more likely to end up with a more diverse and committed workforce – a win for both businesses and the communities they serve.

Learn more about which Russell 1000 companies are taking action in our full 2022 Workforce Equity and Mobility Ranking. For more information on how we’re engaging with the country’s largest employers on these issues, reach out to our team at programs@justcapital.com.