The Economy & Workforce: The Reentry Opportunity

The Economy & Workforce: The Reentry Opportunity

Jeffrey D. Korzenik Chief Investment Strategist

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Is the Economy Running Out of Labor?

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Is the Economy Running Out of Labor?

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Labor Market Conditions

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Unemployment Trends

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Opioids and Drug Abuse Deaths in the United States by Cause 80000

70000

23,238

60000

Opioidrelated overdoses

Number of Deaths

50000

58,000 55,000

49,068 43,000

40000

40,000

30000

20000

10000

0 Drug overdoses (2017) U.S. soldiers in Vietnam War Car crashes (1972 Peak)

HIV/AIDS (1995 Peak)

Gun homicides (1993 Peak)

Source: Centers for Disease Control, Vox Note: Numbers are rounded estimates

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Incarceration and Recidivism International Rates of Incarceration United States Rwanda Russia Brazil Australia Spain China Canada France Austria Germany Denmark Sweden India 0.00%

0.10%

0.20%

0.30%

0.40%

0.50%

0.60%

0.70%

0.80%

Source: Walmsley, R. (2015). World Prison Brief. London: Institute for Criminal Policy Research.

Available online: http://www. prisonstudies.org/world-prison-brief

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The Opportunity

Source: University of Georgia

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The Opportunity 80,000,000 70,000,000

70,000,000 60,000,000 50,000,000 40,000,000 30,000,000 19,000,000

20,000,000 7,304,910

10,000,000 2,392,589 0

ly nt rr e Cu

ri p n i

le ro a p n r o o n so

ly nt rr e Cu

ly er m or r f o

le ro a p n r o o on ir s p in

t as p r o nt e rr Cu

y on l fe

s vi er p su

n io

ac er t In

w la e h t th i w n tio

Source: University of Georgia, National Employment Law Project

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A Changed Environment

January 6, 2018

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Modeling a Second Chance Society

Private Sector

Government

Employers willing to employ second chancers and provide support for needs typical to that community

Reduction of barriers to employment of second chancers and support for employers who hire them

A True Second Chance Society

Non-profits Preparation and referral of workforce, supplemental employee support, respecting the needs of employers

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Supplementary Models • Transitional employment • Incarceration work experience • Advanced professional training • Entrepreneurship

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Inaction Comes at a Cost

Annual shortfall of workers at full employment:

=

1.248 million

=

1.149 million

Number of people reportedly misusing prescription opioids

=

11.5 million

Cost of each year of potential growth lost: GDP of $20 trillion x ~2.5% real growth

=

$500 billion

Average payroll growth minus natural demographic and immigration contribution

5-year re-arrest rate (~76.6%) x Number of people released from jails and prison annually (~1.5 million)

Source: Fifth Third, University of Georgia, U.S. Department of Health & Human Services, Bureau of Justice Statistics; Note: all numbers are estimates, estimated 2017 GDP data used

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Disclosures & Definitions U-3 Unemployment Rate is the total unemployed as a percentage of the civilian labor force. U-6 Unemployment Rate is the total unemployed, plus all persons marginally attached to the labor force, plus total employed part time for economic reasons, as a percent of the civilian labor force plus all persons marginally attached to the labor force.

Nonfarm payrolls measures the number of employees on business payrolls.

The Labor Force Participation Rate refers to the number of people who are either employed or are actively looking for work. The number of people who are no longer actively searching for work would not be included in the participation rate.

EBITDA, or Earnings Before Interest, Taxes, Depreciation, and Amortization, is one indicator of a company’s financial performance and is sometimes used as a proxy for the earning potential of a business. EBITDA strips out the cost of debt capital and its tax effect.

GDP (Gross Domestic Product) is the total market value of all final goods and services produced in a country in a given year, equal to total consumer, investment and government spending, plus the value of exports, minus the value of imports.

The Federal Funds Rate is the short-term interest rate targeted by the Federal Reserve’s Open Market Committee (FOMC) as part of its monetary policy.

The U.S. 10-Year Treasury Yield is the pre-tax yield to maturity on Generic United States on-the-run government bill/note/bond indices.

Sources: News, economic and market information compiled from various sources including Bloomberg, FactSet, and Wall Street Journal Opinions are provided by Fifth Third Private Bank. This information is intended for educational purposes only and does not constitute the rendering of investment advice or a specific recommendation on investment activities and trading. The mention of any specific security does not constitute a solicitation or an offer to buy or sell any security. This information is current as of the date of this presentation and is subject to change at any time, based on market and other conditions.

Asset Allocation, Diversification, Alternative Investment and Hedging strategies are intended to mitigate the overall risk within your portfolio. Some strategies may be subject to a higher degree of market risk than others. There are no guarantees that any strategy presented will perform as intended.

Indexes are unmanaged and do not incur investment management fees. You cannot invest directly in an index. Past performance is no guarantee of future results.

Fifth Third Private Bank is a division of Fifth Third Bank offering banking, investment and insurance products and services. Fifth Third Bancorp provides access to investments and investment services through various subsidiaries. Investments, investment services and insurance:

Are Not FDIC Insured Offer Not Bank Guaranteed May Lose Value Insurance Products are made available through Fifth Third Insurance Agency, Inc. Are Not Insured by Any Federal Government Agency Are Not a Deposit

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