First Step Staffing's multi-year contract with San Bernardino County is one of 19 case studies about innovative, results-based workforce development models of funding and risk-sharing featured in Workforce Realigned, a new publication from Social Finance and the Federal Reserve Banks of Atlanta and Philadelphia.

Based in Atlanta, First Step has expanded its impact by acquiring for-profit staffing firms in Atlanta, Philadelphia, and southern California. With access to these active new accounts, First Step places job seekers experiencing homelessness into open positions as natural turnover occurs.

In southern California, First Step bought part of OS4Labor at the end of 2019. To help First Step capitalize the acquisition, San Bernardino County agreed to a performance-based contract, advancing $1.5 million to First Step in exchange for the enterprise’s commitment to place at least 70% of the County’s candidate referrals up to 2,000 individuals per year. First Step provided $300,000 as collateral in case of underperformance.

The case study highlights three powerful components of this contract design, noting that it:

• Pairs government advancement of startup funds with an outcomes-based contingency that shares risk and ensures public dollars achieve their goals
• Creates mutual incentives to hit the referral and placement targets within the contract
• Represents a cost-effective approach for the public sector and other impact investors to expand high quality programs

To date, First Step has placed 453 individuals through its San Bernardino branch, including about 150 people referred by San Bernardino County. The average hourly wage rate is $16.60, and 90-day retention has ranged between 40% and 50%.

A larger number of County-referred individuals have received employment offers from First Step but have turned them down for various reasons including the type of work offered, commuting distance, personal challenges, or their ability to secure other employment. As First Step adds new and more varied customer assignments in San Bernardino, they expect a higher rate of acceptances.