I've run my own business by hiring people who are new (or down on their luck) that are obviously smart and have potential. I've done this for several years, and while the business has not done well (I attribute that to my own incompetence) I can point out a long trail of people who worked for me at $10-$15/hr who left my company to get real jobs paying more than 5x that.
Uh, but yeah, actually I've had more people asking me for work than I have money of late, though, so if you shoot me an email lsc@prgmr.com I can send you a few promising resumes.
buy me lunch or something if you like one of 'em.
but yeah, how do I find people? Uh, the first was a few years after the .com bust. The guy was my roommate, randomly. Obviously he was really smart, and an excellent programmer, though he was chronically unemployed. I paid his rent and used him on my 'book price search' venture, which flopped due to competition, and on some consulting gigs. He left for a real job, and hasn't had trouble keeping a job since.
the second was a guy I worked with during the first .com boom. I met him working in a deli a few years after the crash. I hired him for a little more than what the deli was paying, he worked on my current xen vps hosting venture.
The third was that guy's roommate. I really got lucky that time.
The forth was a guy just out of highschool who I met when I spoke at the LUG in Davis. He was a customer for more than a year before I hired him.
Uh, that's the other thing. You have _much_ more flexibility if you are willing to let 'em work from far away. I haven't listed the foreigners I've hired, but there have been a few, good and bad.
But yeah, overall, make sure your social circle includes people who are both poor and smart. Make offers if you know people working jobs that are beneath them. But the thing is you are looking for a market inefficiency. these are rare things. People who are good don't stay cheap for long. Be patient, and don't hesitate to act when you spot someone good.