A handful of innovators have developed successful programs to help lift low-income workers into the middle class. Can their model become the norm?
For Amber Mitchell Ikpe, learning computer software skills was only part of the experience at Year Up, a nonprofit job training program.
The coursework, followed by a six-month internship at a company, included classes on speaking in public, teamwork, professional behavior and attire. There was a closet with men’s and women’s business clothes, and an ironing board.
Year Up also arranged help with basic needs including subsidized child care, medical insurance and food assistance. When her car broke down, she got a grant to get it fixed.
“Without all that, I would never have finished,” Mrs. Ikpe recalled.
After graduating from Year Up, Mrs. Ikpe landed a technology job with a near six-figure salary. Five years later, she is a homeowner in suburban Atlanta and considers herself upper middle class. She now works for an education and networking nonprofit for Black technology managers.
The Year Up program is one of a relative handful of nonprofits that have established track records of lifting low-income Americans into jobs that can be ladders to the middle class.
They share a holistic approach to work force development. They foster close relations with employers. They offer training for in-demand work skills and coaching in “soft skills,” like communication and teamwork. And they provide or arrange help with daily life challenges, like child care and transportation.
But while growing, these programs are small. Even larger ones, like Year Up, reach only a few thousand students a year.
The Biden administration is trying to prod often ineffective local and regional training programs to adopt the comprehensive model of the successful nonprofits. The administration has allocated $500 million in grants for its Good Jobs Challenge, a part of the American Rescue Plan of pandemic relief spending.
The 32 grant winners were announced in August, with the money going to communities in 31 states and Puerto Rico for work force development programs. The goal of the government’s jobs-challenge competition over the next few years is to generate more than 50,000 good-paying jobs — which means more than the prevailing wage for an occupation in a region — with benefits. Creating opportunities for disadvantaged workers is a priority.
The jobs-challenge competition required the local applicants to offer training, services and engagement with employers — the ingredients seen in programs like Year Up. It did not seek a grant, but may work with local and regional grantees.
“We do know what works, but making it work at scale is very difficult,” said Todd Fisher, who oversees the American Rescue Plan programs at the Commerce Department’s Economic Development Administration. “We’re trying to encourage and replicate more of these comprehensive work-and-learn models.”
The United States government spends less on job training and support for workers, as a share of economic activity, than most other developed countries. And private businesses have traditionally regarded spending on training as an obligation that is largely beyond its principal, profit-making role.
But there are signs of change in corporate America that, if expanded, could open the door to opportunity for many more low-income workers, according to work force experts.
Corporations are beginning to change their hiring behavior, prodded by a tight labor market and pressure to diversify their work forces. More companies, experts say, are broadening their recruiting efforts, adding apprenticeship and other on-the-job training programs.
Dropping the four-year college degree requirement is a critical step. Recent research shows companies are gradually trimming the degree prerequisite in job listings.
The four-year degree filter is a rigid barrier to advancement for many workers. Nearly two thirds of American adults do not have four-year degrees. Screening by college degrees hits minorities particularly hard, eliminating 76 percent of Black adults and 83 percent of Latino adults from the job pool.
In recent years, organizations like Opportunity@Work and the Markle Foundation have pushed the concept that skills rather than degrees should be the basis for hiring and career advancement in most occupations.
A 2020 study by researchers from Opportunity@Work, Harvard University, Cornell University and the professional services company Accenture dissected skills in different occupations and found that up to 30 million workers had the skills to realistically move to new jobs that paid on average 70 percent more than their current ones.
That study coined an acronym for those without college degrees but with valuable work experience — STARs, which stands for “skilled through alternative routes.”
Last month, the Ad Council began a public-service advertising campaign that features successful STAR workers and calls the bachelor’s degree requirement the “paper ceiling.”
The marketing drive, which is planned to run for two years, is being done in cooperation with Opportunity@Work. The campaign has the financial and marketing support of corporations including Accenture, Chevron, Google, IBM, LinkedIn, Walmart and Workday, all of which are easing college degree requirements in hiring.
Changing beliefs come before changing behavior, said Gerald Chertavian, chief executive of Year Up, which he founded more than two decades ago. And Mr. Chertavian is encouraged by the recent shift in hiring practices at some corporations.
This year, about 4,000 students will enter Year Up programs at locations across the country.
The Year Up students are 18 to 29. To be accepted, they must have a high school diploma or the equivalent. The program is designed to help low-income young people. Three-fourths of the students are Black or Latino.
The course tracks include software development and data analytics, but also general business skills like project management and sales support. Since the pandemic, classes are a hybrid mix of in person and online.
Over the years, the soft skills, mentoring, coaching and support services to help students stick with the program and navigate corporate life have been layered on.
The students pay no tuition and receive a small stipend during coursework and a larger stipend during their six-month internships with employers. The graduation rate is 70 percent, and the average starting salary for graduates is $48,000, a middle-income wage.
The income gains are lasting, according to a long-term, federally funded evaluation of the program. In updated findings published in May, the researchers found that after six years, Year Up students — including those who did not graduate — made 30 percent more than a comparable group of young people who did not experience the program.
An engine of growth for Year Up recently has been forging deeper relationships with corporations that host large numbers of the program’s interns. The appeal is mainly to self-interest: Studies show that companies pay up to 30 percent more for college graduates than for those without four-year degrees but equivalent jobs skills and experience, and turnover is higher for college graduates.
Corporate diversity goals are also an incentive. Mr. Chertavian makes the case that work force diversity will increasingly become a competitive consideration, similar to the environment and climate change, an issue that employees, customers and investors care about.
“Some major corporations are realizing this is not a nice thing but a really valuable thing,” he said. “It’s becoming part of their talent acquisition strategies.”
Four companies are hosting more than 100 Year Up students as interns this year, and the nonprofit expects the number of companies to more than double next year, suggesting the current economic uncertainty has not yet affected diversity hiring plans.
Typically, about half of the student interns are hired by their host companies, and most others are able to get jobs elsewhere. Eighty percent of Year Up students are employed or enrolled in postsecondary education within four months of graduation.
JPMorgan Chase brings in more than 300 Year Up students for internships annually. The program’s students tend to possess an outsize drive to succeed because they have different life experiences than most bank employees, said Daniel Clarke, a vice president of emerging talent at JPMorgan Chase. “They come from situations that are tough and they pushed through,” he said.
One of his colleagues, Aaliyah Morgan, an emerging talent program manager, dropped out of high school and endured stints of homelessness. But she persevered, earned her high school degree and found her way to a Year Up program in 2016, which led to an internship at JPMorgan Chase.
Ms. Morgan graduated with a business skill in anti-money laundering analysis, but she said more important were the counseling, coaching and confidence building at Year Up and JPMorgan Chase. “It gave me the self esteem to feel that I could actually fit into a place where I never thought I could,” she said.
There is a growing track record of success for programs that are attuned to the hiring needs of business but go well beyond teaching technical skills. The older, larger organizations that evolved over the years include Year Up, Per Scholas, NPower and Project Quest. More recent entries showing strong results include Merit Americaand Pursuit.
Lawrence Katz, a labor economist at Harvard University, was the lead author in a 2020 study of the comprehensive programs, which included Year Up, Per Scholas and Project Quest. Such programs, they concluded, delivered lasting wage gains of 11 percent to 40 percent.
“There are very valuable lessons here for the government to improve its programs,” Dr. Katz said.
Applying those lessons on a broader scale is the purpose of the government Good Jobs Challenge grants.
“This is a significant commitment of resources, and there will be a lot of eyes on the results,” said Maria Flynn, chief executive of Jobs for the Future, a nonprofit that will identify and share best practices among the grantees. “That will really influence what is proposed and funded going forward.”
Steve Lohr covers technology, economics and work force issues. He was part of the team awarded the Pulitzer Prize for explanatory reporting in 2013. @SteveLohr