A Hand Up, Not a Hand Out! To Address Racial and Economic Injustice, Bridge the Skills Gap
There’s a problem with talent in the United States. Not a lack of it -- I would argue the opposite. The problem is that millions of talented, motivated young people across the country do not have access to the training and job opportunities that could catapult them into the middle class. According to the National Skills Coalition, 52% of jobs require education beyond high school -- but not a four year college degree. Yet, only 43% of workers have the skills training needed to fill these roles. Combined with a broken talent ecosystem where nearly all companies compete for entry-level talent on college campuses because they do not know where else to go, the outlook for low-income Americans -- and, in particular, Black Americans who are much less likely to have a bachelor’s degree -- was grim even before COVID.
For young adults, the pandemic’s long-term impact could be particularly devastating because of a downward trend in college enrollment. A recent report by Measure of America, A Decade Undone: Youth Disconnection in the Age of Coronavirus, estimates that more than six million young people are now disconnected from school and employment. Contrary to past recessions, college enrollment rates have dropped significantly due to COVID given the lack of appeal of paying for remote classes and the need to support affected family members, which will have lasting consequences for individuals who never earn a degree. Historically, less than 13% of people who leave college before graduating ever return. If we’re going to rebuild the American economy, we will need to invest significantly in alternative pathways to meaningful careers in the coming decade.
One of the most effective pathways is the nonprofit program Year Up, which offers young adults skills training and a guaranteed professional internship -- all at no cost to students. As discussed later, independent evaluations have confirmed its unprecedented impact on earnings for participants. Since 2000, Year Up has been supplying skilled, motivated talent to hundreds of top companies around the United States. Year Up’s success over the past two decades in connecting low-income young people of color with careers in finance, IT and other high-growth sectors provides a blueprint for how the country can ensure economic and racial justice for disadvantaged groups through targeted skills training, tangible connections to employment and a working talent ecosystem. Following the murder of George Floyd, major corporations around the country made promises to create more opportunity for Black Americans and other people of color. Partnering with organizations like Year Up is a critical component of turning those promises into reality.
I was first introduced to Year Up in 2004. A friend from Harvard Business School told me to go to Boston and meet with Gerald Chertavian, who had started a new program that sounded interesting. My wife and I were walking towards the office when suddenly, two young men ran past us, full steam ahead. When we got to the Year Up lobby, there they were, huffing and puffing. I asked them: “Why were you running?” And one of them said, “Well, we’re running to class. We don’t want to be late.”
I was astounded. These gentlemen were running to learn. When Gerald walked in to greet us, I immediately told him: “Whatever you’re selling, I’m buying.”
Since that fateful meeting, I helped launch a new Year Up campus in Providence, Rhode Island; I’ve hosted multiple Year Up interns and hired several Year Up graduates at my company, Providence Equity Partners; I’ve served as the Chair of Year Up’s National Board of Directors; and I’ve donated millions to the organization. As a white man born in a middle-class environment with the opportunity to attend great schools and universities, I know how lucky I am to have had a helping hand every step of the way. For thousands of young people, ages 18-26, each year, Year Up is that helping hand.
The Year Up program itself is fairly straightforward. In its one-year core model, students spend the first six months learning in-demand technical and professional skills, followed by a six-month internship at a corporate partner firm. Companies invest in Year Up for each intern they host (covering more than half of Year Up’s operating costs) and in exchange get access to a steady pipeline of superb talent.
Throughout the year, students earn a financial stipend (with points -- and dollars -- docked for behavior that could get them in trouble at work like, you guessed it, being late) as well as college credits for their coursework. They have access to robust wrap-around services, including on-staff social workers who can help them apply for health insurance, secure childcare, find transportation, and address other obstacles. Each student also has a dedicated coach and a learning community of peers who provide a strong, lifelong support network.
Simple, right? But making it work, year over year and in a growing number of markets, requires a truly exceptional leadership team at both the national and local level, coordinating with companies to make sure Year Up’s training matches their hiring needs and coordinating with students to make sure they have everything they need to succeed.
And they do succeed, consistently and in amazing ways. Earlier this year, the research firm Abt Associates published a study looking at Year Up’s impact on earnings four years post-program. Funded by the Administration for Children and Families (ACF) within the U.S. Department of Health and Human Services, the Pathways for Advancing Careers and Education (PACE) evaluation of Year Up was a randomized-control trial -- the gold standard of research. In this study, 2,544 young adults, who all met the admissions criteria for Year Up, were randomly assigned to either participate in the program or to serve as the control group, in which case they were directed to other community resources and could not join Year Up.
The results were the most impressive earnings impacts of any workforce development program to date. Year Up participants earned, on average, $8,000 more per year -- a 30-40% increase -- than members of the control group in the four years after they attended Year Up. (A follow-up study will look at even longer-term impacts on earnings in the seven years post-program.) Now, these are the results for all the young adults assigned to the Year Up group. Year Up graduates experience even higher wage gains. In the second half of 2019 and throughout 2020, despite the ongoing ravages of the pandemic, 80% of Year Up alumni were employed within four months of completing the program, earning an average starting salary of $44,000 per year. Before Year Up, most were working part-time in minimum-wage roles, if they were working at all.
The PACE study also did a cost-benefit analysis of Year Up and confirmed what I have always known: if Year Up was a stock, everyone would want in on it. The researchers determined that for every $1.00 put into Year Up, society gets back $1.66. And this was a conservative estimate that assumed companies only get a 50% return on what they pay to sponsor Year Up interns (measuring actual returns to employers was beyond the scope of the study, so researchers chose a 50% return based on interviews with executives, who cited both financial and social motives for partnering with Year Up). Now, I’m pretty sure corporate America would not partner with Year Up unless it was clearly good for business. Year Up interns become Year Up graduates, and Year Up graduates increase retention, engagement, and diversity. Working with Year Up also helps show customers and investors how companies are working towards advancing economic and racial justice. That’s why companies like Bank of America, JPMorgan Chase, Facebook and Salesforce are taking on hundreds of interns each year -- because it is a great deal and truly a win-win for all.
The challenge now is taking something that works and making it accessible to millions more individuals around the country. Scaling is not easy, and I have direct experience with scaling because at Providence Equity Partners, I helped grow the firm from $171 million in assets under management to over $50 billion. Scaling requires figuring out what is essential and where you can adapt and innovate. For Year Up, it means figuring out how to impact the economy more broadly and really move the needle on economic mobility by fixing the fragmented talent marketplace. It means evolving the delivery model and piloting different approaches to see what makes sense, including more technology-enabled solutions and shorter training for those who aren’t able to commit to a full-time, year-long program.
It’s not just about making sure a young adult has the skills and connections to land a great job -- that is only the first step. The end goal? An integrated ecosystem that quickly connects the right talent with the right employment opportunities. For example, Year Up is now partnering with local training providers to provide “last-mile” training that will significantly increase the number of young adults entering the job market set up for long-term career success.
Year Up also created a talent placement firm -- Year Up Professional Resources (YUPRO) -- to connect Year Up graduates and other non-traditional talent with roles across the country that provide social, economic, and career mobility. At the same time, Year Up is committed to supporting companies in creating more inclusive employment practices, recognizing that there are two sides to the problem -- supply and demand. To increase the demand for non-traditional talent, Year Up’s advisory services branch, Grads of Life, partners with leading corporations to assess their current talent practices, provide guidance and services like frontline manager training, set actionable goals, and educate employers more broadly on how to improve their hiring, retention, and promotion strategies.
Year Up’s work to pave the way for an inclusive, integrated talent ecosystem is inspiring -- but no single organization can fix a broken marketplace on its own. Companies and the federal government need to do their part to address the broader systemic issues that prevent millions of young people from reaching their full potential. On the corporate side, the biggest step companies can take is to review their job descriptions and see if they’re asking for four-year college degrees when a shorter training program could provide the necessary skills. By embracing demonstrated skills over credentials, we can create a society of life-long, adaptive learners and provide opportunities to many more people of color -- at least six million Black workers without four-year degrees already have the skills to move into higher-wage roles today. Employers also need to ensure inclusive promotion practices so that Black Americans and other under-represented employees can progress in the company, leading to greater diversity at higher levels. And finally, CEOs need to do more than push for diversity from the top -- middle and frontline managers have to be invested in making it work, and should be held accountable for lack of progress in the recruiting, retention and advancement of diverse talent.
In terms of the federal government, the funding model needs to be updated. The government currently spends billions of dollars on workforce programs with very little evidence of real, lasting impact. At the same time, federal grants have often required incredibly specific evaluation protocols that come at a very high administrative cost -- potentially as much as or more than the grant itself. The government should focus on outcomes and funding proven approaches like Year Up. When a Year Up graduate becomes a taxpayer, then the government should reward success.
The need for programs like Year Up will be greater than ever post-pandemic as more young people without degrees look for jobs paying family-sustaining wages. Beyond addressing unnecessary degree requirements, companies should establish talent pipelines from non-university sources (nonprofits, community colleges and other local organizations) to sustain inclusive hiring practices. Policy leaders and philanthropists should take a hard look at what is being funded and why -- are your current grantees producing great outcomes? As we work to ensure a more just economic recovery, business leaders, policy leaders and philanthropists all have an important role to play, and can all have a huge impact on young people, their families, and their communities.
About the Author:
Paul Salem is Chairman of the National Board of Directors of Year Up and has served on the board of Year Up for over 17 years. Mr. Salem is the Chairman of MGM Resorts International and Chairman of MGM Growth Properties. Previously Mr. Salem had served as a senior managing director at Providence Equity from 1992 until he retired in 2019. Mr. Salem helped grow Providence Equity from $171 million in assets to over $50 billion. He established their London office, served as a director of several of their investments and help found the credit affiliate Benefit Street Partners. Prior to joining Providence Equity in 1992, Mr. Salem worked for Morgan Stanley, in corporate finance and mergers and acquisitions, and for Prudential Investment Corporation, an affiliate of Prudential Insurance, in private placement financings and leveraged buyouts. Mr. Salem is on the advisory board the Carney Institute of Brain Science at Brown University and a board member of Edesia Global Nutrition. He is a graduate of Brown University and Harvard Business School.