A Pathway to Opportunity for Low-Wage Workers
An Interview with Rebecca Taber Staehelin and Connor Diemand-Yauman of Merit America
A conversation with Rebecca Taber Staehelin and Connor Diemand-Yauman, the Co-Founders and Co-CEOs of Merit America. Formerly leaders at the innovative large-scale open online course provider, Coursera, they are now building the non-profit organization Merit America, to provide a path for the millions of Americans who are currently in low-wage jobs to skilled careers and financial independence. Merit America’s approach pairs the best of online learning with cohort-based support and employer partners to build an effective, scalable pathway to opportunity for working adults. Merit America has the ambitious goals of generating over $1 billion in wage gains by 2024 and reaching more than 100,000 low-wage workers. To date, Merit America has served over one thousand underemployed workers and driven millions of dollars in annual wage gains for graduates, and has been described as “the hybrid future of training programs for the disadvantaged," by the NYTimes.
Robin Mendelson: What is your vision for Merit America? What problem are you trying to solve, and how big is the opportunity?
Rebecca Taber Staehelin & Connor Diemand-Yauman: There are 53 million working adults in America -- nearly half of the workforce -- who do not earn a living wage. Our current higher education system is largely failing these low-wage workers: fewer than one in 10 low-income adults will earn a college degree by their mid-20s, with enormous disparities in attainment by race. In the workforce today, 74% of Black Americans and 81% of Latinx Americans do not have Bachelor’s degrees -- even though the vast majority of good jobs in the U.S. require more than a high school degree.
We founded Merit America to meet the specific challenges facing low-wage workers. Our learners don’t have the time or money to go back to school for multi-year degree programs. They lack the schedule flexibility to participate in full-time training programs offered by traditional nonprofits and bootcamps. They struggle to find the structure and support to finish online courses on their own. Even though millions of talented people are stuck in low-wage jobs, looking to advance their careers, our country doesn't have a solution for what they should do to improve their economic outlook.
Our goal is to be that scalable, sustainable solution: building a new pathway for hundreds of thousands of low-wage workers to move into the middle class and beyond. Our near-term goal is to drive over $1 billion in wage gains by 2024.
We prepare low-wage workers without college degrees for in-demand careers at scale, by combining flexible online learning with best-in-class coaching and peer support. Our programs work for people who work: they’re designed for underemployed and unemployed adults, who can learn while they balance work and family. In everything we do, we obsess over Merit America’s “social profit”: our total wage gains driven less our costs. Without this dual emphasis on impact and scalability, we won’t be able to meet the incredible need and opportunity.
Mendelson: Why is your work so crucial at this unprecedented time? How does Merit America create equitable access to jobs? How does your model work with learners and employers?
Staehelin & Diemand-Yauman: The COVID-19 pandemic has made the need for reskilling programs like Merit America even more stark, given the clear vulnerability of low-wage workers to economic shocks and the disproportionate negative impacts they’ve experienced throughout the pandemic. Since March 2020, more than 50 million Americans have filed for unemployment benefits. Low-wage workers -- the exact population Merit America supports -- have been hit the hardest in terms of job losses and reduced incomes. Historical patterns from the Great Recession suggest that low-wage workers without additional education will face the longest road to recovery: workers with a high school diploma and no degree lost 5.6 million jobs in the 2008 recession and recovered only one percent of those job losses between 2010 and 2016. And low-income students’ enrollment in higher education -- disproportionately low to begin with -- has plummeted.
We are very aware that both of our college experiences came with incredible benefits and privilege -- we were both able to immerse ourselves in full-time learning for four years. Unfortunately, that model just doesn’t work for millions of people who need to balance school with significant work -- in large part due to the skyrocketing cost of college. (College tuition has increased eight times faster than wages between 1989 and 2016.) Right now, the tens of millions of talented adults stuck in low-wage work have three choices: keep working in low-paying jobs with little to no opportunity for advancement; try to earn a degree while working, which could take 6-8 years; or drop everything and go back to school. We want to provide an alternative pathway that meets people where they are, with a fast and flexible way to get into a great new career with minimal disruption to their lives.
At the same time, even through the pandemic, employer demand for skilled workers is significant. Demand for middle-skill jobs, in information technology and other fields, continues to increase, outpacing supply. Economists predict that the number of workers sufficiently educated to work these middle-skill jobs will fall millions short of employer demand. Nearly 70% of human resource professionals report an inability to recruit and retain middle-skill talent. To meet labor market demands, 16.4 million additional workers will need to earn post-secondary credentials by 2025.
Merit America trains talented workers and connects them to the employers who need to fill important, hard-to-fill positions at their companies. We help learners find higher-paying jobs through two primary avenues. First, we build strong relationships with local and national employers to source roles directly for Merit America graduates. For example, we have a strong pipeline for graduates into technical roles at JP Morgan Chase in Dallas, and those roles are sourced and managed by Merit America’s team of Employer Placement Managers. Second, we coach learners in an independent job search, helping them craft resumes, prepare for interviews, and project manage their job search process to get hired. Each learner receives support from a Placement Coach at Merit America who guides them through the job application process.
Mendelson: You paint a stark picture for underemployed workers and unmet needs for employers -- and significant market demands. What is distinctive about Merit America’s approach to this problem?
Staehelin & Diemand-Yauman: There are three things that make Merit America unique: our impact, our scale, and our sustainability.
On impact: the majority of our graduates secure new careers in 6 months, moving from average pre-program salaries of $25,000 to average post-program salaries of $47,000 -- almost doubling their income. And the impact is even greater when you account for benefits and advancement opportunities, as well as what happens to someone’s family and community when they begin earning a living wage.
On scale: from our founding, we designed a direct service model that could scale without requiring major design changes, combining scalable technology with coaching and peer support in a model that makes online learning work for a population that online learning alone has failed in the past. Merit America has already grown explosively, from a 15-person pilot in 2018 to 1,000+ learners total (and even more anticipated growth driven by newly launched partnerships with Uber, DoorDash, Amazon Fulfillment Centers, Infosys, and more).
On sustainability: our scale is one of several levers that enables our low per learner costs -- at less than $5,000 per learner projected in the next five years. What’s more, we run and scale Merit America like a business, with the majority of our funding expected to come from earned revenue sources over the next three years. Earned revenue includes our innovative learner repayment program, through which we recoup costs from successful graduates, as well as large, long-term partnerships with some of the largest employers in the country.
We have ambitious goals: to reach 10,000 learners annually in three years, and 100,000 annually by 2030. Even as we scale, we aim to maintain the high individual impact on each learner we serve. This is made possible by the fact that we are scaling the same model that has produced our impact to date. In addition, we have validated significant demand for the roles we are targeting (500,000+ annual job openings aligned to our current two tracks alone, and 3 million+ annual openings aligned to our future tracks) and forged meaningful employer hiring partnerships, giving us confidence in our ability to reach our placement goals as we grow.
Mendelson: You met at Coursera. Can you talk about how this experience and your prior private sector and policy experiences have influenced your leadership at Merit America? How does it influence the culture of your organization?
Staehelin & Diemand-Yauman: At Coursera, where we met 7 years ago, we helped found and launch the enterprise business, which reaches millions of learners each year. It was there that we glimpsed the potential of technology to equalize opportunity, but also the limitations of technology alone to help underserved populations secure new careers.
Merit America was born from these experiences. By combining technology solutions like what we built at Coursera with significant live support, Merit America makes online learning work for a population it hasn’t historically worked for. Having spent our careers focused on systems change (through roles in technology, government, and other industries), we saw a massive gap in the market for accessible, widespread learning programs driving transformative impact that train-the-trainer or advocacy models alone can’t fill.
These experiences have also shaped our organizational focus on transformative impact. Having led and worked for organizations that achieved scale, but not necessarily deep or equitable impact, we are committed to prioritizing impact over scale. We are confident that we can do both, but if our job placement rates or wage gains fall, we are open to tempering our growth ambitions to double down on program quality.
Mendelson: As a non-profit organization, how does your business model work?
Staehelin & Diemand-Yauman: We believe that non-profit is a tax status, not a business plan. Our sustainability comes from a combination of low costs and earned revenue tied directly to our mission. We leverage philanthropy to subsidize our costs, but we aim to achieve 80%+ cost coverage by earned revenue within five years. We keep costs low by leveraging top third-party curricula (secured at low or no cost, through game-changing partnerships like we have with Google) and by delivering our programs virtually.
Our three sources of earned revenue are:
Learner repayment via Success Sharing Agreements (SSA): Our learner-friendly, outcomes-based repayment program recoups a significant portion of our costs per learner from successful graduates who secure careers above $40,000/year. Learners who do not land a job earning above the threshold do not pay; payments pause any time a learner’s monthly income dips below the threshold; and all payment obligations expire after 4 years post-graduation -- whether paid or not. Success Sharing directly ties all the work that we do to our most important goal: landing graduates great jobs.
Tuition payment through upskilling partners: Employers and government agencies interested in covering the cost of learners’ SSAs are paying Merit America upfront to train cohorts of participants. This includes Amazon, a Merit America partner that has committed $700 million to upskilling fulfillment center workers for roles outside of Amazon by 2025, and the City of Sacramento, which used federal COVID-19 relief funding to sponsor a Merit America pilot cohort.
Paid placements through employer partners: We have secured a range of paid employer partnerships with Fortune 500 companies, averaging $5,000-$7,500 in revenue per hired graduate. In our extensive employer need-finding research, employers indicate willingness to pay 10-20% of first year salary as a placement fee for the $40,000-$70,000 roles our graduates seek (with typical staffing company fees of 20% of first year salary).
We use impact financing to cover the upfront costs needed to launch cohorts and unlock the lagging learner repayment and placement fees revenue streams. We have already raised over $7 million in such financing, and anticipate that we’ll be able to greatly increase our working capital fund -- enabling scale in the tens of thousands -- as we develop a track record of repayment coupled with transformational impact.
Mendelson: What role does technology have in the success of Merit America?
Staehelin & Diemand-Yauman: Technology enables us to grow and broaden our impact: our combination of “tech and touch” is what makes Merit America scalable. By delivering the majority of our curriculum virtually and asynchronously, we are able to keep the costs of program delivery low (while keeping live, synchronous connections for the most important learner touchpoints). We deliver an engaging experience for acquiring technical and professional skills and interacting with the Merit America community (coaches, peers, alumni, volunteer mentors, and more).
Our technology also enhances our learners’ education experience. We are working to build a sophisticated technology platform that provides helpful feedback to learners and behavioral nudges to keep learners engaged. Our intent is to rapidly test high-potential opportunities to improve program completion, employment outcomes, and learners’ overall experience while decreasing the cost of program delivery.
Mendelson: In this period of significant investment in infrastructure, education, and other supports for workers and families, how do you see these tailwinds impacting Merit America? What opportunities or challenges do you see emerging and how will you address them?
Staehelin & Diemand-Yauman: In the three years since our founding, several macroeconomic tailwinds have bolstered both the need for our work and the potential for our rapid growth.
First, the COVID-19 pandemic has laid bare the fault lines in our economic system, with low-wage workers facing the brunt of mass unemployment and other financial hardships created by the pandemic. We focused our efforts on meeting our economy’s need for retraining, and piloted new partnerships to expand our scope. For example, the City of Sacramento used federal COVID-19 relief funding from the CARES Act to sponsor a Merit America pilot cohort. We anticipate a continued spotlight on economic mobility as the U.S. recovers from the economic downturn.
Second, with the increased national spotlight on racial equity sparked in 2020, companies are starting to act on the increased pressure to change their hiring practices in order to welcome more diverse candidates. Skills-based hiring, once a pie-in-the-sky topic for advocates and policy wonks, is taking hold among a growing number of businesses. Employers are creating new and more diverse pipelines of talent -- by opening their doors to workers who may not have an expensive and inaccessible college degree but can demonstrate the skills needed to succeed in high-growth careers like IT and advanced manufacturing.
Mendelson: To what extent should social impact measurement be a priority going forward? How does accountability, impact, and unified approach manifest itself in measurement and evaluation?
Staehelin & Diemand-Yauman: Measurement and evaluation is a critical component of Merit America’s work and one of our top priorities. We track outputs and outcomes toward our long-term goal of driving wage gains. Intermediate outcomes include number of learners served, graduation rates, and professional certificate attainment, and short-term outputs include Net Promoter Score and module completion rates. All aspects of our model are evaluated through our social ROI: the total wage gains we drive, less our costs.
We are also investing in rigorous, externally validated evaluation of our outcomes with third-party data (e.g., state unemployment data). We are working with Professor Ben Castleman at the University of Virginia to design a comparative, quasi-experimental evaluation of the outcomes of our learners, building towards a randomized controlled trial in the long-term. External evaluation allows us to both refine our programming and hold ourselves accountable to our goal of enabling life-changing impact for our learners.
Mendelson: We’d like to meet your participants and learners. What challenges do they face and how do you envision Merit America meeting their needs now and in the future?
Staehelin & Diemand-Yauman: Our learners -- who are on average just over 30 years old and usually from non-corporate backgrounds -- face the same challenges that many people entering the professional world for the first time face. Typically, they may need more support navigating the workplace, writing professional emails, and networking. We proactively address these in the Merit America program through targeted training and coaching in professional skills, which is a core part of each of our courses. Merit America generally does, however, serve learners who have some work experience, so while retention and advancement in the professional world is something we think about often, we are aided by the fact that our learners have significant work experience, even if not in corporate environments.
Once they’ve begun their job, sometimes other challenges may arise, especially for our learners who are Black, Latinx or come from other underrepresented backgrounds, where they may not see others in their workplaces who look like them or have a similar background. The strong Merit America alumni community helps to support learners through that experience. We firmly believe that Merit America is not “one and done”: we aspire to be a community that provides support through key career development points. Formally, we have an Alumni Board, alumni events, and post-program check-ins to keep alumni connected. Informally, our alumni support and coach each other. As we grow, we expect the depth and reach of the alumni community to grow as well. For example, our newest graduates who get hired at JP Morgan Chase now see three prior cohorts of Merit America hires at JPMC with whom they can network and build a supportive community.
Many of our learners have tried different higher education options that didn’t work for them. They’ve seen how expensive, inflexible, and inaccessible traditional college is. At the same time, they feel locked out of the upwardly mobile careers they’re interested in due to a lack of credentials. So when Merit America presents a shorter, flexible pathway directly into a middle-skills job, with no upfront payment, it feels like the program is too good to be true. At Merit America, we are surgical about exactly what’s necessary to prepare talented workers for new jobs. We use technology to lower costs; innovative revenue structures (like our Success Sharing Agreements) to keep payments limited only to those learners who experience good outcomes; and a sharp focus on flexibility to make the time commitment manageable for learners who are juggling work and family.
In order to tackle the heart of the problem at a sector level, though, we invest in our direct partnerships with employers to help them better understand the needs and challenges of our learners. Ultimately, we hope that this partnership work will turn the ecosystem in our learners’ favor.
Mendelson: Can you please tell us about some of your participants? What are their biggest challenges and how has Merit America helped them be successful?
Staehelin & Diemand-Yauman: We’ve had the privilege of working with thousands of participants, and these stories of three of our many learners illustrate how Merit America can help change trendlines for tens of thousands of people.
Before Merit America, one participant was driving a van transporting individuals with developmental disabilities to an adult day program. He spent some time in college but didn’t gain anything except student debt. He already had traits that employers covet; he had drive and people skills, and was a fast learner. But these skills weren’t translating to a career.
This learner used Merit America to build a skillset employers wanted. He learned essentials like Office 365 and dove deep into networking, security, and system administration to earn the industry-recognized Google IT Certificate. He used his time with his coach and peers to polish his soft skills. And he kept his job through the whole program. In less than a month after completing the IT Learning Associate program, he found a full-time job in tech with benefits. His post-Merit America Job: IT Help Desk Technician with a wage gain of more than $24,000.
“Merit America helped me change my life, with relentless support and dedication to my success. I used to have a job, but now I have a career.”
***
Another recent learner graduated from high school 12 years ago and enrolled in community college, but dropped out when it became too difficult to manage school and work. He has thousands of dollars in student debt and no degree. He was working at a coffee shop earning just $26,000 a year; when the pandemic hit, his hours were cut drastically, so he was forced to drive for Uber and deliver for Instacart.
After his mom flagged an ad for Merit America, he participated in our IT program over the next 14 weeks while he kept his day job. Within a week of finishing Merit America, he got a new job at a local tech company, with full benefits and advancement opportunities, and a $20,000 salary increase. He said “College just wasn’t for me, but Merit America was. I wouldn’t be where I am today without them.”
***
While working in the food service industry, another learner rose to the rank of general manager in several DC-area chains. But that’s not where she wanted to be.
On her own, she started learning Android development through online courses, but wasn’t able to translate that into a career. Online courses provide incredible content -- but they lack the in-person support and network that can make or break career transitions.
Then she found Merit America. Through Merit America, she gained technical skills like operating systems management and network security, but she also practiced her professional skills with her coach and through community events.
Before the program was over, she landed an IT Consultant position at an IT operations firm that has been named one of The Washington Post’s top workplaces for four years in a row. Her salary has increased by $22,000, and as she looks back, she shared, “In 2013, my daughter, who was 6 months at the time, and I were in danger. I was homeless. I slept in my ‘97 Pontiac. It was winter, and I had absolutely nothing. Looking back, this was such a hard situation. The fears I had for us are unexplainable. In hindsight, the probability of being stuck in that never ending snowball of homelessness and poverty was so much higher than I ever realized...Merit America showed us how to work the system, how to break it, how to be part of it. This is what you need to know to succeed. Merit America opened a door to me that no one else has ever opened. They were the gatekeeper to the other side of the system. I thank them for showing so many of us how to cross the bridge.”
Mendelson: What is the culture you are trying to develop at Merit America? What mechanisms do you use to retain this culture as you scale?
Staehelin & Diemand-Yauman: At Merit America, our values drive “how” we do what we do, and serve as the bedrock for our culture. The six values we champion as an organization are:
Think Big & Act with Conviction: We are bold, innovative and optimistic; we challenge ourselves to push the boundaries of what’s possible, and we believe deeply in the potential for our work to change millions of lives.
Deliver Results: We own our ambitious goals, and we consistently deliver; we focus on driving meaningful learner outcomes above all else.
Win and Lose Together: We are reliable, honest and committed teammates; we ask each other for help and are “all hands on deck” whenever needed; we challenge each other and value diversity of thought, but we “commit” to a path forward even when we disagree.
Learn Constantly: We are nimble and resilient learners; we welcome feedback, we learn from failure, and we continually develop our expertise.
Care Deeply: We are deeply empathetic and passionate about our learners and partners; we believe fully in their ability to succeed and we extend grace to all.
Enjoy the Ride: We are fun-loving, healthy and humble; we bring our whole selves to work and we celebrate our successes
To build and retain this culture as we scale, we build processes and norms to encourage living up to our values.
Mendelson: What excites you most about your work? What do you find most rewarding?
Staehelin & Diemand-Yauman: We’ve been working on education for employment for over a decade, much of it together. What most excites us about this work is pairing scale ambitions with the impact of traditional workforce development nonprofits. This trifecta of impact, scale, and sustainability guides all of our work, and provides a constant source of energy.
Beyond that, our partnership with one another is one of the best parts about this job. We communicate constantly and spend a lot of time together. A lot of time. We see one another more than our respective husbands, and think that you need this level of connection to make a partnership like this work.
We’re also deeply invested in one another’s success, and constantly looking for ways to support one another and put the organization first -- even (and especially) if it means subordinating our individual egos or preferences. This orientation of constantly bending towards each other and our shared goals has been a game changer, especially during more trying moments. We are a constant support of inspiration and support for one another, and each can’t imagine a better co-captain to steer this ship.
About the Author:
Robin Mendelson is a Harvard ALI Senior Fellow. Her professional background is in retail technology where she led the US Books and Entertainment Media Division at Amazon.com and served in other leadership positions in general management and finance in the US and internationally during her twenty-year tenure. Robin serves on various corporate and non-profit boards focusing on education and technology.
This interview has been edited for length and clarity.