Let’s Turn $1 Trillion Into Jobs and Inclusive Growth
From the Social Finance Institute
From the Social Finance Institute
The Social Finance Institute, Economic Mobility, Results-Based Funding
Last month, I traveled to San Diego to discuss the future of education at the 2022 ASU+GSV Summit alongside public, private, and nonprofit leaders. Despite the diversity of titles and topics, each session at the Summit focused on one core question: How can we, in this moment of change, redesign our education systems to better advance economic mobility?
On a panel, I spoke about one possibility offered by our current moment: the Infrastructure Investment and Jobs Act (IIJA). The IIJA provides an unprecedented level of funding for critical infrastructure investments across the country—but how can we ensure that there is a diverse and talented labor pool prepared to support those investments?
We agreed that innovative models for financing workforce development are an important part of the solution. There is no single right model, but those that have the greatest likelihood of success share common features: a focus on inclusive student bodies, a holistic pairing of relevant curriculum and critical supportive services, and robust engagement with employers. During the discussion, I highlighted several of Social Finance’s financing models and initiatives that provide blueprints for how we can ensure the economic growth created through the IIJA is equitable and inclusive.
One model is the Pay It Forward Fund: a place-based workforce development fund that leverages public and/or philanthropic dollars to more sustainably invest in worker upskilling. Participants in Pay It Forward Funds enroll in high-quality training programs and receive wraparound support services. If they land well-paying jobs, they repay program costs to support future learners. If they don’t, they pay nothing.
Many public and private stakeholders across the country, including in New Jersey, Texas, and Colorado, are already piloting these efforts, which equip workers with the skills that employers are looking for and, in doing so, align job growth with a state’s economic development goals. To take advantage of the opportunity for infrastructure investments that the IIJA funding provides, states should consider using similar models to leverage scarce resources to train their constituents for these priority jobs.
But Pay It Forward Funds are not the only model that bears promise. Other outcomes-based, public-private partnerships, like Social Finance’s $8.2 million project with the New York State Energy Research and Development Authority, have the potential to stretch IIJA dollars even further. This project, designed to invest in the clean energy workforce, will train over 660 New Yorkers who qualify as low-income, including youth and people grappling with long-term unemployment, for careers in the clean energy sector. They will gain access to higher-paying jobs, critically strengthen the state’s infrastructure labor force, and help accelerate New York’s transition to a green economy.
If the project demonstrates a meaningful impact on participants’ earnings, based on analysis from third-party evaluator MDRC, the U.S. Department of the Treasury and the U.S. Department of Labor will reimburse NYSERDA up to $7.1 million, which it can then further invest in clean energy workforce development.
Employers play a critical role in the design and success of these outcome-based financing models. One such example is our Career Impact Bond with American Diesel Training Centers (ADTC), which helps employers access a pipeline of skilled diesel mechanics and provides a pathway for motivated students (who may not otherwise be able to afford the training) to enter diesel mechanic training programs at no upfront cost and land good-paying jobs in the transportation industry.
The best part about this model is that it can be employer-sponsored. In our Career Impact Bond with ADTC, employers like Green for Life or Penn Power Group cover the monthly tuition repayments for the graduates they hire—meaning graduates don’t have to pay for their training as long as they stay with their employers during the four-year term.
In fact, I believe private sector employers are a key piece of this puzzle. With their partnership, governments can leverage IIJA funding for outsized impact. One example: corporate-nonprofit efforts like the $100 million Google Career Certificates Fund promise to create economic opportunity at scale. Supported by funds from Google’s balance sheet and from its philanthropic arm Google.org, this program will enable 20,000 people who have been locked out of education and employment opportunities to gain new digital skills, secure well-paying jobs, and achieve over $1 billion in aggregate wage gains over the next decade. We’re hoping this program becomes a model for how other corporate employers can increase access to economic opportunity and create a pipeline of diverse talent—meeting their needs, the needs of state and local governments, and most importantly, the needs of American workers.
The Pay for Success Clean Energy Training project, which is supported by an $8.2 million grant from the U.S. Department of Labor and the U.S. Department of the Treasury, will train more than 660 New…