Full text of Cascade (Federal Reserve Bank of Philadelphia) : Cascade, No. 90

The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.

CASCADE
NO. 90 WINTER 2016

COMMUNITY DEVELOPMENT STUDIES & EDUCATION

Apprenticeships and Their Potential in the U.S.*
By Keith L. Rolland, Community Development Advisor

Government, foundation, and workforce leaders are displaying keen interest in apprenticeships as a way to give
job seekers skills, credentials, and access to careers. This
increased interest is also part of the greater attention to
workforce development strategies that engage employers.
Apprenticeships have a long history with roots in ancient
times. The Code of Hammurabi of Babylon, which dates
back to the 18th century bce, required artisans to teach their
crafts to the next generation. By the 13th century, a type of
apprenticeship emerged in Western Europe in the form of
craft guilds.1 In the colonial U.S., now-famous apprentices
included George Washington (surveyor), Benjamin Franklin
(printer), and Paul Revere (silversmith).
The modern concept of apprenticeships is a “learn and
earn” strategy with “work-based learning.” In the U.S.,
these programs may be categorized as registered apprenticeships (RAs) regulated by the U.S. Department of Labor
(DOL), non-RAs, and youth apprenticeships. This article
focuses on RAs, including the expansion of RAs to new
industry sectors and disadvantaged populations.
Registered Apprenticeships
In 1911, Wisconsin created the first state RA system, and in
1937, Congress enacted the National Apprenticeship Act,
which authorized the federal government to oversee the nation’s apprenticeship system in cooperation with the states.
Registered apprentices get structured on-the-job training
(OJT), related training and instruction,2 wages, industryrecognized credentials, and direct access to jobs and careers. Employers, in turn, obtain highly trained employees
and increased productivity and may be able to better retain
employees. The number of apprentices in the RA program
has fluctuated. Between the 2002 and 2014 fiscal years, it
reached a high of 469,238 in 2002 and a low of 357,692 in
2011 and trended upward to 375,425 in 2013, 410,375 in

2014, and 445,900 apprentices as of October 2015, according
to the DOL.3 (See the table for statistics regarding RA activity in 2014 in Pennsylvania, New Jersey, and Delaware.)
Most registered apprentices have been in construction
and the skilled trades, such as electricians, plumbers, and
carpenters. RA programs are sponsored by an employer
or group of employers, labor–management organizations, industry associations, or an intermediary such as a
community-based organization or community college. The
length of an RA program depends on the complexity of the
occupation and whether it is time based (a required number
of hours in OJT and related instruction), competency based,
or a hybrid of the two. RA programs range from one to six
years depending on the occupation.
The present RA system is “bifurcated,” explained John V.
Ladd, administrator of the Office of Apprenticeship (OA) in
the DOL. In 26 states, including Pennsylvania and Delaware,
state apprenticeship agencies oversee registration, provide
assistance, and monitor regulatory compliance. In the balance of the states, including New Jersey, RAs are regulated
by federal DOL staff in the state. There “can be significant
variations” in the two branches of the RA system, Ladd said.
Ladd explained that the OA “is trying to reinvent registered
apprenticeship and make it a more innovative and flexible
model” and that some new RA models are under development. The new models plan to do the following:
•

Allow apprentices to receive technical instruction in a
more flexible way, such as through classes that begin
before the apprentice starts at the worksite or alternating time at work with classes that may be conducive to
college-based programs, possibly enabling apprentices
to complete an apprenticeship in one year. (Tradition-

* The views expressed here do not necessarily represent the views of the Federal Reserve Bank of Philadelphia or the Federal Reserve System.
1
See www.britannica.com/topic/apprenticeship and http://ow.ly/Ulia9.
2
Related training and instruction are available at community colleges, technical schools, or apprenticeship training schools; through
employers; or by accessing resources online.
3
About 20 percent of all registered apprentices are in the United States Military Apprenticeship Program in the Navy, Marine Corps, and
Coast Guard. The program was started in 2008.

Registered Apprenticeship Activity in Pennsylvania, New Jersey, and Delaware in 2014 Fiscal Year
Active Apprentices

Number of Apprentices Who
Have Completed Programs

Active Programs

Largest Number
of Apprentices

Pennsylvania

10,821

1,882

744

Electricians, carpenters,
correction officers, and plumbers

New Jersey

5,322

1,310

867

Electricians, carpenters, plumbers,
and construction craft laborers

Delaware

1,069

130

311

Electricians, plumbers,
HVAC, and carpenters*

State

Sources: U.S. Department of Labor, *Delaware Department of Labor

•
•

•

ally, apprentices concurrently received OJT and related
technical instruction.) Increasingly, employers are using
curricula from community colleges that ultimately will
provide college credits to apprentices.
Increase emphasis on competency-based programs
rather than time-based programs.
Permit community colleges or community-based organizations (CBOs) to sponsor apprenticeships and to provide the
administrative functions that labor unions have traditionally done in the construction sector. Ladd cited New Century
Careers in Pittsburgh as an example of such a CBO.
Make it easier for younger people to participate in the
RA. (Whereas the average age of RA participants is
about 28, the average age of apprentices in Switzerland
is about 17, according to the DOL.)

The OA is working to simplify the registration process for
employers with the goal that it can be completed largely
online. Ladd commented that most employers need a fuller
infrastructure to make it easier for them to participate in the
RA program and that, until now, the building trades have
been one of the only sectors with such an infrastructure.
Ladd said that South Carolina’s statewide RA program,
Apprenticeship Carolina,4 has created an infrastructure that
makes it easier for employers to participate in RAs.
Apprenticeship Carolina is a division of the 16-college South
Carolina Technical College System. Regional representatives
help employers design RA programs and submit registration
paperwork to the DOL. The technical training component
of the RA programs is aligned with academic coursework
provided by the colleges, enabling apprentices to be eligible
for federal student aid. Employers with RA programs are
eligible to receive a tax credit of $1,000 for each registered
apprentice. Apprenticeship Carolina has served 13,634 apprentices; currently, 6,475 apprentices are enrolled in 761 RA
programs in South Carolina, according to program staff.
Ladd added that “we must align workforce and education
much better.” He observed that the alignment is strong in
Switzerland and that apprenticeship there “is embedded in
the culture.” He noted that apprentices are much older in
the U.S. than in other countries. Ladd also pointed out the

4
5

See www.apprenticeshipcarolina.com/about.html.
See www.dol.gov/apprenticeship/grants.htm.

important role played by guidance counselors in informing
young people about the range of career options, which can
include apprenticeships.
New Funding
In 2014, the Obama administration called for a doubling
of American apprenticeships over the next five years. In
September 2015, the DOL awarded $175 million in American Apprenticeship Initiative Grants to expand apprenticeship programs primarily in high-growth sectors, such as
information technology, health care, and advanced manufacturing, and to connect apprenticeships more closely
with education and career advancement.
The grants are intended to increase access to apprenticeships for underserved populations, including women,
young men and women of color, persons with disabilities,
low-skilled populations, and veterans. The 46 grantees are
committed to train 34,000 apprentices over the next five
years.5 According to the DOL, the grantees include:
•

•

Philadelphia Works, Inc. Plans include the creation of
a new behavioral health apprenticeship with District
1199C’s Training & Upgrading Fund, expansion of an
existing computer support specialist and information
technology apprenticeship program with a focus on
disadvantaged youths and others, and development of
a pre-apprenticeship program.
West Central Job Partnership. This partnership, which
focuses on the Pittsburgh region and Ohio, plans to increase manufacturing apprenticeships; recruit veterans,
unemployed and low-skilled individuals, and foster
youths; increase community college capacity to provide
related technical instruction; and streamline apprentice
recruitment, assessment, and prescreening processes.

The DOL has been making ongoing efforts to build closer
connections between the RA program and other federal
programs (e.g., Job Corps and YouthBuild) and federal
resources (e.g., federal financial aid and veterans’ GI Bill
benefits). It is also trying to build stronger connections with
the public workforce system.

Starting in 2015 under the Workforce Innovation and Opportunity Act (WIOA), all RA programs that request to be on the
eligible training provider list will automatically be qualified
to receive federal workforce funding as pre-approved training providers for the workforce system. WIOA also allows
higher reimbursement to employers for OJT expenses.
Return on Investment
Employers weigh costs and responsibilities before they
commit to sponsoring apprentices. According to a Mathematica Policy Research analysis in 2012 of RAs in 10 states,6
employers incur costs for training, paying apprentices’
wages, managing the RA program, and mentoring apprentices. According to the DOL, employer responsibilities
also include identifying when wages should be increased
according to competency gains, determining the set of competencies that prove an employee has the skills to perform a
job independently after an apprenticeship, and developing
or using a curriculum to train apprentices.
Robert I. Lerman, professor emeritus in the department of
economics at American University and fellow at the Urban
Institute, observed that barriers to employer involvement
in apprenticeships include limited information, misperceptions that apprenticeships will facilitate unionization, and
low government funding levels for community college
courses related to apprenticeships.7 In a paper on Canadian
apprenticeships, he noted employer concerns that “apprenticeship training tends to be too specific in an era of rapid
advances in technology and uncertainty about occupational
demands” and that companies may lose their investment if
other firms hire workers who have completed apprenticeships.8 Another issue is the completion rate of RA participants. The authors of the Mathematica Policy Research
study found that about 45 percent of the participants completed their apprenticeships and obtained certificates.
The Mathematica Policy Research study had assessed the
effectiveness of the RA program and performed a cost–
benefit analysis. The authors concluded that:
•

•

RA participants had substantially higher earnings than
did non-RA participants. In the ninth year following
program enrollment, RA participants earned an average of $5,839 more than similar non-RA participants.
The authors estimated that RA participants who completed their programs would have career earnings that
were an average of $240,037 higher than the earnings of
similar non-RA participants.
The benefits of the RA program appear to be much larger
than the costs, although the authors said they could not

Cesar Reza was in a YouthBuild program in Denver, CO, when
he earned his GED, was exposed to career fields, and decided
to pursue an electrical apprenticeship. He attends construction
classes on Tuesday evenings and works 40 hours a week as
an apprentice. His career goal is to become a journeyman
electrician. Photo Credit: U.S. Department of Labor

estimate the net social benefits of the government investment as distinct from those of the private investment.
Employers and state agencies are interested in the return
on investment (ROI) of their participation in RA programs.
As a result, economists at Case Western Reserve University
and the U.S. Department of Commerce are conducting a
study on the ROI to U.S. employers that participate in RAs.9
The state of Washington conducts a detailed analysis of
the costs and benefits of RA programs and other workforce
development programs in that state.10
The DOL’s Ladd commented that “ROI is a challenge in the
U.S. In Germany, the federal or state governments pay for
education-sector investments related to apprenticeships,
enabling employers to have a good ROI on apprenticeships.
The United States does not fund RA programs to support
such things as tuition or costs to a company of operating an
RA program. The system is voluntary. A national tax credit

See Debbie Reed, Albert Yung-Hsu Liu, Rebecca Kleinman, et al., An Effectiveness Assessment and Cost-Benefit Analysis of Registered Apprenticeship in 10 States, Mathematica
Policy Research, July 25, 2012, available at http://ow.ly/Ulwxm. The 10 states include New Jersey and Pennsylvania.
7
See Robert I. Lerman, “Proposal 7: Expanding Apprenticeship Opportunities in the United States,” The Hamilton Project, Brookings Institution, 2014, available at
http://ow.ly/UlDmN. Also see the American Institute for Innovative Apprenticeship, available at http://ow.ly/UTEMG.
8
See Robert I. Lerman, Expanding Apprenticeship Training in Canada: Perspectives from International Experience, Canadian Council of Chief Executives, 2014, available at
http://ow.ly/UlDHF.
9
See Department of Commerce, “Joyce Foundation, JPMorgan Chase, and the Annie E. Casey Foundation Support Apprenticeship Return on Investment Study,”
September 8, 2015, available at http://ow.ly/UlIGp. The apprenticeship ROI study is funded by the Joyce Foundation, JPMorgan Chase, and the Annie E. Casey Foundation.
10
See Workforce Training and Education Coordinating Board, “2015 Workforce Training Results,” 2015, available at http://wtb.wa.gov/Documents/Apprenticeship2015.pdf.
6

for employers would go a long way in expanding apprenticeships in the U.S.”11
Lessons from Other Countries
There is growing interest in learning from successful apprenticeship programs in other countries. This past summer,
the U.S. Departments of Commerce, Education, and Labor
signed declarations of intent with their counterparts in Germany and Switzerland for cooperation, information sharing,
and fact-finding visits on career and technical education
and apprenticeships. Also, the German Embassy has started
a Skills Initiative to share information about best practices
in sustainable workforce development in cooperation with
German companies that are implementing apprenticeship
programs in their U.S. manufacturing facilities.12
In November 2014, 40 U.S. business, civic, and government
leaders traveled to Munich and Nuremberg, Germany, to
learn about the German model for manufacturing competitiveness and German apprenticeships as part of the Global
Cities Initiative led by JPMorgan Chase and the Brookings
Institution. A report on the trip highlighted the importance
of regional collaboration among public, private, and civic
actors; targeted institutional intermediaries that address market and coordination failures; and incentive-based investments to support small and medium-sized businesses.13
In October 2015, the Urban Institute convened British training providers in Washington, D.C., for an event titled “How
Did England Generate Two Million Apprenticeships?” The
event was organized in part by Lerman, who pointed out that
apprentices constitute only 0.2 percent of the U.S. labor force
compared with 2.2 percent in Canada, 2.7 percent in Great
Britain, and 3.7 percent in Australia and Germany.14 Lerman
also reported that apprenticeships involve 55 to 70 percent of
the young adult population in Austria, Germany, and Switzerland — countries where youth unemployment rates are
very low.15 Apprenticeships and secondary schools are closely
linked in those countries, he observed, but in most other countries, apprenticeships begin after secondary school.
Pre-apprenticeship Programs
Pre-apprenticeship programs are seen as important for
disadvantaged populations in RAs. Such programs, which
prepare individuals to enter and succeed in RAs, ideally
should link closely with RAs and can provide career exposure and development of literacy and math skills.

Laura Ginsburg, special assistant, national industry promotion and strategic partnerships in the OA, explained that
pre-apprenticeship programs provide important supportive
services and remedial skills. She said, “The DOL has developed a quality framework for pre-apprenticeship that we
urge all organizations to use. There are too many training
organizations that train individuals with no job at the end
of that experience. We want to ensure that pre-apprenticeship programs are linked to registered apprenticeships and
a career.” The OA does not approve pre-apprenticeship programs but has issued a document on the subject16 and plans
to develop a toolkit on these programs.
Conclusion
RAs, authorized under 78-year-old federal legislation, are
getting more attention in recognition of the critical importance of engaging private-sector employers in addressing
the workforce needs of unemployed and underemployed
people. RAs, with a combination of structured OTJ training and related training and instruction, hold the promise
of industry-recognized credentials and career access. RAs
have been used primarily in the skilled trades and construction, but recent DOL grants are intended to catalyze their
use by new populations in high-growth industries with
new program models.
As private-sector employers weigh the costs and benefits
of apprenticeships, intermediaries can assist employers to
design programs, recruit participants, and register RA programs. The intermediaries range from state programs such
as Apprenticeship Carolina, nonprofits such as Vermont
Healthcare and Information Technology Education Center
(HITEC), and joint labor–management programs.17
The declarations of intent signed this summer between
the U.S. Departments of Commerce, Education, and Labor and their counterparts in Germany and Switzerland
reflect a growing desire to learn from countries where
apprenticeships are successfully embedded in educational and employment systems. The inherent challenge
will be to apply and implement successful practices in
the U.S. despite differences in educational systems and
employment practices.
For further information, contact John V. Ladd at ladd.john@dol.
gov, Laura Ginsburg at ginsburg.laura@dol.gov, or Robert I.
Lerman at blerman@urban.org.

Two bills have been introduced that would provide a national tax credit to employers that have RA programs. U.S.
Senators Cory Booker of New Jersey and Tim Scott of South Carolina have introduced the Leveraging and Energizing
America’s Apprenticeship Programs (LEAP) Act. U.S. Senators Maria Cantwell and Susan Collins have introduced the
Apprenticeship and Jobs Training Act of 2015.
12
About 55 percent of high school graduates in Germany participate in a “dual system” of vocational education and
training, according to the initiative. See www.germany.info/skillsinitiative.
13
See Joseph Parilla, Jesus Leal Trujillo, and Alan Berube, Skills and Innovation Strategies to Strengthen Manufacturing:
Lessons from Germany, Brookings Institution, 2015, available at http://ow.ly/UlMZ0.
14
See Lerman, “Proposal 7,” 2014.
15
See Lerman, Expanding Apprenticeship Training in Canada, 2014.
16
See http://ow.ly/UlOY3. Another useful resource on the subject is http://ow.ly/UlP2U.
17
See http://ow.ly/UR0xV.
11

Read the entire issue of Cascade at
www.philadelphiafed.org/cascade.

CASCADE: NO. 90, WINTER 2016

Building Opportunities and Skills for a Growing Digital Workforce*
By Sydney Diavua, Community Engagement Associate
Information Technology (IT) is a sector with a high demand for skilled workers to fill jobs in U.S., regional, and local economies, according to the Bureau of
Labor Statistics.1 Although most of the employment opportunities in this sector have been advanced-skills jobs in start-ups, software and application
development, and wearable technologies, there are many IT opportunities that do not fall into these categories. The need for skilled IT employees has
increased across many industries. Recent initiatives and reports recognize these opportunities as a means to move entry-level workers into technologyrelated jobs and to create pathways to the middle class. The technology sector has potential for workers who are disadvantaged or lack bachelor’s degrees
but retain an aptitude for gaining skills.

Employment in the Technology and Digital Skills Sector
A report from Capital One and Burning Glass Technologies — Crunched by the Numbers: The Digital Skills Gap in the Workforce — details the need for
today’s workers to have digital skills. According to the report, “Digitally intensive jobs have grown 2.5 times more rapidly than middle-skill jobs that do
not require spreadsheets, word processing, or other digital skills …” Considering occupations that require advanced digital skills, such as client
management software, coding, and health technologies, the report further notes that “employers pay a premium for this knowledge. Occupations that call
for one or more advanced digital skills pay an hourly wage 38 percent higher on average than non-digital middle-skill occupations …”2
As of March 2015, there were more than half a million job openings in IT fields.3 Most of these openings were not in IT-specific industries. Non-IT industries
currently employ two-thirds of the private-sector IT workers, with manufacturing, retail, and health-care industries topping the list.4 The need to fill
these vacancies has piqued the interest of a variety of sectors, resulting in new approaches to fill these roles. The White House’s TechHire Initiative,5 IT
Works, and the Urban Technology Project are a few examples of how government, private, and nonprofit sectors are building strategies to train workers
and fill jobs. Through partnerships with workforce training programs, employers, and government leaders, these initiatives strive to create better policy
and build career pathways for IT workers.
TechHire, for example, was launched in November 2014 in six local and state areas and continues to add new sites. There are now 31 participating areas,
with eight more in the works. The participating regions, which collectively account for more than 120,000 technology-related jobs, will use TechHire as a
partnership strategy to enable workers to qualify and obtain these jobs. Successful TechHire partnerships use data and innovative hiring practices, expand
training models that prepare students in months rather than years, and connect people to jobs through “on-ramp” programs.6

TechHire Initiatives in the Third District
In the Third Federal Reserve District, the city of Philadelphia and the state of Delaware are designated TechHire regions. In Philadelphia, for example,
12,000 IT job opportunities went unfilled because of a lack of skilled, available talent.7 In terms of skills, the greatest need was for developers proficient
in Java and .NET.8
Delaware TechHire
To address the skills gap in technology jobs in Delaware, Governor Jack Markell, in conjunction with Delaware TechHire, convened a number of private
employers, financial institutions, workforce and economic development organizations, and community partners. As a result, Delaware TechHire launched
Zip Code Wilmington in June 2015. Zip Code Wilmington is an accelerated coding school that combines training courses and apprenticeships to fast-track
interested workers into jobs in the coding and software development field.9 Some Delaware employers have committed to hiring graduates of the coding
school into paid apprenticeships and eventually into full-time positions.
Philly TechHire
Philly TechHire is a coordinated partnership among several entities, including the city of Philadelphia; Philadelphia’s Office of Innovation and Technology
(OIT); Philadelphia Works, Inc.; PNC Financial Services Group; Comcast; Ranstad Technologies; EventUpon; Technical.ly Philly; PACT; and Seed Philly. The
program seeks to identify employer needs and design appropriate and innovative responses. According to Meg Shope Koppel, chief research officer at
Philadelphia Works, Inc., Philly TechHire also works with start-up, training, and academic organizations, such as Creating IT Futures, NY Code + Design
Academy in Philadelphia, Code for Philly, Tech Impact, Development Bootcamp, Peirce College, and the Community College of Philadelphia. These entities
work together to create a community of resources and to expand information on opportunities in IT for candidates and employers. For example, in October
2015, nontraditional IT candidates had the opportunity to use problem-solving and presentation skills in a contest, with the goal of developing a proposal
to solve a tech-related issue for the Free Library of Philadelphia.10 Philly TechHire partners also use internships and apprenticeships to help candidates
obtain jobs. With the aid of a $56,000 state grant, for example, Philly TechHire provided internships to 20 adults and 13 youths. In addition, Philly TechHire
provided training to 14 workers who received advanced IT certifications and job offers.
As part of the Philly TechHire initiative, the Philadelphia OIT is using existing assets, such as KEYSPOT computing centers, to promote IT jobs and training.
Andrew Buss, director of the innovation management group at OIT, notes that “our motive to participate in TechHire is addressing a shortage of technology
workers that can fill positions for the growing number of companies in Philadelphia. For this, OIT has turned its focus to training the next generation of
workers, youth as young as middle school for this work, and in complementary science, technology, engineering, and math (STEM) fields. The goal is to

create a pipeline of skilled workers that have begun to develop the skills and career interest in technology to fill continuing work training pipelines to
employment.”

Other Approaches and Strategies
Several other organizations are also working with employers to create career pathways that will enable disconnected youths11 to obtain computer
technology positions. The organizations incorporate holistic approaches that include apprenticeships or internships, professional mentoring, accelerated IT
training, certifications, and direct engagement with local employers. One such organization is Tech Impact.12 This organization, with branches in both
Philadelphia and Wilmington, DE, provides hands-on technology support to nonprofits as well as manages workforce development programs. One of the
programs, IT Works, is a 16-week immersive program for young adults between the ages of 18 and 26 who do not have bachelor’s degrees. The program,
which includes 11 weeks of classroom training and a minimum of five weeks at an internship, gives students practical hands-on experience, professional
development, and comprehensive soft skills training. Students also can earn several different types of certification (e.g., Cisco IT Essentials Certification,
CompTIA A+ Certification). Since 2011, more than 200 students graduated from the program, 70 percent of whom found jobs in the IT sector within six
months of graduating. Patrick Callihan, executive director of Tech Impact, notes that students who complete the program earn incomes up to two times
more than they did before entering the program.
A second initiative is Creative Tech Works Design Studio (CTW)13 in Philadelphia, which provides a
“makerspace” and apprenticeships for advanced students in engineering and computer science. CTW
students build a “stickiness” in STEM fields that extends beyond immediate skills gained. Dr. Jamie Bracey,
founder of CTW and director of STEM education, outreach, and research at Temple University’s College of
Engineering, said that this stickiness increases skill flexibility and future mobility within the tech industry.
Young people participate in a 16-week immersion studio with training in product design, programming,
engineering, and micromanufacturing. Examples of CTW products include City Street, a civic engagement
race competition using wearable technologies, and Fashion Hack, a showcase of apprentice-designed
wearable technologies. Program participants have also been involved in consulting projects for the U.S. Navy,
DroneCast, and Coders4Africa, and most students matriculate at area colleges.
A third initiative is the Urban Technology Project (UTP), a public–private partnership between Communities
This digital tracker watch was created for City
In Schools of Philadelphia, Inc., the local affiliate of a national nonprofit that works with underserved
Streets participants by Stephen Pettus, a Temple
students, and the School District of Philadelphia. UTP’s goal is to help urban youth explore and enter IT work
University student who participates in the Creative
Tech Works Design Studio (CTW) program in
pathways that lead to the middle class. UTP provides a continuum of service-learning and school-to-work
Philadelphia. Pettus says that the CTW program
experiences that begins in middle school, continues through high school, and extends into post–high school
“taught me how to run a business. Because of it, my
opportunities. Recent graduates of Philadelphia public high schools can join the Digital Service Fellows, a
partner and I decided to start our own LLC for our
tech consulting work.” Pettus said that he earns $35
leading AmeriCorps program. Fellows serve one year in a pre-apprenticeship providing technical support to
to $40 per hour on consulting projects and has
Philadelphia schools under the mentoring of IT professionals. Upon completion of the program, fellows can
purchased an equity stake in a client’s organization.
Photo Credit: Jacqueline Quidort
apply for the Computer Support Specialist (CSS) Program, a registered apprenticeship. The program, now in
its 10th year of accreditation, is the only program of its kind in the state of Pennsylvania. UTP’s CSS program
is a participant in a $2.9 million apprenticeship initiative grant application submitted by Philadelphia Works, Inc. and approved by the U.S. Department of
Labor.
Edison Freire, director and cofounder of UTP, notes that UTP apprentices, even though they don’t have a four-year degree, are attractive job candidates
because they have up to 5,000 hours of hands-on training and can earn up to three industry standard certifications. UTP apprentices become lifelong
learners, acquire problem-solving skills, and develop teamwork and collaboration skills. Freire also says that UTP plans to transition from a singleemployer model to a multi-employer model to provide UTP apprentices with a greater number of permanent IT opportunities with private companies.

Engaging Employers
The workforce pathways described previously depend heavily on partnership with employers and flexibility. Success depends on deep engagement from
local employers to review and modify hiring and recruitment processes and required credentials to take into account candidates’ current skills and future
aptitude versus current degrees. At Philly TechHire, employer engagement has been critical to the success of the initiative. Because of the number of
current vacancies, Philly TechHire employers are interested in recruiting highly skilled nontraditional workers. Accelerated IT skills training programs can
increase the work-ready population with minimal cost to the employers. Employer partners in PhillyTech Hire have seen the value of project-based training
and of the opportunity to observe candidates using critical thinking and problem-solving skills. This recruitment strategy also has provided employers with
the opportunity to recruit more women and minorities to develop a more diverse workforce.
Employer engagement comes from strategic relationship building between skills training programs and employers. Many of the partners mentioned
encourage agencies to build personal relationships and to have significant “face time” with employers as a means of building confidence in their systems
and to showcase candidate skills. As part of the recruitment for its internship program, IT Works engages closely with employers to determine the day-one
skills needed for entry-level workers and matches the IT Works training program and certifications for these skills. One of the employers is Barclays Bank
Delaware.

Future Challenges
Although there has been much success in this field, a number of challenges and barriers remain. Automated human resource processes filter out strong
candidates who are skilled but lack the necessary educational credentials. Formal work experience also can be a barrier in the IT field, and
apprenticeships can counter this lack of on-the-job IT experience. Philadelphia Works’ Shope Koppel emphasizes the need for greater investment from
private sources to create relationships between employers and training programs. Since initiatives such as Philly TechHire are being led by the current
federal and city administrations, shifts in government leadership may slow momentum on these projects. Employers and program directors must identify
ways to make strategic investments to accelerate these initiatives and make them sustainable. As these partnerships and programs mature, it will be
important to increase opportunities for young workers to obtain industry-recognized credentials outside of traditional academic settings.

Information Technology Programs Outside the Third Federal Reserve District
There are a number of programs nationwide that are similar to the featured models from the Third Federal Reserve District. Here are some
examples.
LaunchCode , based in St. Louis, is dedicated to making pathways to mobility through apprenticeships and placement in technology jobs. Since
2013, LaunchCode’s staff has expanded from four to 24, and the organization now has project locations in southern Florida and Kansas City.
LaunchCode has also placed candidates remotely in a number of additional cities. Ninety percent of LaunchCode participants had no coding
experience before entering the program, and 42 percent of the participants do not have a college degree. LaunchCode reports that, on average,
participants increase their salaries from about $21,000 before the program to about $50,000 after the program.
The Chicago program i.c.stars provides low-income young people with a 16-week paid internship immersed in the technology sector.
Participants go on to attend community college and are placed with corporate partners, or they join the staff of the i.c.stars social enterprise,
which delivers social media management to clients. Eighty percent of i.c.stars participants complete the internship portion, resulting in an
average increase in income of $9,000 to $31,000 and a job placement rate of 95 percent.a
Capital One’s Future Edge initiative will provide $150 million for community grants and initiatives over the next five years to better prepare
citizens for success in a changing digital economy. Part of this process is the recognition of the need for digital skills training for middle-skills
jobs. In partnership with educational institution General Assembly, Capital One will create the Capital One Opportunity Fund, a fellowship
program that will provide training for individuals looking to gain the advanced digital skills needed to secure high-skilled occupations.b

See Martha Ross, Carolyn Gatz, Richard Kazis, et al., Unemployment Among Young Adults: Exploring Employer- Led Solutions, Metropolitan Policy Program at Brookings, July 2015,
available at http://ow.ly/VlwB5.
a

b

Visit http://ow.ly/Vocsw

for more information.

*

The views expressed here do not necessarily represent the views of the Federal Reserve Bank of Philadelphia or the Federal Reserve System.

1

See C. Brett Lockard and Michael Wolf, “Employment Outlook: 2010–2020 — Occupational Employment Projections to 2020,” Monthly Labor Review, January 2012, pp. 3–20.

2

For more information about this report or to download the report, see http://ow.ly/VlhR3.

3

See TechHire Initiative, available at http://ow.ly/VllVg.

4

See Ready to Work: Job-Driven Training and American Opportunity, White House, July 2014, available at http://ow.ly/VkuOJ.

5

See TechHire Initiative.

6

See TechHire Initiative.

This information was obtained from CEB TalentNeuron’s research and analysis, crawling of public profiles, skill predictor algorithms, CEB TalentNeuron Skill Taxonomy, and SME Interviews,
unpublished, 2013. This figure is as of 2013.
7

8

See Ready to Work, 2014.

9

See www.zipcodewilmington.com

to learn more about the program.

10

See www.phillytechhire.com.

11

A disconnected youth is defined as a young adult between the ages of 16 and 24 who is neither in school nor employed.

12

See www.techimpact.org.

13

See www.creativetechworks.org.

CASCADE: NO. 90, WINTER 2016

Annie E. Casey Foundation Initiative Combines Employer Engagement and Positive Youth
Development Strategies*
The Annie E. Casey Foundation is a private philanthropy that creates a brighter future for the nation’s children by developing
solutions to strengthen families; build paths to economic opportunity; and transform struggling communities into safer and
healthier places to live, work, and grow. To these ends, the foundation awards grants and forges partnerships to help increase
opportunities for low-income families, reduce the number of children growing up in poverty, and ensure that parents and their
children are on a path to financial stability.
Allison Gerber, a senior associate at the foundation, oversees employment-related investments that promote collaborative
approaches to improving job opportunities for low-income families. In the following Cascade interview, she answered several
questions about “learn and earn” and “demand-driven” strategies.

Allison Gerber, Senior
Associate, Annie E. Casey
Foundation

1. Please describe the Annie E. Casey Foundation’s funding and other activity on “learn and earn” strategies,
such as apprenticeships and on-the-job training (OJT). To what extent do these strategies engage young people between the ages of
16 and 24?
We believe learn and earn strategies, including apprenticeships, and demand-driven strategies are effective for all youth and young adults. Although we
focus on increasing opportunities for youth and young adults in low-income families or with limited access to employment, we need to develop multiple
pathways for young people to get jobs and build careers using a combination of education, training, and supportive services. To thrive, all young people
should have a network to tap into, including strong relationships with supportive adults and connections with jobs and employers.
For more than 20 years, the foundation has supported employer-led, or demand-driven, strategies, which involve forming partnerships with businesses to
identify employment opportunities and help people of all ages obtain the knowledge and skills necessary to get and keep good jobs in their regional
economies. Many of these strategies incorporate OJT opportunities. We promote demand-driven approaches through the National Fund for Workforce
Solutions, which supports regional collaboratives made up of employers and local workforce development providers, and through employer-led initiatives
in health care and other investments in Baltimore and throughout the country. Young people who are 18 and older have certainly been included but were
not the sole focus.
Recent efforts to tailor existing demand-driven workforce development strategies to serve young adults, as well as other investments in employment and
training programs targeted toward youth who are not in school or working, have taught us that industry partnerships can be effective in helping young
adults find jobs. These strategies differ from many existing youth employment approaches, which have limited knowledge about how to connect with
employers, meet their needs, and develop strategies that connect with young people. However, we’ve also learned that much of the existing demanddriven programming isn’t well equipped to provide the more intensive support services that young adults may need as they transition to work.
Given these challenges, the foundation has launched a new young adult employment initiative, Generation Work,1 which will support local partnerships
that promote combining demand-side strategies with positive youth development support services, such as mentoring and work-based learning. Through
this eight-year initiative, we seek to scale these strategies in four sites by helping workforce systems and practitioners build stronger connections to
employers and serve as networks for young people seeking employment. The foundation recently invited a small group of local partnerships to submit
proposals for this initiative and will make selections later this year.

2. What strategies is the Annie E. Casey Foundation exploring in the apprenticeship field?
Over the past year, we have been asking several questions: What would it take to see more uptake of apprenticeship in the United States? And what might
be the role of foundations, including the Annie E. Casey Foundation, in promoting apprenticeship? Central to these questions are what employers see as
some of the opportunities and challenges around apprenticeship and how we can build a field of practice that addresses some of these challenges.
We are not the only ones asking these questions. There have been increasing interest and investment in apprenticeships in the past year, including a $175
million national funding competition and a White House call to double the number of apprentices. However, we have also seen relatively modest growth in
apprenticeship following the Great Recession.
We have identified four strategies to further explore and employ to better support apprenticeship: (1) building the case for employer participation, (2)
connecting youth and young adults with apprenticeship programs, (3) better aligning state and local workforce development and apprenticeship programs,
and (4) documenting and disseminating best practices to promote uptake of apprenticeship.
Through recent investments, we’ve sought answers to these questions to better understand why employers may be hesitant to develop or expand
apprenticeship opportunities within their companies. Some examples include the following:
• Skills for America’s Future,2 part of the Aspen Institute’s Economic Opportunity Program, is researching the obstacles that businesses experience
when implementing or participating in apprenticeship. This research will result in a set of recommendations for promoting and growing the
apprenticeship field, particularly in areas where philanthropic investment can strengthen access to such opportunities for low-income and
marginalized individuals and communities.

• Business Leaders United,3 an initiative of the National Skills Coalition, is surveying more than 500 businesses in its policy network to learn more
about which types of employers are most interested in apprenticeships and other work-based, or hands-on, learning strategies and their reasons for,
or barriers to, incorporating these strategies in their firms. The survey results will help inform a set of policy proposals around apprenticeship and
work-based learning that its membership network can use to engage state and local leaders.
• With support from JPMorgan Chase, the Joyce Foundation, and the Annie E. Casey Foundation, Case Western Reserve University is investigating4 the
return on investment to U.S. employers using apprenticeships in different sectors in conjunction with the U.S. Department of Commerce. The study
will examine the costs and benefits of apprenticeships for employers and collect data on the investments associated with such programs, as well as
apprentices’ performance and productivity. We expect results by late summer 2016.
We believe these investments could build knowledge of and evidence for the power of approaches that encourage and increase employer participation in
apprenticeships and connect low-income individuals and families to such opportunities. In addition, they are helping to inform the ways in which the
foundation can support increased use of and access to apprenticeships.
Based on some of the early research that’s been done, common barriers for employers seem to include a lack of knowledge about how to develop or
deliver an apprenticeship, the cost of creating and running an apprenticeship, and concerns about bureaucracy associated with registering an
apprenticeship with the state or federal government.

3. What are the benefits to employers in apprenticeships, including those for young people? How can employers be persuaded to
offer such apprenticeships? What kind of assistance do employers need to make apprenticeships attractive and viable?
Despite some of the challenges, we are hearing that employers value work experience, even for entry-level positions. Research on the return on
investment to European firms shows that apprenticeship can help employers reduce costs related to recruitment, retention, productivity, and safety.
According to one study,5 because apprentices are productive employees during their training periods, companies frequently recoup training costs during
apprenticeships or soon thereafter. Still, the results vary considerably, and we have limited evidence on the return on investment for apprentices in the
U.S. Having such evidence would help make a stronger case to U.S. businesses to consider adding apprenticeships, especially businesses outside the skilled
trades, which currently offer the vast majority of apprenticeships. Apprenticeships may also help businesses diversify their entry-level candidate pool and
develop an internal process for succession planning.
The state of today’s labor market may offer new opportunities to engage employers in developing apprenticeship and other learn and earn programs.
Employers say they still struggle to find workers with the right set of skills, but they may not see it as their role to work with traditional education systems
to help students develop the skills needed to succeed in the labor market. Apprenticeship provides a path forward that combines work with structured
learning opportunities.
The companies that have successfully implemented apprenticeships share a few common factors, including reliance on intermediaries that streamlined the
design and registration processes, availability of an existing curriculum and instructional resources, and exposure to peers also using apprenticeship
programs.

4. When are pre-apprenticeship programs advisable? Which entity is responsible for organizing such programs? What are the best or
most promising practices — and research — on pre-apprenticeships?
Pre-apprenticeship programs are typically pre-employment training opportunities that prepare job seekers for employment in a particular industry. They
seem to be most common in the construction sector. The objective of these programs is to prepare individuals for entry into apprenticeships, although
they often place people in a range of other employment opportunities as well.
Pre-apprenticeship programs can vary widely in terms of the job seekers they serve, the structure of the programming provided, and the institutional
home. In different regional labor markets, community-based organizations, community and technical colleges, high schools, and chambers of commerce
have organized such programs. The quality of these programs in terms of preparing job seekers for apprenticeships also varies considerably.
However, pre-apprenticeships can provide potential apprentices, including youth and young adults, with structured career exposure opportunities,
including hands-on learning; help for the development of literacy, numeracy, and industry-specific skills; and access to an apprenticeship that might not
otherwise be available.
From 2009 to 2012, the foundation supported the Aspen Institute’s research6 on the role pre-apprenticeship programs play in preparing low-income,
disadvantaged adults for careers in construction. The publications resulting from this work are good resources for learning more about pre-apprenticeship.
For further information, contact Allison Gerber at agerber@aecf.org

or visit www.aecf.org/.

*

The views expressed here do not necessarily represent the views of the Federal Reserve Bank of Philadelphia or the Federal Reserve System.

1

The Annie E. Casey Foundation, “Two New Casey Initiatives to Focus on Education and Employment for Youth, Young Adults,” September 8, 2015, available at http://ow.ly/UT9re.

2

See http://ow.ly/UTmjv.

3

See http://ow.ly/UTn1n.

Department of Commerce, “Joyce Foundation, JPMorgan Chase, and the Annie E. Casey Foundation Support Apprenticeship Return on Investment Study,” September 8, 2015, available at http://ow.ly
/UTnhi.
4

Robert Lerman, “Do Firms Benefit from Apprenticeship Investments? Why Spending on Occupational Skills Can Yield Economic Returns to Employers,” IZA World of Labor, May 2014, available at
http://ow.ly/UTnNM.
5

6

Workforce Strategies Initiative at the Aspen Institute, “Our Work: Research & Evaluation,” 2015, available at www.aspenwsi.org/our-work/research-evaluation.

CASCADE: NO. 90, WINTER 2016

Measuring the Quality, Not Quantity, of Job Creation*
By Noelle S. Baldini, Community Engagement Associate
Job creation has long been seen as a worthy goal that supports economic growth while providing opportunities for the local workforce. Increasingly,
however, stakeholders are beginning to ask whether success should be measured purely by the quantity of jobs created without regard for the quality of
those jobs. This article explores various efforts that are underway to encourage the creation, dissemination, and integration of job quality standards into
investment, philanthropic, and economic development efforts aimed at job creation.

The Case for Quality Jobs
Currently, most investors, foundations, banks, and government entities are “counting jobs in specific [low- and moderate-income] zip codes without paying
attention to the quality of these jobs,” said Andrea Armeni, cofounder and executive director of Transform Finance, a San Francisco–based nonprofit
organization.1 Transform Finance’s mission includes bridging finance and social justice, and quality job creation is one area through which the organization
seeks to achieve that goal.
Transform Finance recently received funding from the Ford Foundation and Surdna Foundation to develop implementable job quality standards that can be
used by impact investors, foundations, labor organizations, and government “to ensure that jobs created aid in breaking the cycle of poverty versus
perpetuating it,” said Armeni. Often, job creation leaves many workers dependent on government services because wages are too low to allow for selfsufficiency. Furthermore, Morgan Simon, cofounder and chair of Transform Finance, notes that job creation is a “slippery” metric.2 The only factors that
truly create new jobs are market demand and innovation, so the goal of mission-driven funders and investors, Transform Finance believes, should not be to
increase the quantity but rather the quality of those jobs.
Helen Neuborne, director of Quality Employment at the Ford Foundation, agreed. “We no longer live in a
country where someone can simply ‘pull themselves up by their bootstraps.’ Growing inequality is not a
result of a lack of willingness to work but the result of a lack of quality jobs,” said Neuborne. The work of
Neuborne’s team has expanded since the program’s start in 2003, as the foundation deepened its
commitment to addressing inequality. The Quality Employment unit makes grants in three programmatic
areas to improve economic opportunity for low-wage families. The first supports effective strategies for
workforce development to improve access to quality training and jobs for low-wage and disadvantaged
workers, especially immigrants; the second seeks to improve the quality of jobs held by low-wage workers by
ensuring paid sick days and paid leave, expanding unemployment insurance, and raising the minimum wage;
and the third is working with states to expand the availability of and access to work supports (e.g., the
Supplemental Nutrition Assistance Program [SNAP], child care, and health care) that promote greater job
stability.
The Ford Foundation believes that the lack of quality jobs is not only bad for workers but also for businesses
and the broader economy. “Businesses will not thrive in an environment where people do not make enough
money to consume. With the middle class hollowing out, demand from consumers for products and services is
decreasing,” said Neuborne. Low wages are an obvious element of poor-quality jobs, but a shift to part-time
and subcontractor jobs with no benefits and volatile schedules is also a concern. To have a strong economy,
Neuborne and the Ford Foundation believe more attention should be placed on building a solid workforce,
and they have supported this belief with roughly $100 million in grants toward quality employment.

In 2009, the New Hampshire Community Loan
Fund invested in VXi, a Dover, NH–based maker of
corded and wireless telephone headsets. This
investment allowed VXi to more than double in
size, reach record profitability, and institute an
employee bonus plan. When the owners sold the
company three years later, each employee received
a share of the proceeds, and the new owners were
so impressed with the staff that they kept it intact.
Photo Credit: Geoff Forrester Photography, Courtesy of NH
Community Loan Fund

Zeynep Ton, an adjunct associate professor in the operations management group at MIT Sloan School of
Management, also believes that investing in the workforce can have a positive economic impact. Ton’s book, The Good Jobs Strategy, examines
operational strategies that businesses can use to improve employee satisfaction, leading to increased productivity, operational efficiency, and customer
satisfaction. Ton’s research also explores “the presumed trade-off between investment in employees and low prices”; she argues that both can be
simultaneously achieved by “a combination of investment in workforce and operational practices that benefit employees, customers, and the company.”3
Ton explains that most companies see labor as a cost instead of as an asset to be invested in. Retailers such as Costco, Trader Joe’s, QuikTrip, and
Mercadona take the opposite approach by prioritizing investments in their workforces. These companies have documented effects such as decreased
employee turnover and increased employee satisfaction while keeping prices low through strategies such as offering fewer product varieties and crosstraining employees to cover a variety of responsibilities.4 Although Ton’s research has primarily focused on retailers, she believes that these principles can
be applied across industries.
Ton’s research is important for funders such as Shawn Escoffery, program director for the Strong Local Economies Program at the Surdna Foundation. The
foundation’s Strong Local Economies Program aims to encourage collaboration geared toward improving the quality of jobs in the lower wage sectors of the
economy while creating access to career pathways to good jobs in emerging industries. Escoffery believes that the presence of a sustainable business
model is key to successfully improving job quality. “If the business cannot survive and grow, there will be little to no job creation, so we are also looking
for ways to strengthen and support small businesses in their efforts to put workers first,” said Escoffery.

Supporting and Measuring Quality Job Creation
Escoffery explained that “tying strings to capital” is one effective way to encourage this behavior change. Emerging best practices for investors promoting
job quality include a “floor-and-ladder” approach,5 which was designed by Transform Finance for the California-based mezzanine fund HCAP Partners.6
This approach assesses where a business currently is in a number of categories and provides action steps that will allow the company to climb the quality
“ladder” over time. Lenders, such as Fund Good Jobs7 and Social Capital Partners,8 have offered reduced interest rates for businesses that meet certain
job quality standards or commit to hiring employees from underserved areas.
Growth Opportunity Partners,9 or “Growth Opps,” is a nonprofit organization based in Cleveland that was founded in January 2015 by JumpStart,10 a
nonprofit organization that provides equity capital and technical assistance to early-stage ventures in Ohio. Since its founding earlier this year, Growth
Opps has approved six loans and anticipates the average loan to its clients to be approximately $275,000. The organization plans to become a community
development financial institution (CDFI). “Job quality is central to our mission and is much more than simply checking a box,” shared Michael Jeans,
president of Growth Opps.
Jeans explained that Growth Opps’ approach involves creating a mechanism that supports employee skill
building and puts employees on a path to obtaining a living wage (or beyond). Growth Opps calls this
mechanism the Milestone Funding Process (MFP) and uses it to keep its clients focused on the creation of
“meaningful wage jobs” and opportunities. If given the proper training, each employee can be on a path to
obtaining a “meaningful wage” within 12 months, said Jeans. Growth Opps defines a meaningful wage as one
that is at or above the federal living wage and that provides wealth-building opportunities such as retirement
planning. The MFP requires business owners to reach agreed upon financial performance metrics and job
quality outcomes — milestones that allow them to access the next layer of financing from Growth Opps. The
intended use of the loan proceeds is written into the loan agreements, which Jeans explained not only holds
the client accountable but also ensures that the business can afford the increased cost. “We are working
with the employer to benefit both the company and the employee,” Jeans said. He believes that this
strategy will decrease turnover that occurs when lower wage employees seek new jobs to obtain nominal pay
raises, sometimes as low as 25 to 50 cents per hour. Growth Opps sees this strategy not as a “benevolent
exercise” but as one that will result in a more engaged, stable, and productive workforce, which should
translate to increased profitability for the company.
In contrast to the approach of Growth Opps, Daniel Brett, manager of InSight at Pacific Community Ventures,
finds a “lack of evidence of many CDFIs actively promoting and measuring job quality.” Pacific Community
Ventures (PCV)11 is a CDFI based in San Francisco whose services include technical assistance and capital for

Rustic Crust, located in Pittsfield, NH, was on a
fast-growth track. With its all-natural pizza crusts
being sold in grocery stores across the country, the
company needed additional working capital and
some new equipment to increase productivity.
Rustic Crust’s management team was experienced
and had managed the company for strong profits
and good jobs. The New Hampshire Community
Loan Fund’s investments from 2009 to 2014
allowed Rustic Crust to triple in size, add more
than 80 jobs, and acquire a new product line.

small businesses, as well as impact evaluation, research, and strategic consulting for CDFIs, foundations, and
Photo Credit: Cheryl Senter, Courtesy of NH Community Loan
other capital providers within the impact investing space. PCV’s recent research aims to highlight best
Fund
practices, recommendations, and insights from CDFIs currently engaged in measuring and supporting job
quality. Brett believes that the lack of CDFI engagement on this topic can be attributed to uncertainty
regarding the definition of a quality job and to the fact that CDFIs’ sources of capital — namely, government, foundations, and banks — do not require this
measurement. PCV’s research will highlight several job quality categories that it hopes will be incorporated into CDFI underwriting and reporting
requirements in the future. Categories include:
• Living wage: Does the job provide sufficient income to afford a basic standard of living or at a minimum offer financial remuneration closer to a
living wage than the employer’s competitors?
• Benefits: Does the employer offer health insurance, paid sick leave, and maternity and paternity leave?
• Career-building opportunities: Do employers offer training, mentorship, and opportunities for advancement within the company?
• Opportunities to build wealth: Are employees given retirement plans with company match, ownership options, merit-based bonuses, or financial
literacy training?
• Employee-focused work environment: Are staff members at all levels treated with respect and dignity? Are employees empowered and engaged?
Are there strong relationships between management and staff? Are employees given advance notice of their schedules and flexibility to take care of
family emergencies without fear of being fired?
PCV believes that although ongoing measurement is key, providing potential CDFI borrowers with a “checklist” of job quality categories to be considered
during underwriting could become a promising strategy.

Considerations and Potential Challenges with Job Quality Measurement
Some CDFIs, however, are cautious about incorporating job quality standards into underwriting because they feel these standards could become a barrier
to accessing capital. Joan Brodhead, executive vice president and chief operating officer at Community First Fund, a CDFI based in Lancaster, PA, believes
that job quality standards should not inhibit access to capital but rather should be tracked over time to gauge progress. John Hamilton, vice president of
Economic Opportunity at New Hampshire Community Loan Fund (Community Loan Fund), a CDFI that offers both royalty financing and loans to businesses
with one to 75 employees in New Hampshire, agrees that as long as a business is “willing and coachable,” his team can work with the business to improve
job quality standards over time. “Although a loan to a business that already has an 80 percent job quality rating may look more impactful,” said Hamilton,
“we believe working with a business that begins at 30 percent and improves to 80 percent over the course of our involvement with them will have a much
greater impact.” Although promoting job quality is central to the mission of the Community Loan Fund’s small business lending, Hamilton explained that it
is also a way to mitigate risk. “When businesses rely on one smart person making all the decisions … that’s risky,” said Hamilton. By investing in
employees, small businesses are developing talent at all levels, often improving their bottom line in the process.
Although job quality is a major focus for the Community Loan Fund, Hamilton shared what he views as challenges with creating job quality standards. For

example, it is difficult to measure job quality and engagement quantitatively. The Community Loan Fund plans to increase its work with portfolio
businesses to conduct employee surveys to measure factors such as engagement and satisfaction as well as to ask employees what matters most to them.
This may better define quality from the eyes of the job holder, thereby customizing job quality measurements according to the unique culture, industry,
size, or age of a business and the employees who make up that business. Hamilton is mindful of not “holding businesses to job quality standards that don’t
make sense for them and create a lot of additional paperwork.” He also shared that the Community Loan Fund must overcome businesses’ skepticism that
as a nonprofit, mission-driven lender, it may bring an agenda that is not rooted in strong business practices or may not be an investor that is able to add
value to the businesses’ bottom line. The Community Loan Fund is able to create strong relationships with businesses throughout the state by limiting the
reporting requirements of portfolio companies and working with businesses to create customized strategies for improving both job quality and business
performance. Additionally, the Community Loan Fund provides financial incentives to portfolio companies that are able to achieve customized job quality
goals.

Conclusion
Several efforts are underway to develop job quality standards that could be incorporated into investing and philanthropic decision-making. Improvements
in job quality would be beneficial not only for workers but also for businesses and the broader economy. Focus will need to be placed on ensuring that
these standards will be in line with what is possible for businesses, understanding that if a business is not sustainable, neither will be the jobs that it
offers. It is also important to ensure that efforts to improve job quality do not reduce job access for difficult-to-employ populations.

*

The views expressed here do not necessarily represent the views of the Federal Reserve Bank of Philadelphia or the Federal Reserve System.

1

See www.transformfinance.org.

2

Morgan Simon, “Managing vs. Measuring Impact Investment,” Stanford Social Innovation Review, March 20, 2015, available at http://ow.ly/UiN5o.

3

Zeynep Ton, “Why ‘Good Jobs’ Are Good for Retailers,” Harvard Business Review, January–February 2012, available at http://ow.ly/UiMYI.

4

See Zeynep Ton’s Harvard Business Review article for a more thorough explanation.

See Keith L. Rolland and Noelle S. Baldini’s “Investing to Create Good Jobs” article in the Fall 2015 issue of Cascade for a full description of the floor-and-ladder approach, available at
www.philadelphiafed.org/community-development/publications/cascade/89/02_investing-to-create.
5

6

See www.hcapllc.com/hcap-partners.

7

See www.fundgoodjobs.com.

8

See http://socialcapitalpartners.ca.

9

See http://growthopps.org/#page.

10

See www.jumpstartinc.org/about/what-we-do/.

11

See www.pacificcommunityventures.org/about.

CASCADE: NO. 90, WINTER 2016

Spotlight on Research: Making a Difference in the Lives of Young Men of Color*
By Marvin M. Smith, Ph.D., Senior Community Development Economic Advisor
The plight of young men of color, whether it is in education, the labor market, or involvement in the criminal justice system, has been and remains a
challenge. The difficulties in the various areas of these young men’s lives have been well documented over time. The problems of young men of color have
also engendered numerous responses. Policy initiatives at the federal, state, and local levels as well as endeavors by foundations have been undertaken to
address these dilemmas.
Unfortunately, the efforts to assist young men of color have waxed and waned over the years, and valuable lessons have not been learned from previous
interventions to shape improved policies and programs. Christopher Wimer and Dan Bloom attempt to rectify the situation by documenting statistically
sound successful strategies and promising interventions.1 The following is a summary of their findings.

Background
The statistics on the difficulties experienced by young men in general and young men of color in particular have been well
chronicled. Some of the highlights from the report include the following: “The employment rate of male teens aged 16 to 19, for
example, has plummeted over the past 35 years. In 1978, the employment rate for this group stood at 51.8 percent. In 2009, it
was 28.1 percent, falling by nearly half. For teenage males of color, these rates are even lower. Hispanic male teens had an
employment rate of 24 percent in 2009, and the rate for black male teens was even lower at just 14 percent.” Although the low
employment rates of teens are alarming, the dismal employment experiences of teens of color follow them into their 20s and 30s.
Not too surprisingly, the earnings of young men of color have also waned over the decades.
Marvin M. Smith, Ph.D.

The labor market troubles of young men of color are exacerbated by their involvement in the criminal justice system. “In 2010,
black men were more than six times as likely as white men to be incarcerated in prison or jail, while Hispanic men were more
than two-and-a-half times more likely to be incarcerated.”2 Incarceration can have ancillary effects on young men of color as well. Their job possibilities
tend to be adversely affected by their criminal records. Moreover, incarceration can interfere with their educational attainment or the accumulation of
work experience. Wilmer and Bloom point out that, although the school enrollment of young men of color has been increasing, only a small percentage
enroll in and graduate from postsecondary education. Unfortunately for some young men of color, today’s economy places a premium on educational
attainment as a precursor for success.

Programs That Work
In reflecting on the quandaries faced by young men of color, the authors observed that “a growing number of young men of color have become
disconnected from the positive systems, institutions, and pathways designed to help people achieve success — high school diplomas, enrollment in and
completion of postsecondary education or training, and ultimately career ladders leading to well-paying jobs.” Fortunately, some interventions have made
a difference. The authors note, however, that despite the disparaging statistics concerning young men, not all young men of color are at a total
disadvantage. Some are faring rather well, and some need only a little assistance to succeed. Yet others require a great deal of support in order to thrive.
As mentioned previously, a number of programs have been implemented to contend with the dilemmas facing young men of color. In reviewing the efforts
that have been undertaken, the authors considered only interventions that have been successful or show a great deal of promise.3 They further narrowed
their focus to programs that were evaluated by high-quality, randomized controlled trials (RCTs). The programs that the authors review are divided into
two categories: (1) proactive approaches, which include “preventive interventions aimed at youth who are still connected to positive systems (like schools
or community colleges) that seek to enhance their success in moving through those systems and on to productive careers in the labor market,” and (2)
reconnection approaches, which involve “interventions targeting those who have disconnected from positive systems, who have dropped out of school or
the labor market, or who have been sent to jail or prison and are relying upon the second-chance system to help reintegrate into their communities.”
Proactive Approaches
Two types of programs are considered under this approach. The first type of program covers interventions for young men of color who are of high school
age and serve to assist their preparation for postsecondary education or provide them with skills that will be beneficial early in their labor market
experiences. The second type of program focuses on youth and young adults who are currently involved in postsecondary or job training settings and is
designed to assist them in improving their outcomes in the labor market.
High School–Focused Programs. The authors identified a few programs that were successful in addressing the unsettling fact that “young men of color are
less likely than their peers to graduate from high school and go on to enroll in postsecondary education or find a job.” One of the most effective
interventions is Career Academies. This program targeted low-income youth and encouraged them to remain engaged in school by offering them
instruction in small learning communities while also providing them with valuable information to facilitate the transition to either college or employment.
Career Academies are assisted in this task with the aid of local employers who “provide concrete work-based learning opportunities.” The efficacy of
Career Academies was evaluated by a random assignment study conducted by MDRC (a nonprofit research organization).4 The study included both young
men and women, and around 85 percent of the study’s participants were Hispanic or African American. The results of the study were especially
noteworthy for young men. According to the MDRC report, Wimer and Bloom noted that “in comparison with a control group, earnings for young men
participating in Career Academies were nearly $30,000 higher over the eight years following scheduled graduation from high school.”5 Moreover, the

participants were more likely to live independently of their parents and live with a spouse or partner and their children.
Another program that focused on at-risk high school students — including many young men of color — and yielded some success was New York City’s Small
Schools of Choice. The results of an RCT assessment of the program6 found that the participating schools raised the students’ graduation rates by nearly 10
percentage points and improved the students’ readiness for college by increasing the passing rate for the English Regents Examination.7
Postsecondary Programs. Several programs were recognized as being effective in assisting the progress of young men of color through postsecondary
education and training. One intervention noted by Wimer and Bloom was a “performance-based scholarship program” at a community college in Arizona.
Students in the treatment group were given $4,500 in scholarships contingent on their meeting a number of benchmarks. The findings from a random
assignment study indicated that, compared with the control group, participants were more likely to increase net financial aid (less reliance on loans),
enroll full-time, stay in college for a second semester, and earn more college credits.
However, not all youth desire or have the ability to succeed in college. But they still could benefit from the acquisition of marketable skills to help them
succeed in the labor market. Examples of an effective intervention to achieve this task are the Sectoral Employment Training programs. These programs
tailor the job training to meet the needs of local industries and employers and afterward connect trainees with the opportunities offered by employers. A
randomized evaluation of one of these programs found that, relative to the control subjects, participants were more likely to earn (29 percent) more,
work more consistently in higher-wage jobs, and work in jobs with better benefits.8,9
Reconnection Approaches
The authors found a number of interventions that reconnect young people to education and training. The most visible of these interventions is the federal
Job Corps program. This program “provides intensive, (mostly) residential and job training services to disadvantaged youth aged 16 to 24.” An evaluation
of a randomized study of the program found that participants increased the completion of General Educational Development (GED) and vocational
certificates, increased short-term earnings, and reduced criminal activity.10
Another noteworthy intervention is the Center for Employment Opportunities transitional jobs program. The program in New York City “offers former
inmates, who are predominately men of color, temporary, paid work in addition to other services (for instance, fatherhood or parenting skills classes) to
help them avoid recidivism.” This program yielded a reduced reincarceration rate, a reduced probability of arrest, and a temporary increased employment
rate.

Concluding Note
Only a few of the programs that the authors have found to be effective in improving the livelihood of young men of color are discussed here. For more on
these programs and the findings on the efficacy of programs not covered here, see Wimer and Bloom’s report. According to the authors, knowledge of the
successful programs and their interworkings is critical in the planning of future interventions.

*

The views expressed here do not necessarily represent the views of the Federal Reserve Bank of Philadelphia or the Federal Reserve System.

1

Christopher Wimer and Dan Bloom, Boosting the Life Chances of Young Men of Color: Evidence from Promising Programs, New York: MDRC, 2014, available at http://ow.ly/VFpkR.

2

Information obtained from Bruce Drake, Incarceration Gap Widens Between Whites and Blacks, Washington, D.C.: Pew Research Center, 2013.

Only some of the former will be considered here. Also, it should be pointed out that “while some of the interventions discussed [here] focus exclusively or predominately on young men of color, others are
more broadly focused but have either consistently or especially positive outcomes for this group.”
3

4

James J. Kemple, Career Academies: Long-Term Impacts on Work, Education, and Transitions to Adulthood, New York: MDRC, 2008, available at http://ow.ly/VLZBv.

5

See Kemple, 2008.

Howard S. Bloom and Rebecca Unterman, Sustained Progress: New Findings About the Effectiveness and Operation of Small Public High Schools of Choice in New York City, New York: MDRC, 2013,
available at http://ow.ly/VLXbC.
6

7

Passage of this examination exempts incoming students at the City University of New York from remedial English courses.

Sheila Maguire, Joshua Freely, Carol Clymer, et al., Tuning in to Local Labor Markets: Findings from the Sectoral Employment Study, Philadelphia: Public/Private Ventures, 2010, available at
http://ow.ly/VLXEW.
8

9

Although this program did not focus solely on young men of color, African Americans and Latinos made up 81 percent of the participants, and about half were young adults 18 to 26 years of age.

10

Peter Z. Schochet, John Burghardt, and Sheena McConnell, “Does Job Corps Work? Impact Findings from the National Job Corps Study.” American Economic Review 98:5, pp. 1864–86

Youth, Education, and the Labor Force*

MAPPING OUR

Some workforce development programs specifically target people 16 to 24 years
of age who are neither in school nor successfully participating in the labor market.
Efforts to reengage youth in either school or work could yield long-term dividends
for the individuals as well as for their communities.

COMMUNITY

A recent report by Measure of America estimates that in the U.S., roughly 13.8
percent of those in this age range were not in school and were either unemployed
or had dropped out of the labor force in 2013. Referred to as “disconnected youth”
in this report and “opportunity youth” in other quarters, this definition includes
about 5.5 million youths nationally and describes more than 19 percent of those
in this age range in West Virginia and Louisiana, but well under half that level in
Nebraska, North Dakota, and a number of other states. As for the states covered by
the Third Federal Reserve District, the percentage of youths meeting this definition
was near the national average in Pennsylvania (13.3 percent) but was substantially
higher in Delaware (15.4 percent) and lower in New Jersey (12.1 percent).

Third Federal Reserve District
KEITH WARDRIP, COMMUNITY DEVELOPMENT RESEARCH MANAGER

WA
MT

ME

ND
MN

OR

VT NH

ID
WI

SD

NY

WY

CT

IA

NE

OH
UT

IL

KY
NC

TN
AR

NM

SC
MS

TX

DE

VA

MO

OK

AZ

DC

WV

CO
KS

Percentage of Population
16 to 24 Years of Age
Neither in School nor
Working (2013)

MD

IN

RI

NJ

PA

NV
CA

MA

MI

AL

GA

LA
FL

Up to 11%
11.1% to 13%
13.1% to 15%
15.1% to 17%
Over 17%

*The views expressed here do not necessarily represent the views of the Federal Reserve Bank
of Philadelphia or the Federal Reserve System.
Note: Not shown on the map, the estimates for Alaska and Hawaii were 14.2 percent and 11.5
percent, respectively.
Data source: Estimates are provided in Zeroing In on Place and Race: Youth Disconnection in
America’s Cities, written by Kristen Lewis and Sarah Burd-Sharps and published in 2015 by
Measure of America, a project of the Social Science Research Council. The Lewis and BurdSharps report is available at https://www.measureofamerica.org/youth-disconnection-2015/.
The estimates are based on an analysis of the U.S. Census Bureau’s 2013 American Community
Survey Public Use Microdata Sample file and were replicated by the author.
Map sources: U.S. Census Bureau; Esri, derived from Tele Atlas

COMMUNITY DEVELOPMENT STUDIES & EDUCATION

Recommended Reading - Cascade: No. 90,
Winter 2016
By Nathaniel Borek, Outreach and Administrative Analyst

Recommended Reading
Workforce Development
Leung, Loh-Sze, and Margaret Miley. “Integrating Financial Stability Strategies into
Workforce Development Programs: An Implementation Pilot in Boston,”
SkillWorks and the Midas Collaborative, December 2013.
This report presents qualitative and quantitative findings of a successful pilot
intervention that combines financial education and counseling with workforce
development.
Organisation for Economic Co-operation and Development. Time for the U.S. to
Reskill? What the Survey of Adult Skills Says,
Paris, OECD Publishing, 2013.
This report presents findings for the United States, relative to other countries
surveyed, from the OECD Survey of Adult Skills and makes policy
recommendations based on these findings.
“What Works in Job Training: A Synthesis of the Evidence,”
U.S. Departments
of Labor, Commerce, Education, and Health and Human Services, July 2014.
This report assesses a wide array of workforce development programs, policies,
and studies to determine best practices and to inform continued innovation and
policy implementation.

Youth and Young Adult Programs
Benus, Jacob, Terry Johnson, Michael P. Kirsch, et al. “Job Corps Process Study:
Final Report,”
U.S. Department of Labor and IMPAQ International, June 2014.
This report assesses the effectiveness of the Jobs Corps program and of particular
program policies, such as the payment of stipends, guidance from mentors, and
continued services after the primary program ends.

Bloom, Dan. “Programs and Policies to Assist High School Dropouts in the
Transition to Adulthood,”
Future of Children, 20 (Spring 2010), pp. 89–108.
This report reviews evaluated programs for high school dropouts and concludes
with recommendations on strengthening current programs, innovating to create
new programs, and engaging with youths who have the most need for training
and education services.
Curnan, Susan P., Andrew B. Hahn, Lawrence N. Bailis, et al. Innovating Under
Pressure: The Story of the 2009 Recovery Act Summer Youth Employment
Initiative: Chicago, Detroit, Indianapolis & Marion County, Phoenix & Maricopa
County,
The Center for Youth and Communities, Heller School of Social Policy
and Management, Brandeis University, June 2010.
This report takes an institutional perspective on summer youth workforce
development and presents case studies focused on public and private partnerships
and implementation of best practices.
Deschenes, Sarah N., Amy Arbreton, Priscilla M. Little, et al. “Engaging Older
Youth: Program and City-Level Strategies to Support Sustained Participation in
Out-of-School Time,”
Harvard Family Research Project, Public/Private
Ventures, and the Wallace Foundation, April 2010.
For this report, the authors studied programs with high participation and
retention to determine what factors help foster engagement with older youths and
how institutions and governmental agencies can encourage policies that lead to
high participation.
Heinrich, Carolyn J., and Harry J. Holzer. “Improving Education and Employment
for Disadvantaged Young Men: Proven and Promising Strategies,” Urban
Institute Research Report, May 2010.
Programs for improving employment outcomes of different groups of
disadvantaged youths are identified in this report that emphasizes process,
results, and thorough evaluation.
Hossain, Farhana, and Dan Bloom. “Toward a Better Future: Evidence on
Improving Employment Outcomes for Disadvantaged Youth in the United States,”
MDRC, February 2015.
This paper presents factors that affect youth unemployment, provides evidence on
programs that target different groups of youths, and emphasizes the importance
of engaging and partnering with private employers.
Kemple, James J., and Cynthia J. Willner. “Career Academies: Long-Term Impacts
on Labor Market Outcomes, Educational Attainment, and Transitions to
Adulthood,”
MDRC, June 2008.
This report presents findings from an in-depth study of Career Academies, a
program that combines academics and career development opportunities for
youths. The study used an experimental methodology that found significant
differences in labor market outcomes between treatment and control groups.
Ross, Martha, Carolyn Gatz, Richard Kazis, et al. “Unemployment Among Young
Adults: Exploring Employer-Led Solutions,”
Metropolitan Policy Program at
Brookings, July 2015.
This report analyzes youth unemployment through the lens of both supply and
demand within the labor market and concludes that stakeholders from a diverse
group of institutions must work together to address issues on both sides of the
market.

“Youth and Work: Restoring Teen and Young Adult Connections to Opportunity,”
The Annie E. Casey Foundation Policy Report, Kids Count, March 2012.
This report offers comprehensive national and historical perspectives on youth
employment issues and concludes with a case study and recommendations for
addressing these issues.

CASCADE: NO. 90, WINTER 2016

Message from the Community Affairs Officer
By Theresa Y. Singleton, Ph.D., Interim Senior Vice President of Corporate Affairs and Community Affairs Officer
The Community Development Studies & Education (CDS&E) Department has focused on a range of issues related to workforce development in recent years.
Through our initiatives, we have put a particular emphasis on the workforce development needs of young people. We recognize the importance of making
investments in human capital and how these investments will result in long-term individual success and regional economic growth.
Earlier this month, in partnership with the Cleveland Fed and the Annie E. Casey Foundation, we hosted Bridging the Gap:
Promising Approaches and Emerging Practices for Addressing Youth Unemployment . The event, which highlighted
apprenticeships and other employer-led strategies, is available for viewing.
This edition of Cascade features some of the latest government, foundation, and nonprofit initiatives to respond to the vast
workforce development needs of young people from 16 to 24 years of age, particularly “opportunity youth” — those who are
neither working nor in school. Many of these initiatives seek greater involvement from the private sector to provide meaningful
pathways to jobs and careers.
Theresa Y. Singleton,

Apprenticeships, which combine on-the-job training and other related training and instruction, are highlighted in this issue as an
Ph.D., Interim Senior
Vice President of
important model to address youth unemployment. Registered apprenticeships (RAs), authorized under federal legislation enacted
Corporate Affairs and
in 1937, have traditionally been used in construction and the skilled trades, but RAs are now being expanded to high-growth
Community Affairs
Officer
industries such as information technology (IT), health care, and advanced manufacturing. There is also much to learn from
emerging approaches being implemented overseas. Just this past summer, the U.S. Departments of Labor, Commerce, and
Education signed agreements with their counterpart agencies in Germany and Switzerland to work together and share information on apprenticeships and
career and technical education.
Other articles in this issue focus on the importance of job quality, reflect on other employer-led strategies to address youth unemployment, and provide a
comprehensive overview of opportunities to bridge workforce partnerships in IT. We also highlight research on efforts to assist disadvantaged young men of
color, many of whom who have experienced high unemployment rates.
As we look toward 2016, CDS&E is considering new ways to engage in initiatives that address the workforce development challenges facing young people
throughout the Third Federal Reserve District and nationwide. Please contact our team if you have opportunities to partner in this area.
I wish you a happy holiday season and look forward to connecting in the new year.