Aligning Capital, Training, and Economic Mobility

In recent years, skills development and training as a way to help low- and moderate-income (LMI) individuals access quality jobs or career ladders have received a lot of focus. Experts have long noted that workers need to be able to access training throughout their careers to have the skills employers require. However, public funding for such programs has not risen to meet this increased demand for workforce development and training services. Instead, adjusted for inflation, the core federal workforce development funding programs are down well over 85 percent since 1980. This begs the question of whether new service delivery models and financing strategies can be developed to help scale effective training programs and use private dollars as a source of payment. To help answer this question, the 2019 Financial Innovations Roundtable (FIR) brought together thought leaders in community development finance and workforce development to examine financial barriers to scaling successful training programs and discuss opportunities for investments to be made in high-impact businesses and programs. These two industries serve many of the same people and communities, although they have not collaborated extensively. Read the FIR executive summary for a more detailed discussion. At the conference, speakers noted the highly decentralized and fragmented nature of the public workforce development system, which includes workforce investment boards, career and technical education, apprenticeships, and adult basic education programs. They also noted that the largest funding sources include federal Pell grants and employers, with the latter investing half a trillion dollars a year in skills and training. Unfortunately, employer investments do not usually focus on midlevel or front-line workers. Many saw finance as a powerful tool that could help redistribute risk and better align incentives between individuals, employers, training providers, and governments to improve economic outcomes for LMI workers. The roundtable highlighted a number of innovative training models, including an outcomes-based finance program that funds nonprofit training providers in the state of Massachusetts and another that funds community colleges in Virginia, as well as a social enterprise that finds job placements for individuals with multiple barriers to employment at scale.