The Profit Motive

Investment titan Blackstone on why casting a wider net in hiring and helping frontline workers move up in careers is good for the bottom line. Also, Year Up rebrands while seeking to offer sectoral training as part of a broad set of workforce solutions for employers, community colleges, and regional coalitions.

Shoots of Green for Untapped Talent

New York City—The skills-first movement will be stuck at feel-good press releases and tiny pilot programs if big business continues to relegate it to philanthropic and social responsibility projects, many experts say. However, real change seems more likely if corporate America decides that the economic mobility of working learners and frontline employees is good for the bottom line.

Blackstone appears to be a believer. During a meeting the $1.1T alternative asset management company hosted last week, executives from the firm and several of its portfolio companies made the financial case for tapping a wider pool of talent in hiring and creating more career growth opportunities for workers.

“This work is good for people,” and it “makes good business sense,” said Joe Baratta, Blackstone’s global head of private equity.

Baratta played a lead role in creating the company’s Career Pathways program, which began four years ago. So far, Blackstone’s portfolio companies have made 10,500 hires from underrepresented populations (veterans, refugees, nondegree workers, and graduates of minority-serving colleges). The program also focuses on the retention and internal mobility of employees, including through the upskilling of frontline workers, with a goal of driving savings and creating value for companies.

Through its foundation, Blackstone seeks to close opportunity gaps, primarily with the college campus–based LaunchPad program. Yet the company is hardly viewed as a bleeding heart institution, as one speaker at the event noted. Several attendees said they hoped the financial titan’s clout can help to elevate the profit motive for skills-first hiring and advancement.

“The great thing about our firm is its reach,” said Jon Gray, Blackstone’s president and COO, citing its 230+ portfolio companies that employ roughly 700K people. “You can do a lot with that.”

Joseph Fuller is a realist about the uphill struggle of trying to improve the economic mobility of workers without four-year degrees. Companies have been overlooking “hidden workers” for a long time, says Fuller, a professor at Harvard University’s Business School who co-leads its Managing the Future of Work Initiative, and he doesn’t predict much progress in the next year or so.

However, Blackstone’s imprimatur is a promising sign, he said at the event.

“We’re seeing early shoots of green,” said Fuller, adding that vendors and social entrepreneurs follow when big companies start acting. “There’s suddenly demand.”

Executives from Servpro, Copeland, and several other Blackstone portfolio companies shared results from their career pathways work:

• QTS Data Centers employs 100 workers who are new to the industry and were brought on through new pathways to roles in corporate services and critical site operations. These employees were offered mentorship and 15% received promotions within the first year.

• Cvent has doubled down on its apprenticeship program and alternative hiring sources. The software company’s apprentices are more engaged and intend to stay on the job longer compared to other software engineers.

The event also featured workers from portfolio companies who landed jobs and promotions through recently created programs.

For example, Briona Thomas became a dental assistant with DECA Dental after participating in an apprenticeship. Thomas said the biggest factor in her decision to pursue an apprenticeship over college was time, followed by cost. “They paid me to learn,” she said.

Blackstone has made a huge commitment to its career pathways work, said Gray, who stressed that the effort isn’t charitable.

The Kicker: “Bridging untapped talent” is the goal, Gray said. “Ultimately it strengthens our companies and helps us deliver for investors.”

Spanning the Opportunity Divide

Blackstone highlighted its partnership with Year Up, perhaps the most established U.S. workforce development organization, which focuses on young adults without four-year degrees. 

So-called sectoral training providers like Year Up are having a moment, with broad support and a shout-out this week in The New York Times by Raj Chetty, the Harvard University economist who directs Opportunity Insights.

Earlier this month, the nonprofit Year Up rebranded. As Year Up United, the group seeks to be better positioned as a comprehensive suite of workforce development solutions. The new name more explicitly folds in the Year Up initiative Grads of Life, which advises employers on skills-first strategies, and the subsidiary YUPRO Placement, a staffing agency and public benefit corporation.

“We are addressing both sides of the opportunity divide—employers in need of skilled talent and young adults in need of opportunity—and want to present ourselves as such,” says Ellen McClain, Year Up United’s CEO and president, who took the helm last year after serving as the group’s COO and CFO. (Click over to Work Shift for a Q&A with McClain.)

As Year Up United, the group will lean into systems change at the local level.

“We intend to take the community-of-practice approach,” says Elyse Rosenblum, the founder and managing partner of Grads of Life. She points to the MassSkills Coalition, a broad group of employers, unions, academics, and workforce organizations that are working together on how to better hire, train, upskill, and retain workers. “That’s an example of the way we want to face the market.”

Year Up United has served roughly 45K learners and partnered with 250+ companies during its quarter-century history. Yet the last couple years have been challenging for the group and most tech-focused workforce education and training providers. Hiring has tightened, particularly for jobs in tech and IT. While recent college graduates have felt the slowdown, breaking into careers remains harder for jobseekers without four-year degrees.

However, YUPRO Placement has seen a recent uptick and is now doing better with placements than it was at this point last year, says Michelle Sims, the company’s CEO: “We are starting to see it open up.”

Demand for contract work in particular has been strong, she says, with roles in green energy, cybersecurity, hospitality, customer service, and sales leading the way.

Year Up United has long partnered with community colleges. But the group is hoping to grow its presence with the sector, says Rosenblum, in part by tapping into its strong relationships with big companies.

“The ambition is really to serve as an intermediary for community colleges and employers,” she says.

Rosenblum says businesses increasingly are moving beyond the pilot phrase when it comes to hiring and supporting workers without college degrees. The main driver, she says, is that they see worker retention rates and success with broader hiring pools as leading indicators of profitability.

Until recently, organizations like the Business Roundtable, the New York Jobs CEO Council, OneTen, and Opportunity@Work were leading the skills-first push with Grads of Life, says Rosenblum.

“There was a field of nonprofits that were propping up the work and trying to get employers to the table,” she says. “Now they are leading it.”

Open Tabs

Industrial Policy
Kamala Harris this week pledged to expand on investments by the Biden administration in specific industry sectors. A campaign document laid out a focus on clean iron and steel, biomanufacturing, AI, aerospace, data centers, and clean energy. Harris also said she would boost registered apprenticeships while working to drop excessive requirements for occupational licensing and for degrees in hiring.

Career Exploration
An enhanced online tool from the Federal Reserve Banks of Philadelphia and Cleveland seeks to help workers chart a path to higher-paying jobs. The Occupational Mobility Explorer now covers more than 600 job titles across 500 U.S. regions. It provides users with up to 10 roles with similar skills to their current job, with details about median wages, degree requirements, and projected growth of job roles.

AI Education
To help prevent a global AI divide, a new $120M fund from Google will provide AI education and training in local languages through partnerships with nonprofits around the world, said Sundar Pichai, CEO of Google and Alphabet. As part of the new fund, the company’s philanthropic arm announced $25M in funding for AI education that will go to ISTE, 4-H, aiEDU, CodePath, and STEM From DANCE.

Missing Apprentices
Last year, 541 two-year colleges were sponsors of registered apprenticeships, yet just 208 of these colleges had an active apprentice, according to a report from Apprenticeships for America. The overall number of apprentices in these programs (roughly 15,500) accounts for just 3% of all civilian apprentices in the U.S. However, the sector has seen a big jump in active programs during the past seven years.

Apprenticeship Degrees
Reach University and Louisiana’s Delgado Community College are part of a coalition that will receive a $10M grant from the U.S. Department of Education to create an apprenticeship pathway for teachers in Jefferson Parish Schools. The program will back at least 350 Delgado graduates who will work in K-12 paraprofessional roles, including as classroom aides and bus drivers, as they complete Reach’s paid bachelor’s degrees.

Regional Plans
Jobs for the Future will recruit regional U.S. leaders to develop customized, place-based action plans to promote regional economic growth with a focus on people without four-year degrees and those from underserved groups. JFF and its partners will select an initial six regions to equip more than 600 advocates, public servants, and community members with tools to improve economic inclusion and job quality.

Job Moves
Matthew Gee is the new director of data strategy for the Gates Foundation’s U.S. program. The co-founder and CEO of BrightHive, Gee also is a senior research fellow at the University of Chicago.

Leah Belsky is the first general manager of education for OpenAI. Belsky, who previously was Coursera’s chief revenue officer, will participate in an OpenAI event next month on AI in education.

Let me know what I missed? Catch you next week. —PF