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As COVID Leaves Millions Unemployed, Here's How Workforce Funders Are Evolving

  • Publication: 
    Inside Philanthropy
    Date: 
    August 11, 2020

    It’s often pointed out that the COVID-19 pandemic has laid bare existing systemic problems for the nation and the world to see. That certainly applies to the plight of the American workforce. This spring, over 20 million people lost their jobs as sectors like retail and hospitality cratered. While the CARES Act’s $600 unemployment provision assisted families for several months, the recent expiration of those benefits and ongoing fights over their extension leave the future uncertain.

    The most pain has fallen, predictably, upon workers whose situations were already precarious. Plentiful but insecure service sector jobs characterized much of the working world as of late last year, when Brookings estimated that 44% of all workers aged 18 to 64 earned low wages. In 2020, many of those jobs have either disappeared altogether or been labeled “essential” while still mostly paying the same. As of July, the Bureau of Labor Statistics reports that the unemployment rate of workers with less than a college degree remains much higher than that of their better-educated peers. A similar disparity extends to race: unemployment among Black workers is around 5 percentage points higher than among white workers.

    Meanwhile, ongoing pre-COVID workforce displacement, driven by factors like automation and globalization, hasn’t gone away. According to a June report from the Markle Foundation, “This crisis will mark an historic turn from the industrial to the digital economy, where education and training will be necessary for many good jobs, threatening to leave behind those without the resources and support to access these opportunities.”

    For Markle and other workforce development funders, the disruption wrought by COVID-19 will be a telling testing ground. Can mostly local and piecemeal strategies for workforce development graduate into something more coordinated and effective? Or will they remain difficult to scale, useful only to the few workers who can access their services and leverage them well?

    A Funding Gap and a Skills Gap
    Looking at the big picture, private funding for workforce development operates alongside public funding provided via the federal Workforce Innovation and Opportunity Act, in addition to some state spending. Enacted in 2013 to put Americans back to work in the wake of the Great Recession, the Workforce Innovation and Opportunity Act was designed to improve upon the previous federal Workforce Investment Act of 1998. Nevertheless, its effectiveness has been limited.

    One problem is the meager quantity of funding appropriated for federal workforce development every year. As a percentage of GDP, U.S. public spending on job training, hiring initiatives and related issues pales in comparison to that of other wealthy countries in the OECD. That percentage also declined as the U.S. economy recovered from the last recession, whereas many other OECD countries maintained their workforce spending during the rebound. State-level spending on workforce development did increase during the expansion, but the overall numbers there are still quite low.

    Federal workforce dollars, meanwhile, are usually spent at the discretion of local workforce development boards. According to the Markle report, most of that funds “staff-assisted services for jobseekers and overhead costs,” leaving a measly 22% for actual education and training.

    Given the less-than-ideal state of public workforce funding, philanthropy plays an outsized role. It fills gaps and supplements local efforts, but it also helps chart the course of the sector and determine which strategies get adopted and scaled. Over the past seven years or so, we’ve followed several key trends among workforce funders that set the stage for where they may be headed in a post-COVID economy.

    For one thing, there’s been a huge emphasis on skills development as employers confronted a lack of qualified applicants for “middle skill” jobs in sectors like healthcare, tech and the skilled trades. As one might expect given such a decentralized landscape, those programs didn’t cover everything equally. Philanthropic support from corporations—whose contributions tend to dominate this space—often centers the industry of the company in question. That meant a lot of well-targeted funding over the years from big-name firms like Google, Walmart and JPMorgan Chase, often with a major upskilling component.

    The shift to a digital economy prompted most workforce funders to emphasize STEM and tech-adjacent skills over the past decade. That trend is particularly prominent among tech firms and tech billionaires, but it’s not exclusive to them. Meanwhile, workforce giving for professions like nursing or construction has been much more sporadic, in part reflecting big donors’ tendency to support programs related to their own professions—often tech, finance and the like.

    The techie tint of workforce philanthropy has led to experimentation with more than a handful of digital platforms meant to connect jobseekers with training and employment. Markle provides one example. The foundation’s Skillful initiative has it partnering with Microsoft, LinkedIn, the Lumina Foundation and others to build out a diverse set of workforce initiatives, including digital platforms, in Colorado and Indiana. As corporate giving grows increasingly strategic, we’ve seen companies like Google and JPMorgan Chase align vast proprietary data infrastructure with their workforce development programming, in part to grow their own labor pools.

    Equity and the Future of Work
    Though many of these digital “future of work” initiatives come with a side helping of corporate self-interest, their place in the post-COVID landscape can’t be disputed. Already, COVID has led to a spike of funder interest in remote learning and remote work, including from global firms. Building out digital infrastructure—and closing digital divides—is pretty much where a lot of workforce funders were already headed. A worldwide disruption to in-person work has likely sped up that timeline.

    For instance, Google rolled out a digital skills development initiative in July oriented toward economic recovery. It adds a skills certification program to the company’s Grow with Google workforce initiative, commits to funding 100,000 need-based scholarships, and dedicates $10 million from Google.org to job training and equity initiatives at JFF, Power and the YWCA.

    In a similar vein, Microsoft has set out “to help 25 million people worldwide acquire the digital skills needed in a COVID-19 economy.” That involves leveraging data, certification and job-seeking tools the firm already controls (like LinkedIn) and disbursing grants to nonprofits around the world. In the U.S., those grantees include the National Urban League and Markle’s Skillful program.

    A lot of recent workforce commitments from corporations, foundations and private donors have also been equity commitments. Just a few from the corporate world include $10 million from Morgan Stanley to the National Urban League, racial justice pledges from Amgen, including partnerships with HCBUs, and $10 million from AT&T to expand economic opportunity in underserved communities via grants to YouthBuild USA, Jobs for America’s Graduates, and Year Up. That’s not to mention the raft of much larger corporate pledges for racial equity that went out this summer, many of which include some form of equity-centered workforce or skills commitment.

    It would be hard to argue that public (and peer) pressure wasn’t the main reason corporate America sounded off on racial equity so loudly this summer. But it would be wrong to underestimate the corporate bandwagon’s influence. After all, corporate floats at pride parades might rub some LGBTQI activists the wrong way, but they’re also a strong sign that the tide of public opinion has turned in favor of a once-unpopular cause.

    It’s too early to tell whether these equity-oriented workforce commitments actually reflect soul-searching beyond the usual DEI platitudes. But in the meantime, they keep coming in. Over the past several months, the National Fund for Workforce Solutions has received a number of funding commitments focused on equity. The National Fund got its start right before the Great Recession and now partners with 30 regional funder collaboratives to advance skills training and career advancement.

    New grant commitments to and through the National Fund include a contribution from Walmart to address workplace racial inequities in Cleveland and Philadelphia, $2 million from Prudential Financial toward efforts to improve the quality of jobs, and $1.25 million from the Harry and Jeanette Weinberg Foundation to support equitable back-to-work programming. In addition to those three, the National Fund’s backers include other big names like JPMorgan Chase, the Lumina Foundation, the Ballmer Group, the Gates Foundation and the W.K. Kellogg Foundation.

    “We Can’t Train Our Way Out of This”
    In a June post, the National Fund’s Senior Director for Innovation and Strategy Janice Urbanik argued that while training and job placement played an important role in the post-2008 recovery, they are not sufficient alone. “We simply can’t train our way out of this crisis,” she wrote. “[After the Great Recession], we focused mostly on reskilling the supply side of the labor market and not on improving the quality of the jobs, and therefore contributed to the unsustainable economy that has left us all vulnerable today.”

    That line of thinking seems to be growing more common in workforce development circles that long advocated upskilling without paying enough attention to the deep inequality of the post-recession recovery. Take this argument from JFF’s Lexi Barrett that returning to the old normal would be a mistake, or the Markle report, which makes the case for ramped-up and better-integrated federal workforce funding. That includes, for instance, generous “opportunity accounts” that unemployed and low-wage workers could use to pay for career training and job placement services.

    In another corner of the workforce world, challenges are now underway to source and fund innovative “solutions” in an economy brought low by COVID. The venture philanthropy hub New Profit is partnering with a number of organizations on two challenges: Reimagining Pathways to Employment in the U.S. and XPRIZE Rapid Reskilling. The first will award $625,000 in grants to solutions that increase access to skill-building and training opportunities and “drive support to Black, Indigenous, and Latinx entrepreneurs and innovators.” Partners include New Profit, MIT, the Morgridge Family Foundation, IBM, CSU Global and Gary Community Investments.

    The second challenge, conducted through XPRIZE, involves a lot more money. The $5 million prize purse will go to an organization that develops a new approach to “rapidly train 500 individuals in 60 days or less at no entry cost, place as many as possible within 60 days, ensure job retention of at least 90 days, and demonstrate exponential adoption by deploying the training solutions for 5,000 individuals in three industries.” In addition to New Profit, co-sponsors include Walmart and the Strada Education Network.

    Whether or not those efforts produce anything substantive, what’s clear is that calls for economic justice are getting louder as COVID ravages the workforce. And in philanthropy, they’re no longer limited to typical progressive funders like Ford, Kellogg and Irvine. Corporate funders have swung behind racial equity in a big way, and more voices are calling for changes to the inefficient federal workforce system. Even super-rich givers like Pierre Omidyar and MacKenzie Scott have backed the new labor movement and other economic justice nonprofits. Who knows what the next year will hold?

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