How to Maximize Investments in Earn-and-Learn Programs

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How to Maximize Investments in Earn-and-Learn Programs

February 29, 2024

At a Glance

JFFLabs offers a clear overview of the earn-and-learn training and education ecosystem, with strategic insights for philanthropists, investors, and government leaders who want to strengthen and scale effective models.

Highlighting findings from research conducted within JFFLabs, this blog is intended to provide clarity to the understanding of the earn-and-learn ecosystem.

Employers play a pivotal role in creating quality jobs and building equitable workplaces. One way to do that is to offer workers paid on-the-job training and learning opportunities—a strategy that has become the key to navigating a tight labor market where competition for highly skilled workers is intense. This approach enables employers to fulfill their talent needs in-house by upskilling current employees, and it positively impacts workers and their families and the communities they live in by giving people opportunities to continue earning a paycheck while they build new skills.

Successful earn-and-learn models have extraordinary potential to become the solution employers need to meet existing and future demands for talent. However, challenges arise when navigating the intricate web of funding sources, measuring success and performance, and determining the most effective strategies to alleviate the cost and time requirements of training programs for both employers and learners. This complexity adds a layer of difficulty in discerning each stakeholder’s role in supporting earn-and-learn models and which investments or tools will be most effective for addressing those challenges.

Defining the Market and the Opportunity

To understand the challenges and opportunities in the earn-and-learn ecosystem for funders and stakeholders, Jobs for the Future (JFF) analyzed more than 1,000 companies and organizations and identified more than 100 high-quality programs that pay workers as they learn new job skills. Providers include private-sector employers, government agencies, and nonprofit organizations dedicated to job placement and training.

The analysis also considered the effectiveness and sustainability of earn-and-learn models. The insights gained offer valuable guidance for stakeholders navigating workforce development challenges and provide a road map for investors who want to help further develop and scale the most effective models to create comprehensive workforce solutions.

Segmenting the Market to Identify Points of Entry

With a deep understanding of the earn-and-learn ecosystem, JFF recognized that there was a need for a clear and simple overview of segments of this market. Informed by our research findings, we developed a framework that divides the market into four segments based on the perspectives and goals of the people participating in earn-and-learn programs. The framework also highlights key trends, challenges, and opportunities to help guide stakeholders to solutions where their support will be most effective.

This illustration outlines four core segments of the earn-and-learn market:

Here are more detailed descriptions of each segment, along with a look at challenges and opportunities in each.

Bound for Jobs and Learning

Programs in this category are designed for workers who are current students, have recently left school, are transitioning into a new career field, or are reentering their communities after incarceration. This segment typically includes traditional apprenticeship programs in industries such as construction, IT, and manufacturing, but it has the potential to grow into other sectors, such as the green economy, health care, and education.

Challenges. The costs of these programs often exceed the amount of funding available through government programs, and they often require added expenditures to make wraparound services like mental health care available to participants. Spending more on these programs can sometimes lead to better outcomes, but scaling them is difficult. Additionally, people sometimes have to work for low wages while participating in these programs, and that can be a disincentive for participation.
Key Opportunities. It can be possible to scale successful programs “in disguise” by replicating them and adapting them to various types of businesses and deploying them in a host of settings. There’s also an opportunity for programs in different segments to broaden their pipelines and vertically integrate with other offerings in this segment.

In the Classroom and Working

Programs in this category serve people who are working to support themselves while primarily focused on pursuing postsecondary education or training to earn a credential such as a degree or certification as they prepare for permanent employment.

Challenges. These types of programs are often built on what could be called the “earn and aid” model, and the people in them often don’t earn enough to cover the cost of living, leaving them at risk of incurring high levels of long-term loan debt. Participants in programs whose coursework focuses on skills or expertise for skilled trades or STEM occupations will likely have more opportunities to get jobs while they’re still learning than their counterparts in liberal arts programs.

Key Opportunities. Integrating services and opportunities across postsecondary education, government, and industry creates multiple entry points and job prospects for learners. Third-party providers that manage and administer internship or apprenticeship programs for employers foster a win-win-win situation that benefits learners, employers, and educational institutions. This collaborative approach enhances the overall ecosystem.

On the Job and Learning

Programs in this category are designed for workers who want to pursue shorter-term training and development options that allow them to build their skills on their own (limited) time while working for their current employers. This model enables participants to gain transferable skills and prepare for permanent employment.

Employers play a crucial role in these programs because they directly train the participants and pay most of their wages. Workforce leaders who embrace this model often aim to push Registered Apprenticeship into new fields like education and energy.

Challenges. Because of temporary grant structures, workforce boards face challenges in sustaining and innovating pathways for learners in this segment. Moreover, despite increased advocacy for and adoption of skills-first hiring practices among employers in a range of industries, many workers and employers believe that degrees still hold more value than credentials and experience acquired in work-based learning programs like apprenticeships, limiting the growth potential of the apprenticeship model. And scaling programs in this segment can be costly, especially when one-on-one training, mentorship, and additional support are essential for learner success.

Key Opportunities. Investing in a robust technology foundation for the entire earn-and-learn experience of this segment could have a positive impact on these programs and potentially deliver a strong return on investment. Also, this segment offers opportunities for intermediaries who can alleviate the burden on employers by directly managing programs and handling government paperwork.

Additionally, JFF’s program design frameworks for advancing diversity, equity, inclusion, and accessibility in Registered Apprenticeship are a valuable resource for employers, offering recommendations of research-driven processes and best practices.

Continue Working and Learning

Programs in this category are for workers who are employed full time and want to pursue upskilling or retraining opportunities offered in-house at their current employers or through external professional development programs.

In this segment, education benefits hinge on federal tax policies that typically allow employers to provide workers with up to $5,250 or so per employee per year in tax-exempt tuition benefits. Third-party education service providers like Guild often manage these programs and bill the costs directly to employers. This model alleviates upfront costs for workers, but participants may have to cover additional costs on their own because tax laws often limit the amount employers can spend on education benefits. Therefore, there’s a need for cost-efficient models in this segment.

Challenges. Beyond the tax breaks, it’s often unclear what incentives employers have to offer these programs. The model may even seem counterintuitive—educating people so they can move on to new jobs elsewhere. This segment may offer significant opportunities for providers of retraining and upskilling programs, with both employers and workers as potential clients.
Key Opportunities. Foundations and individual donors can make a positive impact by offering affordable retraining and upskilling opportunities for adult learners. Increasing the reimbursement cap for education-as-a-benefit incentives could greatly benefit workers, educators, and learners.

A Road Map of Opportunities for Stakeholders

Using the JFF earn-and-learn market segmentation framework, funders, government agencies, and impact investors can identify promising high-quality approaches within earn-and-learn models. Working collaboratively, they can use this framework as a unifying tool to align strategies and contribute collectively to advancing earn-and-learn initiatives. Here’s a look at possible strategies.

Funders and individual donors can enhance their impact by using their resources to strengthen and expand the capacity of effective models. This involves championing effective solutions, shaping narratives through marketing channels, providing valuable data and insights on return on investment, and sharing information through narrative campaigns and case studies about topics such as best practices related to income share agreements. This collaborative effort should extend across networks, with individuals reaching out to colleagues and partners to garner additional support.

When making direct investments, a strategic approach could involve allocating funds to high school models that deliver strong educational outcomes while supporting tools that enhance employer return on investment. Additionally, there’s a valuable opportunity to support learner recruitment initiatives in communities that have long been underserved by existing systems and institutions.

Government agencies and workforce development leaders can play a crucial role in advancing earn-and-learn models by leveraging their positions and drawing upon tools from conventional education pathways. For example, they could design financial aid support systems that mirror those available for people in higher education degree programs but are specifically for nondegree pathways like apprenticeships and other work-based learning programs. This approach would enable the seamless integration of proven tools.

There is also potential to allocate more unrestricted operational and capacity funds for intermediaries. And strategic financial backing can help successful models that deliver robust outcomes.

Another way to enhance government investment would be to amplify local tax incentives for hiring apprentices or pre-apprentices. This would benefit local economies and potentially expand apprenticeship opportunities for members of populations that have long been underrepresented in quality jobs.

Impact investors can be catalysts of innovation in the earn-and-learn ecosystem by providing financial support for tech-enabled solutions that have the potential to rapidly scale learning models while concurrently upholding quality standards and cost efficiencies.

Impact investors can also play an important role by championing employer adoption of these technologies. They could engage in collaborative efforts with other funders and investors and align capital structures to support programs where traditional investments alone may fall short. By taking this multifaceted approach, impact investors would put themselves at the forefront of efforts to drive innovation and catalyze employer adoption.

Fueling Overlapping Investments to Fill Gaps

When multiple funders come together to engage in collaborative efforts, they play pivotal roles because they leverage one another’s strengths and have the capacity to fill gaps that are too big for individual funders to fill on their own. For example, a nonprofit-operated high school program utilizing a high-growth tech platform and offering wraparound services may benefit when students have access to financial aid and employers can take advantage of tax incentives. In such a scenario, the partners each play their own roles, but collectively they have an impact that’s bigger than the sum of its parts.

Collaboration extends beyond direct program support, encompassing philanthropic investments in data capacity development efforts and backing for policymakers who work across sectors. This collective support enhances data outputs, offering valuable insights for government initiatives, aiding in the formulation of policies that facilitate scaling solutions for state agencies focused on K-12 and higher education workforce and labor goals. Furthermore, it provides a crucial background for impact investors seeking new companies to add to their portfolios.

Recognizing the importance of collaboration, every stakeholder should focus on supporting high-quality systems rather than individual programs. This strategic approach ensures a holistic and impactful contribution to the advancement of earn-and-learn models.

Reach Out to a JFF Expert for Support to Launch Your Strategy

JFFLabs offers a comprehensive lineup of tools, frameworks, and research to assist stakeholders in navigating their roles within the quality jobs ecosystem. Visit JFF.org to learn more about earn-and-learn solutions and to get in touch.