The American Dream was constructed on the premise that free people in a democratic and capitalist society can build better lives for their children. Until the late 1950s, this principle held. It has rapidly deteriorated over the last half-century. The primary reason is that for tens of millions of Americans, work doesn't work.
There are currently 10 million unemployed Americans. Worker productivity has increased by over 70 percent since 1979 but hourly wages by only 17 percent. Nearly 40 percent of Americans do not have enough cash on hand to cover a $400 emergency. According to polling during the pandemic, over 60 percent of Americans reported living paycheck to paycheck.
Americans are working harder and earning less
In recent years, economists and workforce experts have argued that to fix this problem we need to skill up the workforce and move towards a paradigm that prioritizes skills over credentials. The problem with this argument is that we know that skills alone don't lead to jobs.
Here’s an example: Just a few years ago, LinkedIn, the employment-oriented online service, added a referral button to their website. LinkedIn quickly found that job seekers were four times more likely to secure employment through referrals. When it comes to jobs, who you know matters almost as much as what you know.
Yet, the workforce innovation economy has tripled down on the skills-only myth.
Look no further than the millions of Americans who every year pay to improve their skills through online providers. It remains unclear whether these providers are actually helping people move up the economic ladder as there is scant public data available on learner outcomes, including new jobs and wage gains. Given the lack of data, we can only draw the conclusion that these companies either underperform at collecting learner outcome data or the learners aren’t actually getting the jobs and wages that they are being promised (or both).
If we have any shot at fixing work, we have to think beyond skills beginning in high school and continuing through the first two years of a job. Fortunately, there are pockets of momentum to build on, that’s where we should start.
One, every school district should consider using federal stimulus funds on “purpose education” that can help students build career identity. For example, nXu, a national nonprofit organization, is equipping youth and adults to explore, articulate and pursue their purpose. Youth with a strong sense of purpose experience greater life satisfaction, perform better in school and have higher rates of college retention; while adults with a strong sense of purpose achieve greater financial and professional success than their peers who don't.
Two, every state should consider using federal stimulus funds to connect education and job training paths to labor outcomes, including wage increases. For example, the Seek UT System connects individual student and alumni data to employment data and assists students in choosing job pathways that have high completion rates, low debt levels and strong wage outcomes.
Three, once we understand what works in each state, we should stop funding programs, organizations and companies that don’t change economic trajectories for the Americans they purportedly serve. Full stop.
Four, communities should consider investing in efforts that increase “know who”— relationships that can be leveraged into job recommendations, referrals and meaningful work experience. For example, the organization that we are both affiliated with, Climb Hire, which builds social capital while providing technical skills training for in-demand jobs, helped hundreds of young adults access jobs that, on average, have increased their wages by $43,000. Over 40 companies have hired graduates of the program including Salesforce, IBM, GoogleX and Nike.
Five, industries should consider investing in efforts that help workers who are new to middle-income jobs remain in those jobs. For example, KIPP Through College employs coaches and advisors to help graduates navigate the academic, social and financial challenges they might encounter while in college or pursuing a career. This should be an industry norm.
America’s economic vitality runs on the promise of work. It’s time to look at ourselves in the mirror and renew that pledge by thinking beyond skills.
Nitzan Pelman is the founder and CEO of Climb Hire, a national nonprofit organization that trains diverse and determined talent to break into new careers. Andrew Buher is a board member at Climb Hire, managing director at Opportunity Labs, a national nonprofit consultancy focused on children, and a former COO at the NYC Department of Education.