This is part 2 of a series. Read Part 1

September 21, 2020 – By Betsy Zeidman, Cristina Alaniz and Iliriana Kaçaniku

Since America’s inception, immigrants and refugees have come to the U.S. in search of a better life. They settle with or near family and seek employment using the experience they bring from their home countries. They may access resources provided by government or social service agencies, or in the case of refugees, resettlement agencies. They receive services for a set number of weeks and success is determined by how many find a job upon completing the program. But little incentive exists to find a “quality” job, that is, one with equitable benefits and compensation, support in and out of the workplace, and growth potential. They often end up working in grocery stores or as home health aides, and are frequently overlooked by their customers and clients.

But this may be changing. The global COVID-19 pandemic has refocused our country on the value of “essential workers,” and heightened awareness of the large numbers of immigrants and refugees that compose this workforce. At the Beeck Center for Social Impact + Innovation, we see the many barriers these workers face in trying to integrate and advance in the workplace, and the long-term impact of such barriers on our society and economy as a whole. With the support of the World Education Services (WES) Mariam Assefa Fund, we have explored expanding the economic integration and mobility of immigrants and refugees through financing workforce training.

Recognizing that this is a multi-faceted challenge requiring multi-faceted approaches, we recently convened two meetings of individuals, intentionally selected for their diverse expertise in workforce training, immigrant integration and finance. During the first session, we focused on development and training programs and identified a number of best practices for programs serving this population. Our second session explored ways to finance effective training programs, which we summarize here.

The workforce development field is large and scattered with many players and fragmented funding, with the path for immigrants and refugees even more complex (See Figure 1). We also have little data on many critical elements, such as how many immigrants and refugees participate in workforce training programs (as they are not tracked as a discrete group); and how much it costs to train a worker (as important ancillary costs are rarely tabulated). We do know that money for these programs comes from government (federal, state and local), philanthropic grants, the immigrants themselves, and employers seeking to upskill their workers – with some supporting the programs and some offsetting the cost to workers. These funds then get distributed to organizations through charitable grants, loans, “earn & learn” apprenticeships, public-private partnerships, and more. Together, these financing efforts are important, but a large capital gap remains, as workforce development’s demand for funds simply outweighs its supply.

Chart of Marketplace of Immigrant Workforce Development and Funding
Figure 1 – Marketplace of Immigrant Workforce Development and Funding.

In seeking options to fill that gap, discussion participants agreed that capital supporting workforce development programs should be patient and flexible; how to find and deploy such capital is the question. There were multiple options, but six key recommendations emerged.

Clarify the problem, identify the program(s) that could solve it, and then determine the most appropriate source and form of capital to cover the cost. Discussions around funding often submit to the lure of innovative financing vehicles that can become overly complex and difficult to implement, and organizations lose sight of the problem at hand – immigrants and refugees need quality jobs, and employers need trained workers. Focus on those needs first, and then figure out the best funding tool.

Structure financing to reward and incentivize measurable outcomes. If the goal is higher wage jobs, establish benchmarks for measurement, track data rigorously, and share results. Pay-for-Success (PFS) models champion this type of outcomes-based financing, and there are several workforce PFS pilots underway. Two examples include:

  • The Massachusetts Pathways to Economic Advancement Social Impact Bond (SIB) raised over $12 million from private investors to front the cost of expanding vocational English language lessons designed for immigrants & refugees in Boston. Launched in 2017, investors received returns early, and trainees saw increased earnings as measured by administrative wage data.
  • Philadelphia Works, the city’s Workforce Development Board, is piloting a slightly different SIB, one that trains workers for a single employer. The employer (in this case, Comcast) is the ultimate payor, reimbursing the non-profit based on preset targets for both employment and retention. A third party monitors and measures results. Comcast’s involvement at the outset ensures that the training supports actual jobs.
  • There are also publicly funded programs that tie payment to performance measures. For example, Texas State Technical College receives payments from the state based on the earnings of its students over their first five years post graduation.

Align financing with growth. These variations on the PFS models use growth as the proxy for success and help mitigate risks to the trainee. Examples include:

  • An Income Sharing Agreement (ISA) allows people to enroll in education programs for low or no cost, and pay tuition over time as a share of their earnings. These have traditionally been the province of students in 4-year college programs and challenged due to their high interest rates. The San Diego Workforce Partnership (SDWP) is piloting a student-centric ISA: interest rates are reasonable and no repayment is due until a student’s annual salary is at least $40,000. SDWP is the first Workforce Board to try an ISA.
  • The Career Impact Bond (CIB), developed by Social Finance, is similar to the ISA and the SIB, as it draws together a wide variety of stakeholders (employers, training organizations, donors and investors) to advance economic mobility among overlooked communities. The model integrates incentives and aligns risk among all parties:
    • the training entity fronts some of the initial costs, with repayment from investors;
    • high quality training for sectors in need of workers (in this case IT) maximizes job placement;
    • building in philanthropic support allows the CIB to finance wraparound services (linked to higher completion rates), and
    • student-centric terms similar to those used by SDWP increase repayment.
  • Revenue-Based Models: Where ISAs enable individuals to access training and pay for it once they generate income, revenue-based financing allows commercial entities to access capital and repay it once they generate income. This financing (also known as royalty financing) could serve as an alternative to debt for training organizations that support immigrants and refugees (and is of particular interest to Muslim immigrants whose tradition rejects paying interest). However an organization must have a clear plan to generate revenue, e.g., a contract to train the workforce of a stable employer.

Braid in different streams of capital – public, philanthropic and private – in two key ways:

  1. Staging: Program needs evolve over time, so staging sources and structures of capital may make sense. Government and philanthropy support training for basic skills, such as English language learning. As workers seek more specialized training, employer support kicks in.
  2. Blended Models: Workplace solutions increasingly appeal to impact investors and foundations seeking opportunities for mission-related investments. A blended capital fund may support a training program, where sources with low- to no-return expectations (e.g., philanthropic funds’ program-related investments) could absorb risk that private capital generally wouldn’t bear.

Research all available pools of capital. Important sources of capital for workforce training and development can sometimes be overlooked or underutilized, so supporters should be sure they are looking into all available options. A few examples include:

  • Government funds resting in federal, state and local programs. For example, many community colleges providing workforce training can receive funding for administrative services from SNAP E&T (Supplemental Nutrition Assistance Program Education and Training). SNAP E&T also covers a student’s tuition and fees, and a portion of ancillary expenses, such as books, dependent care and transportation, as do Pell Grants. Community Development Block Grants (CDBG) channel funds to local workforce departments.
  • Equity to help build businesses that provide or support training, participate in purchasing cooperatives and make investments in social enterprises that provide critical support services.
  • Community Development Financial Institutions (CDFIs) as useful (and underutilized) partners. They exist amid the targeted populations and know the communities’ needs. They are patient and flexible, and often provide a bridge to mainstream capital. In the recent economic crisis, they have been invaluable and are largely limited only by their size.

Keep it local. Local community partnerships can finance effective, sustainable workforce training programs. As an example, the Alamo Colleges Westside Education and Training Center is a specialty campus for workforce development of immigrants and refugees on the West Side of San Antonio, Texas. It represents a collaboration among the city, local economic development department, community college, school district, small businesses, nonprofits and funders, and offers targeted academic programs and social service services. When the last Levi’s plant closed the facility became available and the full community rallied. Government, foundations, and employers provide financial support.

In partnership with the WES Mariam Assefa Fund, the Beeck Center began exploring effective ways to finance and expand the economic integration of immigrants and refugees through workforce training a little over a year ago, when the world was a very different place. The arrival of COVID-19 clarified the importance of these efforts, and highlighted areas of opportunity, including:

  • We must get better data on the immigrant and refugee population. They are not simply a subset of low-income communities.
  • We know that these efforts work best when all stakeholders have skin in the game, so we must embed such mechanisms into partnerships of all sorts: labor-management partnerships; public-private partnerships; community collaborations, to name a few.
  • We know the field needs patient, flexible capital, so we must tap the ultimate patient capital, philanthropy. However, funders must not simply hand over grants. They should lean into risk mitigation and use their funds to catalyze the participation of new providers of capital.
  • We must determine which outcomes-based models work best, and for whom and replicate those with attention to each market’s local context.
  • We must consider the systemic issues that hinder immigrants and refugee workers, and advocate for incentives that support pro-worker programs.
  • We must remember that amid all these challenges, opportunities exist for those who remain aware. For instance, the Building Skills Partnership (BSP) recognized that before businesses could reopen after the COVID19 quarantine, they would need deep cleaning and sanitizing. Given the numbers, this would create a huge demand for workers. The Labor-Management Partnership created a program to train its janitors to meet this need.

We look forward to sharing these and additional lessons we’ve learned over the past year, and hope to help inform the broader diversity of stakeholders in the workforce development field as they move forward.

Betsy Zeidman is a Fellow in the Fair Finance team at the Beeck Center

Iliriana Kaçaniku is a Consultant in the Fair Finance team at the Beeck Center

Cristina Alaniz is a Student Analyst in the Fair Finance team with the Beeck Center.

September 16, 2020 – By Cristina Alaniz 

Understanding key components that drive successful social service programs, specifically centered around workforce development training, is a theme that I have explored over the course of the last year. As a Student Analyst at the Beeck Center for Social Impact + Innovation, I focused on a project, supported by the WES Mariam Assefa Fund, to identify approaches that could drive additional capital to workforce training and development of immigrant and refugee workers. 

As the world enters its eighth month of the pandemic and ongoing economic uncertainty, vulnerable communities face increasing barriers to economic prosperity and social inclusion. During this trying time, the world must not forget to continue to support these populations and equip them with the tools necessary for survival. Refugees are a group especially at risk. According to the United Nations High Refugee Commissioner (UNHCR) the current global refugee crisis has hit a record high of approximately 79.5 million forcibly displaced people. As the pandemic hinders the ability of countries to welcome refugees and provide adequate resources, digital gaps and disparities in access to healthcare will likely heighten the frustrations and needs of this population.  

Resettlement States provide refugees with legal and physical protection, including access to civil, political, economic, social and cultural rights similar to those enjoyed by nationals. (UNHCR)  By way of this, the States adhere to the delivery of a “social inclusion framework” that creates opportunities for refugees to develop their ability to reach self-sufficiency. According to the World Bank, social inclusion barriers include not only legal systems, land and labor markets, but also attitudes, beliefs, or perceptions. This is crucial, as cultural barriers are predominant factors that may prevent immigrant and refugee communities from reaching social inclusion rapidly or at all. As resettlement and welcoming efforts are made around the world, societies begin to recognize that a social inclusion framework is multi-faceted and blends with the economic development of the State. 

Unfortunately, the health of our global economy is weak and is predicted to shrink by at least 5.2% this year. U.S. unemployment continues to fluctuate and stands at 8.4%. These uncertainties decrease opportunities for vulnerable populations, as well as pose a major problem for States; a capital problem. With funding fragmented across government-funded programs and an expected uptick in demand for social services from both refugees and national citizens, how can States look to private funding to help solve the capital problem and create a sustainable social inclusion framework? As impact investors seek to use their capital to address structural barriers, can we rely on them to make blended capital (a mix of government, non-profit grants, equity investors and lenders) a more permanent solution for funding social services programs?

A Solution: The Social Impact Bond (SIB) 

The Social Impact Bond (SIB), “is an innovative financing mechanism that shifts financial risk from a traditional funder — usually government — to a new investor, who provides up-front capital to scale an evidence-based social program to improve outcomes for a vulnerable population. If an independent evaluation shows that the program achieved agreed-upon outcomes, then the investment is repaid by the traditional funder. If not, the investor takes the loss.” (Urban Institute) 

Chart of Social Impact Bond
A model of a social impact bond. Credit: “A Critical Reflection on Social Impact Bonds”, Stanford Social Innovation Review, May 1, 2018

Over 175  SIBs exist around the world. These vehicles have largely focused on financing social welfare and employment projects and can help reduce the cost of public services for taxpayers. The U.K., home to the first SIB (2010) has the largest market exposure, followed by the U.S. As of 2015, SIBs have gradually made their way into the developing world, where they are often called “Development Impact Bonds”. The average life of a SIB is typically 2-5 years and the number of individuals served varies by motivation for project, project objective and issue area. As an example, we look to Nordic efforts, where social inclusion frameworks are well thought out and incorporate beneficiary feedback. Finland, a country who sought impact investing initiatives, designed a SIB that solves for rapid employment integration of immigrants and refugees, satisfying a key measure of its innovative social inclusion and participatory framework for arriving immigrants and refugees in Finland. This project also helps the country reduce resettlement/social expenditures.

Finland: A Case of Compassion for Inclusion of Immigrant Blue-Collar Workers 

In Finland the admission limit of 750 refugees is set in consultation amongst various government agencies. The “Koto-SIB” program is an integration social impact bond structured to help with integration of immigrants who have been granted a residence permit, but are not Finnish citizens. The demand for rapid employment was evident and Finland knew that an influx of asylees and refugees would benefit from the Koto-SIB. This €10 million project attracted strategic partnerships amongst various stakeholders and diverse employment sectors, that enable immigrants to train and work in blue collar jobs. From 2015 to 2016, project evaluators explored blue collar job pathways that would prepare immigrants and refugees to enter the Finnish workforce, by designing a model that would develop an individual’s work life skills, societal and cultural capabilities. Susanna Pieponnen, a senior advisor at the Ministry of Economic Affairs and Employment, who helps oversee the Koto-SIB program, provides insights on the structure of the model, outcomes and some of the lessons learned thus far. We spoke via phone, the conversation has been edited for length and clarity.

Who was your target group?

Susanna Pieponnen: Our target group: unemployed immigrants between the ages of 17-63, who were ready to work, had a desire and motivation to learn Finnish and accept blue collar jobs. We aimed to target 2,000 individuals over a 3-year period beginning in 2016. The first cohort began in 2016 and currently we are in our 4th cohort. 

Tell me about the feasibility and structuring of Koto-SIB. What do you think Finland did differently from other SIB models that target immigrant challenges?

The program aims to place immigrants in jobs within 4-6 months. It is designed for adults who know what type of job they want. The program helps participants learn basic language, navigate cultural settings in the workplace and material that is sector specific. So, it’s very cultural. But mostly, it is flexible. 

How is success measured?

The Ministry of Economic Affairs and Employment will commission an external evaluation after the trial. In the evaluation, the taxes paid and unemployment benefits received by those who participated in the SIB project are compared to the taxes paid and unemployment benefits received by the control group. From the State’s perspective, the trial is a success if the taxes paid by those participating in the experiment are higher and unemployment benefits they received are lower than in the control group. We believe that all parties will benefit, so this is a win-win approach for employers, immigrants, investors and society. 

What are some of the lessons learned? 

One mistake the government learned early on was assuming immigrants and refugees had to study for a longer period of time and go through a traditional 4-year college. When end-users were asked what they thought of blue collar jobs (ie. drivers, kitchen cooks, hospitality roles), they believed that once a bus driver, always a bus driver. Their confusion about blue collar jobs was contributing to exclusion.  Culturally, the jobs were not up to par, but explaining the value of blue-collar jobs and providing them with pathways to advancement, made job placement easier. There seemed to be more understanding of how they could transition from blue-collar jobs to white-collar jobs as we delivered training and reminded them that every job is valuable. 

Can the U.S. apply lessons from the Finland SIB model to solve for rapid employment of refugees in the U.S.? If so, why or why not? 

The U.S. holds the largest refugee admissions in the world, but recently has welcomed the lowest numbers in its history, with less than 8,000 refugee admissions in 2020. Federal, state and local governments contract with social service delivery organizations to deliver  resettlement services, such as job training, English language instruction, similar to the structure in Finland. Refugee admission processes are similar between both countries. Finland welcomes refugees under the refugee quota determined by the state budget; in the U.S., refugee admissions are determined by a presidential determination in consultation with federal and state offices. However, a significant difference amongst the two countries is the timeframe of integration for a refugee. In Finland it is a 3 year process assessed by local employment offices from the day of arrival. In the U.S., a refugee is expected to reach integration within 6-8 months and interacts with multiple service providers. With limited time for integration, the U.S. could use rapid employment advancements as a universal framework. Another key difference is that Finland has leveraged the need of rapid employment as a solution, not a problem. With fragmented funding and a dismantled resettlement program in the U.S., now is the time to revisit the existing gaps of our domestic social inclusion framework and adapt to better solutions. 

The first U.S. workforce SIB, the JVS/Social Finance “Massachusetts Pathways to Economic Advancement Pay for Success Project,” is already demonstrating success, both in terms of returns to investors and impact for participants. The SIB launched in 2017, to support 2,000 adult English language learners seeking to transition to employment, higher wage jobs, and/or higher education. Centered around English language needs, the model includes a workforce development component and rapid employment. The Massachusetts PFS model targets English learners who are potentially past the 6-8 month integration period. Both SIB models serve their States’ social inclusion frameworks, however, Finland has implemented the model from  initial points of resettlement and integration, whereas in the U.S., it picks up where initial resettlement efforts end. There are many commonalities between both models, so why is this not replicated beyond the state of Massachusetts and integrated to initial resettlement and social inclusion efforts?

As funding for social adjustment programs becomes scarce across all levels of government in the U.S., innovations such as the “Koto-SIB” model, may help serve as a blueprint for local U.S. state governments to advance rapid employment placement and integration of immigrant and refugee communities. The “potential” if applied, could help generate a win-win approach across governments, local communities, emerging employment sectors (e-commerce and agriculture) and investors looking to expand corporate social responsibility (CSR).

*A special thanks to Susanna Pieponnen of the Ministry of Economic Affairs and Employment in Finland and Mika Pykko of The Finish Innovation Fund Sitra, for their support and collaboration. 


NOTE: Cristina also spoke about her work with WES Mariam Assefa Fund. Read her interview.


Cristina Alaniz was a student analyst with the Beeck Center for Social Impact + Innovation at Georgetown University and continues to be a graduate student at American University’s School of International Service (SIS).
Linkedin: http://linkedin.com/in/cristinalaniz Email: ca3919a@student.american.edu

This is part 1 of a series. Read Part 2

August 28, 2020 – By Betsy Zeidman + Cristina Alaniz

In the past six months, the U.S. has lived through the convergence of three crises: the worst pandemic in 100 years, the worst economic decline since the Great Depression, and multiple incidents of police violence that triggered unrest in many cities as society attempted to reckon with longstanding racial disparities. These events have generated chaos and insecurity; and forced us to rethink how to live and work, how to educate ourselves and our children, and how to keep our families healthy and safe. However, while everyone feels unsettled, some communities face greater disruption than others. This imbalance aggravates existing disparities and challenges the ability of our entire country to rebound.

The most affected groups include native-born communities of color and immigrants and refugees. They are more vulnerable to COVID, generally have less access to medical care and fewer resources to pay for it. The economic hits hit them the hardest. Twenty percent work in industries most affected by the downturn, and many are not eligible for the emergency funds provided by the government. Those who do have jobs fill our “essential” workforce: e.g., home health aides, janitors, grocery store employees, and bus, metro and taxi drivers. If they don’t work, their families suffer, but we suffer too. They need a way back into the workforce, and a way up from their entry-level, subsistence jobs.

With the support of the World Education Services Mariam Assefa Fund, the Beeck Center for Social Impact + Innovation has been exploring how targeted training might help immigrants and refugees integrate into the economy and build career paths. Recognizing that this is a multi-faceted challenge requiring multi-faceted approaches, we recently convened two sessions with a brain trust of experts in not only workforce training and adult education, but immigration integration and finance as well. We included employers and employees from the private sector, the social sector, and government. During the first discussion, we aimed to understand what makes a workforce development program that is high in quality, reasonable to implement and likely to generate measurable impact – providing workers with skills needed by employers; and placing workers on the road toward higher quality, higher wage jobs. The participants’ diversity of experience generated a wide-ranging discussion and some best practices emerged:

  • Engage key parties in designing the program. These parties include: workers, employers, training organizations, immigrant-support groups and funders. Incorporating input from everyone affected by a program increases its likelihood of success. Employers certify that the skills being taught are those for which they have jobs to fill; and it is important to include information and buy-in from the employers’ various stakeholders (e.g., management, human resources, C-Suite). Workers ensure the program will meet their needs with appropriate contextualized English language learning and life demands like child care. 
  • Invest in trusted intermediaries and foster ongoing connections among providers and immigrant groups to generate career pathways. Many of the training organizations noted that the insular nature of immigrant support groups limited their interactions, so spots in the programs remain empty. It makes sense to work with familiar intermediaries, such as community-based organizations, immigrants’ rights groups, and churches. Additionally, in the current climate, immigrants will be much more comfortable participating in something which has been “blessed” by a known party.

Bawi Za Muang fled Burma due to severe and increasingly threatening mistreatment by the military. After struggling to survive for many years without a home, Muang and his family arrived in Des Moines, Iowa in 2013, speaking no English. They persevered, taking English classes and driving lessons, and eventually, Muang found a job with Tyson’s Food. In several of its markets (including Des Moines), Tyson’s has solved the problem of an aging workforce by hiring from local refugee populations. Muang advanced at the company, earning higher wages and eventually buying a house. Along the way, he benefitted from Tyson’s partnership with EMBARC (Ethnic Minorities of Burma Advocacy and Resource Center), a local refugee-led organization. EMBARC attunes Tyson’s to the real needs of its immigrant employees and provides services that help employees acclimate and thrive. In 2019, EMBARC’s Legal Navigator Program helped Muang and his wife obtain citizenship.

  • Incentivize programs that enable immigrants and refugees to access “good” jobs, as opposed to any job. Success in the current system tends to be defined by outputs (number of program graduates, number of placements in jobs) rather than outcomes (wage growth, jobs with benefits, etc.). In addition to providing more to the workers, the immigrants will have more money to spend in the local economy and will pay higher taxes, both of which return value to society. Some new initiatives are trying to focus on outcomes, but the system also needs incentives that enable workforce organizations to support the immigrants in their path toward better jobs (e.g., funds for ongoing assistance, access to networks, etc.).
  • Address digital literacy and digital access. Even before the pandemic heightened the need for facility with technology, digital skills were becoming important to almost all jobs (restaurant workers need to be able to enter orders electronically, much of healthcare uses technology, etc.). Immigrants are less likely to have access to the necessary technology or be able to afford broadband, limiting their ability to access training.

Maria Chavez has been studying English since 2018. She found it difficult to make progress because she didn’t have uninterrupted periods of time to go to class. When mobile-first learning company Cell-ED launched its Million Learner Challenge offering workers in low-quality jobs free access to its curriculum, she jumped at the chance. She listens to lessons over the phone, or receives them by text or message. ”It’s so practical because the class is always there.”

  • Emphasize other transferable skills such as capacity with English, and customer relations, both central to many jobs, in addition to sector-specific training. Formalize certifications, badges or other means of validating skills learned to communicate progress to employers and the broader community.
  • Bring the training to the workplace, including providing employees with the tools they need to participate. This ensures that the training includes the most relevant skills, and acknowledges the challenges immigrants face in trying to build training into a day that may already include more than one job, as well as family care responsibilities. 

Leonor, a janitor at Water Garden business park in Santa Monica, CA, recently completed the Infectious Disease Certification Program; a partnership among the nonprofit, Building Skills Partnership, her labor union, SEIU-USWW, and her employer, Allied Universal. She was grateful that her employer and instructors were committed to investing in her education at work. “It helps to have a supervisor who is very involved in the entire process,” she says. “One thing that stood out to me was that our supervisor was taking the class like everyone else, as if he was one of our peers.”  After the training, Leonor was able to explain to a building tenant at Water Garden the changes that she and her coworkers are making to help mitigate community spread.

  • Create apprenticeship or pre-apprenticeship programs. Partner with employers, trade unions or other relevant entities to develop a clear pathway to more stable employment.

Forrest Sebba was born in the Philippines and had struggled to secure steady work in the U.S. As a transgender person, he was subject to discrimination and suffered from depression. Cooking gave him joy, as it brought back memories of his grandmother. The Los Angeles Hospitality Training Academy’s Registered Culinary Apprenticeship Program, provided in partnership with the U.S. Department of Labor and the State of California, taught the skills he needed, allowed him to build confidence, and introduced him to potential employers. Before completing the apprenticeship, he secured a job as a union cook with the Loews Hollywood Hotel.

  • Build wraparound supports acknowledging the multiple demands on an immigrant’s life. These may include stipends to cover childcare, loaned tablets to trainees that don’t have access to computers, transportation vouchers for in-person training, and more.

There is no single solution to the challenges faced by immigrant and refugee workers (and aspiring workers). Furthermore, because of their tight community bonds, there shouldn’t be a single solution: programs must be culturally sensitive and aligned with the needs of the local community. That said, the lessons highlighted here can be applied toward building effective programs that generate opportunity for immigrants and refugees and unleash a workforce that will contribute to our wellbeing. Our second meeting with the group drilled into financing considerations. 

 

Betsy Zeidman is a Fellow in the Fair Finance team at the Beeck Center

Cristina Alaniz is a Student Analyst in the Fair Finance team with the Beeck Center.

June 3, 2020 | By Betsy Zeidman

Khudaier arrived in Austin, Texas as a refugee from Iraq five years ago, with only a high school diploma in hand, leaving a wife and two daughters behind. He found work as a security guard, and drove for Uber, earning $800 a week getting people to and from the airport. When the pandemic shut down flights, and offices closed, like millions of others, he found himself out of work. Like many refugees and immigrants, English is still a challenge, and he made mistakes filing for unemployment, which kept him from having any income until the end of May. He would love to find other work, but building the skills for a different job takes time and money.

Like Khudaier, over 40 million Americans have applied for unemployment since the start of the COVID-19 crisis, and the virus has hit marginalized communities well beyond their share of the population. We know African-American, Latino and Asian-American communities fall ill, and die, at significantly higher rates than white Americans; and can reasonably extrapolate to assume the death rate is high in immigrant and refugee communities as well.

Unfortunately, these communities’ impact on the country is often underrepresented. Just look at how critical they are in getting food on our table:

infographic of The Essential Role of Immigrants in the U.S. Food Supply Chain
Infographic from Migration Policy Institute

And that’s not the only industry. While the foreign-born comprise 17% of working civilians they represent a significant component of frontline jobs: 38% of home health aides, 25% of nursing assistants, 41% of janitors, 18% of essential retail (groceries, pharmacies and gas stations), and 34% of bus, metro and taxi drivers. This puts all these systems in precarious positions as these workers rarely have sick leave, have less access to health care, and many live and work in places with little opportunity for social distancing.

Getting our economy moving requires confident consumers willing to spend and healthy workers willing to work. This includes immigrants who are projected to represent 83% of workforce growth between now and 2050. We need these immigrants, but there are challenges to reengaging them in the workforce. Many of these predate the emergence of COVID-19 in the U.S. and are similar to those plaguing native-born people of color. They arise from structural aspects of our economy, such as their over-representation in lower-paying industries. Others include language and cultural barriers. When immigrants do seek to advance, they confront obstacles to obtaining necessary training: lack of funds to cover the cost of training, lack of time off from their jobs, unreliable transportation and sporadic, often costly, childcare. Few are lucky enough to access training through their employer or union if they are part of one.

With the pandemic triggering more remote work and online learning, the barriers grow more prohibitive. Lower-income immigrants are less digitally literate than their higher-skilled counterparts, often lack access to computers and broadband connections. These factors complicate training and make integration into an increasingly digital economy challenging, perpetuating the inequity.

The country needs these immigrants to have a pathway back to work. With the support of the World Education Services Mariam Assefa Fund, we are exploring ways in which the tools of finance might facilitate such training at a greater scale. We’ve built a network of diverse experts in immigration, workforce development and finance. With COVID-19 now a part of all our lives, we are focusing on two areas necessary to enable a safe return to work by immigrants and refugees: workforce training and workplace safety.

Thinking creatively about how to pay for these efforts is even more important now. Government funds (federal, state and local) will be reduced – due to increasing costs of caring for the sick and decreasing tax revenues from the economic slowdown. Blending diverse sources of capital will be important.

While early in our exploration, we have identified some promising models:

  • Income-share agreements (ISAs) provide college students tuition in exchange for a share of their future earnings. The San Diego Workforce Partnership, a funder of job training programs, is piloting a new ISA to fund workforce training. They seek a stable, equitable model aligning the interests of workers, trainers, employers and investors.
  • Labor-management partnerships support sustainable workplaces that aim to meet the needs of all stakeholders. California-based Building Skills Partnerships connects largely immigrant janitorial workers, their union, and their employers to provide language and vocational skills. Their pioneering Green Janitor Education program set a standard for providing a growth path for this community. With the onslaught of COVID-19 and its impact on janitors, BSP is building an infectious disease training program that, if successful, can be leveraged to other sectors.
  • Pay for Success (PFS) programs base payments to training providers on the successful job placement of trainees. Successful efforts link clearly identified target outcomes, proven providers, data collection, cross-sectoral partnerships and catalytic capital. The first workforce training PFS, the Massachusetts Pathways to Economic Advancement, has had early success with entry-level workers and pivoted to a virtual model with minimal loss of participants.
  • Community Development Financial Institutions (CDFIs) know their markets as well as any source of capital because they remain so close to their communities. In recent years, they have moved beyond their traditional support of housing and small business to invest in workforce development. Those who received funds from the recent Paycheck Protection Program deployed those funds at a much faster rate than the larger banks.

We know the factors critical to a successful workforce training program: employer engagement to focus on most usable skills; jobs available upon completion; contextualized English language learning, and supportive wraparound services. Linking financing to programs that include such elements will help scale them and bring more immigrants and refugees into the workforce, helping all of us move through the COVID-19 crisis, even as we continue to manage it.

Betsy Zeidman is a Beeck Center Fellow where she explores ways to drive social impact at scale using lessons from behavioral economics, investments in emerging domestic markets and corporate responsibility initiatives.Follow her @BZeidman