TWIN CITIES RISE! is not your typical nonprofit job training program.
While many job training operations are run by grizzled social workers with a professional grudge against free-market capitalism, RISE! is run by a Wharton MBA, Steve Rothschild. Just so there is no confusing RISE! with the market-haters, Rothschild puts the program’s motto “A Market-Driven, Job Training Model” in bold letters at the top of his program’s letterhead.
RISE!’s mission is ambitious: to move thousands of unemployed and underemployed adults “from poverty to economic self-sufficiency.” A tall task, but since 1994, RISE! has been engaged in an experiment that, if successful, could serve as a model for others in the multi-billion dollar U.S. job training industry.
It is about time someone found a formula that works. Every year, elected officials cite worker education and job training as the key to U.S. economic prosperity. Every year, congressional appropriations bills are packed with job training funds for everyone from the laid off defense industry worker to the mother making the transition from welfare to work.
In fact, according to the General Accounting Office, Washington now spends over $20 billion a year on a sprawling complex of roughly 160 federal job training programs (nobody is sure of the real number). Yet, despite this investment, a recent GAO report found that “large numbers of individuals remain unprepared for employment.”
GAO’s findings are no surprise to Steve Rothschild, himself no fan of the current system (he typically likens the federal job training model to the Soviet Union’s command economy). “It’s a hierarchy,” says Rothschild. “It is a supplier-driven system that filters [money] down through layers of bureaucracy, with each layer taking its cut of the funds.” As a result, Rothschild adds, “the employer doesn’t have much say” in how these job programs train their participants even though it’s the employer who will do the hiring.
Rothschild, a former top General Mills executive, came to the job training world by a circuitous route. Having lived in Minneapolis since 1970, Rothschild was alarmed by the rising crime and illegitimacy rates, the chronic unemployment, and the stagnating or plummeting wages of those with jobs.
In early 1993, Rothschild assembled business leaders, academics, government officials, and other community leaders to develop a blueprint for an effective job training program. A particular problem for the Twin Cities, according to available research, was that inner-city minority men had been left behind economically because traditional forms of social welfare were geared toward helping women get off welfare.
Worse still, the limited training programs available to men were inadequate to reverse the widening wage and skills deficit of minority men.
A different kind of training program was needed. Rothschild felt that, unlike other programs, any new program needed to focus on long-term, higher skilled job placement of at least $20,000 a year plus benefits (enough to support a small family). It would explicitly focus on men and would have close ties to employers. It would aim to become a self-financing, for-profit business, a supplier of skilled labor, but it would have a charitable purpose—to help the former drug user or the person lacking basic reading and math skills make the transition into the economic mainstream.
Above all, says Rothschild, it would seek “to bring stability into [its clients’] lives” by steadily increasing their self-confidence and income.
Rothschild’s chief insight was simply to work with, rather than against, the free market. Employers make economically rational decisions every day, Rothschild reasoned, especially when it comes to hiring skilled, reliable workers. Employers were especially keen on hiring qualified minority men, given the large influx of minority residents into the Twin Cities since 1980. Rather than churning out dozens of “trainees” with the same skill set, why not work closely with individual businesses to supply employees who can perform exactly the task needed by the employer?
So, in 1994, with the help of several foundations (including large grants from the McKnight, Northwest Area, and Bush foundations), Twin Cities RISE! opened its doors for the first time.
It works like this: A local business tells RISE! what it wants in a prospective employee, and RISE! works with the employer to custom train someone for the job. “The customer is the employer,” explains Rothschild. “We’re here to meet their standards.”
RISE! identifies a suitable candidate already in the program (trainees remain in the program for an unbelievable one-to-three years, all the while holding down a part-time job) then trains them to do whatever is needed. In return, RISE! asks employers to be closely involved in the training program and pay Twin Cities RISE! a fee for each person they hire, along with a “retention fee” to RISE! for each hire who stays on the job (cheap when compared to the cost of recruiting and training a new employee).
To get into RISE!, a successful applicant must show a strong desire for self-improvement but must also face significant barriers to long-term, livable wage employment. “We treat a minor drug problem and a lack of English skills and a dyslexia problem all the same,” Rothschild commented to a local newspaper last year. “We then develop a specific development plan, based on their needs.” Trainees, as described by RISE! program literature, “receive classes in basic skills, ESL, Empowerment training, computer competency, work skills communication, as well as comprehensive social service support, including help with transportation, technical school tuition, and family counseling.”
Another vital part of the program is the “work skills coach,” a volunteer, often with extensive private sector experience, who develops a mentoring relationship with the trainees. Coaches also stay involved with RISE! graduates for a year after they begin full-time work. This follow-up coaching is critical in making sure RISE! graduates are performing well for their respective employers and continue on a career path of economic self-sufficiency.
Twin Cities RISE! is expensive ($20,000 per trainee) and Rothschild candidly admits that as a concept it remains to be proven. But there are already encouraging signs of progress. Trainees in their first full year at RISE! have seen their income increase by nearly 30 percent, payment of back child support is up 20 percent, and government subsidies to these same trainees is down 23 percent. Of the first 19 trainees who started the program, 13 remain and have made significant progress (currently, 66 trainees and 20 employers participate in RISE!). The eventual goal is to graduate 500 trainees annually with close to the total cost of the program paid by the employers for services rendered (in 1998, 25 to 30 percent of RISE!’s revenue will be “earned” income).
But living in the marketplace could mean failing in the marketplace, a fact Rothschild is keenly aware of. “There are a lot of risks,” says Rothschild, and “we can’t declare victory, yet.” But being an entrepreneur is about taking risks and sometimes there’s a big payoff. Just ask Bill Gates.
Daniel McKivergan is associate editor of Philanthropy.