Google Creates $100 Million Fund for Skills Training Program

Google said on Thursday that it was creating a $100 million fund to sponsor an ambitious project to expand effective skills training and job placement programs for low-income Americans.

The Google-backed initiative is targeting a big problem: how to find, train and create paths to good jobs in the modern economy for the nearly two-thirds of American workers who do not have a four-year college degree.

“I genuinely think this is one of the important areas for society to figure out,” said Sundar Pichai, the chief executive of Google’s parent company, Alphabet, in an interview. If the project is successful, Mr. Pichai said, he hopes it will be a “template for other companies to do more” and show policymakers that there are better-performing alternatives to traditional government training efforts.

The tech giant is working with three nonprofit groups on the effort: Year Up, which focuses on upward mobility programs for the disadvantaged; Merit America, an organization that offers tech training programs for adults without a bachelor’s degree; and Social Finance, which designs student-friendly financing and repayment plans.

The training organizations are paid a portion of their costs upfront and receive additional payments only if their graduates land and keep higher-paying jobs. The program will combine Google philanthropy with loan repayments from students. The loans will carry no interest, and students will begin repaying only if they get a job that pays at least $40,000 a year. The payments will be about $100 a month and continue for a maximum of five years.

The Google fund will pay to start and support the program, since not all students will graduate and secure higher-paying jobs. But loan repayments from successful students will help support training for others in the future. The Google fund hopes to fuel total wage gains of $1 billion for 20,000 training program graduates.

The three organizations working with Google are indicative of newer trends in job training and hiring. They focus on results — graduates getting higher-paying jobs — rather than numbers of people passing through their programs. They are advocates for hiring based on demonstrated skills instead of screening by college degrees. And they are all experimenting with ways to make programs more self-sufficient financially and less dependent on charitable support.

“This is a really serious effort to put philanthropic money into programs that have the elements that have proved effective,” said Lawrence Katz, a labor economist at Harvard University.

The job programs, Year Up and Merit America, will receive grants to train students in technical skills with content from Google career certificate courses in information technology support, data analytics, project management and user experience design. Both nonprofits already use the Google coursework, which provides general technical training but does not teach students to master Google software tools.

But a major part of successful training programs, experts agree, is what they do beyond teaching technical skills. The programs also emphasize so-called soft skills like teamwork, communication and willingness to learn new things. They often provide help with arranging child care and transportation. They have career coaches, social workers and counselors, and foster peer groups and alumni networks.

“Skills and competencies are important, but so is building up a person’s social capital,” said Gerald Chertavian, founder and chief executive of Year Up.

Begun more than two decades ago, Year Up is now a national organization that caters to low-income workers from 18 to 26 years old. It includes three to six months of technical training followed by a six-month internship at a company. Eighty percent of its graduates are placed in jobs within four months, at an average starting salary of $44,000, more than double their previous income, the organization says.

Social Finance, which is managing the investment program, is looking to add a few more job training groups this year. An independent research firm, MDRC, will evaluate the performance of the training and job placement programs over time.

“We’ll allocate more funds to whoever is delivering better results,” said Tracy Palandjian, chief executive of Social Finance, which is not related to the online lender SoFi. “It’s all about impact.”

Merit America has grown rapidly since it began offering courses in 2018. From the outset, it was a hybrid program, with self-paced online training, in-person meetings once a week with fellow students and one-on-one sessions with coaches.

So when the pandemic shutdowns hit, Merit America was well placed to make the shift to remote training. It is growing rapidly — on track to reach 2,500 students this year, more than double the number in 2021.

The Google-fund backing “puts jet fuel in our engine, allowing us to scale up as never before,” said Connor Diemand-Yauman, a co-founder of Merit America.

Merit America participants span demographics, but they are typically in their early 30s, with a decade or more of working experience, often in low-paid jobs in restaurants and retail. The program includes three months of skills and workplace training, followed by a job-placement phase of a few months.

Merit America’s graduation rate is more than 80 percent, and nearly all the graduates are getting jobs, the program says. Graduate starting salaries now average more than $45,000, at least $18,000 more than before the program. Both salaries and wage gains have been rising with recent cohorts.

The nonprofit is financed largely by philanthropy and repayments on no-interest loans from graduates in higher-paying jobs, which is the model being adopted for the Google fund.

Sandra Massie, a single mother in Virginia, had worked for nine years in restaurant jobs when she saw an online ad for Merit America. The skills training was based on the Google IT support certificate course, which she completed online while still working at a restaurant chain.

But, Ms. Massie said, the peer learning with students from similar backgrounds and one-on-one sessions with coaches were crucial. “It’s a network of support that really gets you believing that this type of change is possible in your life,” she said.

With the nonprofit’s help, Ms. Massie got a job offer in 2019, before she finished her training. She now works for a software consulting firm, Intact Technology, and is transitioning from a tech support role to managing small-team projects for clients.

Today, Ms. Massie, 34, earns $75,000 a year, about twice as much as in her last restaurant job. She has health care and vacation time, and the company contributes to her 401(k) retirement plan. She has set up a college savings plan for her 9-year-old daughter and owns a home.

“My life has changed a lot,” Ms. Massie said.