Can Edtech help those without degrees?
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In an article in Edsurge, education investor Trade Urdan repeats Edtech entrepreneur John Katzman’s wry remark that Edtech investors were ‘happy to invest in education, for the rich’. As Urdan goes onto point out, most of Edtech’s unicorns, despite promises to ‘democratise’ Education are geared towards the wealthier, more educated portion of the population. Just look at the unicorns; Udacity, Udemy, Coursera, Pluralsight — they primarily teach to graduate audiences. In Edtech’s defence that could apply to much of Tech — it’s easier to discover things when you have spare time and the internet and easier to buy them when you have disposable income.
The problem however, is that those with degrees are being underserved and their numbers are sizeable. Urdan points out that of the 7.2m jobs lost in the US after 2008, 5.6m were by workers without a degree and despite current high levels of employment, many of those laid off struggled to find work and left the workforce (where they aren’t counted in unemployment statistics).
Urdan, as befits a Venture Capitalist, is interested in private sector solutions and touts the Employment Technology Fund by New Venture Fund (you can see why they pay others to be creative). This fund already supports two organisations aimed at Digital literacy for working adults (Northstar) and a training tool (Cell-Ed). These funds however are backed by philanthropic investors such as the Rockefeller foundation who may be ambivalent about a return on their investment (or at least profits). Can such socially minded solutions also be for-profits?
Kenzie Academy aims to do just that, it recently raised $1.6m in funding to help retrain workers in Indianapolis to be software developers. It is monetised through up-front tuition ($12k for the first 6 months) but students can get discounts on subsequent tuition if they do agency work for the company part time (notably similar to Andela the African start-up backed by the Chan-Zuckerberg foundation).
The issue of using Edtech to support those without degrees is also being tackled in California. California has 2m adults who started college but didn’t finish, most of whom are from low-income, Spanish speaking households. To aid these people, California’s Project Flow, aims to provide an online college covering degrees but also professional certificates and other qualifications. Some Edtech investors scoffed at the California idea, and it’s true that this may be an expensive project that may not quite fit the bill. However California’s move speaks to two issues. Firstly, that the private sector, may never be able to scale sufficiently to provide education solutions to all who need it and second that any solution will need to include a robust offering of non-degree qualifications to be most effective.
In a recent report, by Grads of life (a hiring firm), Harvard Business School and Accenture, they found that 6m jobs in the US that require applicants to have a degree — are already performed by people without a degree. That’s a problem for employers and job seekers alike, the job seeker because they are doing a job for which their expensive degree was not necessary (and will likely pay less — making the degree premium redundant) and for the firm because they’ve unduly narrowed their hiring pool and furthermore, overqualified employees tend to leave. The report’s authors argue in favour of more apprenticeships and paid internships targeted at those without degrees, akin to the UK’s apprenticeship levy where employers above a certain size pay a tax on their payroll for which they can claim back training vouchers to help train staff.
Schemes such as this solve two problems. Firstly by levying the money on all employers they incentivise them to train staff and do so knowing other employers have to pay (so that one firm didn’t invest to train and then lose staff to a firm that didn’t. Secondly, it ensures training is specific to the employer and therefore relevant. The skill gap is in part a classic problem of information asymmetry — employers have needs that are both specific and often change quickly — universities are often charged with trying to fill this gap, one for which they are often the wrong provider and an expensive one at that.
The optimal solution may well lie in public and private sectors working in concert. Edtech can either provide direct training such as City & Guilds, a major provider of vocational education in the UK that has been expanding and acquiring technology platforms to deliver vocational education. Alternatively, Edtech can create platforms that lower the cost of training on employers by making their content digital and scalable. Large companies such as IBM have already announced they will hire 6K people without degrees and they are also opening up their platform to other users — much as Salesforce are doing to theirs.
Government’s role will be to foster such systems and provide financial support where the private sector is not able to or to ensure companies are not freeriding. This is increasingly an imperative in developed economies and the thrust of Adam Levine, President of the Woodrow Wilson Foundation, whose article argues that access to lifelong education ought to be a right. Levine is not pushing a socialist vision but rather recognising that education is equivalent to healthcare, something for which the economy cannot function well without. Skill gaps cost the economy in unemployment, underemployment, lost productivity and social benefits, thus the state must step in either directly or ideally with the private sector to solve this problem.
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