You wouldn't know it from the headlines, but people are getting hired, household incomes are rising, and Americans are pulling themselves and their families out of poverty.
It's happening in Minnesota: An innovative career development program for the chronically-unemployed, called Twin Cities RISE! (TCR!), gets state funding only if and when a participant is hired for a skilled job (at living wage, with benefits) and stays for at least a year. The model motivates TCR! to adequately train and prepare these future employees for success and holds the organization accountable.
What's in it for the state? A significant return on investment -- an estimated $7.24 for every dollar put in -- when these people stop receiving subsidized housing, health care and food stamps, and start paying taxes.
"The return on investment of pay-for-performance can provide social benefit, while also offering accountability and economic value to taxpayers," said Art Berman, TCR! president and CEO.
At a time when the national media in the United States is justifiably focused on depressing jobs news -- unemployment remaining stubbornly high, household income dropping, and a record number of Americans living in poverty -- this bright spot is blazing a trail that is likely to be followed by other states and eventually implemented on a national level.
With market forces and results-based funding powering its success, TCR! solves many problems at once. The unemployed and underemployed are offered a real opportunity for living-wage employment and an escape from poverty. Government is provided with a fiscally responsible, results-based way to invest in job training and poverty reduction. Business benefits from a diverse talent pool and a skilled workforce.
Twin Cities RISE! is a winner in a competition hosted by eBay Foundation and Ashoka Changemakers to find the world's most innovative market-based solutions that create economic opportunity and generate employment for disadvantaged populations. Nearly 900 entries from 83 countries were submitted to the Powering Economic Opportunity: Create a World That Works competition, and five gamechanging initiatives were selected to each receive $50,000 to scale up and expand their impact.
Other winners include a job training franchise program in Africa that brings cheaply-powered, environmentally friendly light to the developing world; a model school program in Paraguay that integrates the teaching of traditional high school subjects with the running of small-scale, on-campus agricultural enterprises (such as dairy processing or a rural hotel) to give students concrete workforce skills and pay the school's bills at the same time; a mobile micro-franchising enterprise in Indonesia that turns poor women into entrepreneurs with pre-packaged kits that include a mobile phone with a microfinance loan for selling "airtime minutes" to their neighbors; and a fair-trade initiative in Brazil that puts locally-made artisan products on the shelves of Wal-Mart.
"We're pleased that President Obama's 2012 budget includes a pay-for-success funding model," Berman said. "Twin Cities RISE! is at the forefront of pay-for-performance and has been successful with this funding model with the State of Minnesota for more than thirteen years."
Founder Steven Rothschild, an Ashoka Fellow and former vice president of General Mills, clearly likes a challenge. TCR! "works primarily with people whose families have been poor for generations, most with a history of homelessness, poor job histories, low academic achievement, and criminal convictions," said Rothschild.
After an intensive, year-long focus on remedial education, skills training, coaching, internships, and empowerment (in other words, transformation into accountable and hopeful human beings), graduates are placed in jobs that pay an average of $25,000 annually, plus benefits -- an annual increase of almost $20,000 from the time they enter the program.
82 percent of graduates are still on the job after one year. And, even in these dismal economic times, it's working. The rate of the organization's job placement has risen 30 percent since 2009, with 52 graduates in 2010 finding full-time employment with benefits at places like banks, insurance companies, and law firms.
"It seems to me that if you're not interviewing somebody from Twin Cities RISE!, you might be passing up on the best employee that you could ever have," says John Herbes, who hired TCR! graduate Tynna Bryant at Wells Fargo and predicts she will become a manager one day.
"Before I came here, I was working in janitorial work. I had my son and was barely getting by," said Bryant. "He was the one that helped me keep pushing -- by seeing him and knowing that if I can make a change within myself, then it would be better for him."
"Every time I go to a graduation... that's what makes my heart skip a beat," said Rothschild. He knows these well-prepared, skilled individuals are well on their way to a better, more productive life, and have quite possibly broken they cycle of poverty for good. "It's likely that their children will never be in poverty again and their grandchildren will never be in poverty, and we may have stopped poverty with that generation."
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