Good morning. It’s Monday. We’ll look at an innovative nonprofit that trains low-income workers to become software engineers — and tangled with a state agency that threatened a cease-and-desist order and possibly criminal prosecution.
Job training is one of those things that everybody talks about, or at least that economists and policymakers talk about. Pursuit, an innovative nonprofit in Queens, has done something about it, helping to lift low-income workers into good-paying jobs as software engineers. But it tangled with the state’s Education Department because it operates differently from a traditional school.
I asked Steve Lohr — a Times reporter who covers technology, the economy and work — to explain why Pursuit found itself in a jam.
First, how does Pursuit work? Its fellows, as it calls its students, promise to give back a sizable chunk of their future earnings, don’t they?
Yes. Pursuit, a nonprofit in Queens, trains low-income workers to be software engineers. It involves one year in the training program — though people can take longer if they need to — followed by three years of mentorship after a person gets a job.
For participants, there are no upfront costs. You pay nothing unless you get a job that pays at least $50,000 a year.
How much do participants pay Pursuit?
Pursuit has experimented with the terms over the years and modified them from time to time. The current plan has staggered rates from 5 percent up to 15 percent for workers with jobs paying $70,000 or more. The payments last for four years. If you lose your job, the payments stop.
The thinking behind the payments is that government funding and philanthropy for job-training programs is limited. And traditionally, job-training programs have measured their success by the number of people completing courses, not whether they got good-paying jobs after.
By contrast, Pursuit embodies what is being called a pay-for-success or outcomes-based model.
Are the payments from fellows the only money that’s coming in for Pursuit?
No. Pursuit does rely partly on philanthropy. It has begun to attract private capital from so-called social-impact investors, who accept modest returns on their investments in ventures with social goals, like upward mobility. The payments from its fellows go in part to repay the investors who helped fund their training.
Pursuit’s founders believe that such nontraditional sources of funding are needed if job programs are going to lift large numbers of people into the middle class.
Pursuit has an impressive track record after 11 years, doesn’t it?
It started small and built up steadily in recent years. On average, Pursuit fellows see their incomes go from about $19,000 to $90,000 a year.
Now, on average is not everyone. But the results do look impressive.
Larry Katz, a Harvard labor economist who studies worker training programs, told me that the evidence to date strongly suggests that Pursuit is innovative and deeply committed and, as he put it, has “tons of promise.”
Pursuit stands out for the length of its program and the size of its reported income gains — so much so that other nonprofits are looking at its model. And some states, including New Jersey and Colorado, are experimenting with pay-it-forward funds as a way to help pay to expand job training and supplement government grants.
But last year, the New York State Education Department threatened Pursuit with a cease-and-desist order and possibly criminal prosecution. Why?
The short answer is that Pursuit doesn’t look like the schools they regulate.
Pursuit tailors its training to suit individuals and changing employer needs. If a fellow needs 14 months or longer to finish the skills training, that’s OK. So there’s no fixed coursework or timetable. To a regulator, Pursuit is not playing by school-like rules.
But the department’s bigger concern was the payments. Student payments have been controversial, a legacy of the abuses of some for-profit colleges and commercial income-share tuition companies in years past.
What was the issue with the payments?
To the Education Department officials, Pursuit’s staggered payments, based on how much someone makes, raised questions of equitable treatment and disclosure: Were its fellows really aware of the deal they were making?
Pursuit says it has tried to make its terms as transparent as possible. But the Education Department saw Pursuit as a career school with no set curriculum and no fixed tuition, an institutional outlier. Pursuit saw itself as working in the best interests of its fellows.
Pursuit eventually extricated itself from that regulatory trap. It applied to the state’s Department of Labor to become a certified apprenticeship program for software development.
With another state agency involved, the Education Department stepped aside.
Since then, Pursuit has made its case to change the rules. Last week, legislation was introduced in Albany that would apply to nontraditional work programs like Pursuit. What are the legislators who stepped in to support Pursuit looking for?
They want to create clear rules of the road for nontraditional programs like Pursuit.
The main risk, they say, should be on the job-training programs and the investors instead of on individuals trying to move up the economic ladder. The state bills also would set up a $100 million reserve fund to reduce the risk for social venture investors and attract more private capital.
The broad goal is to expand the paths to upward mobility.
Pursuit is still relatively small, with only 200 people a year going through the program. Do the two founders want to scale it up?
It prodded policymakers to create a legal framework to make it easier for others to build effective and more self-sustaining upward mobility programs — to adapt some of the elements of the Pursuit model. Pursuit does plan to expand steadily in New York. But it does not seem to envision a network of Pursuit offices across the country.
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Improvising
Dear Diary:
When the 10th anniversary of my move to New York City came around, I selected a Friday evening in June to celebrate with a barbecue at my Gowanus apartment.
String lights swayed in the breeze. The coals glowed white hot in the grill. The Popsicles were organized in the freezer.
One thing was missing: a cooler for drinks.
I walked to the nearby grocery store to pick up one of those inexpensive foam coolers that seem to be ubiquitous in the summer.
But after a fruitless lap around the aisles and a series of head shakes from store workers, I felt defeated and turned toward the door.
“Amigo!” a voice from the storeroom in back yelled.
I walked over to find a young man grinning and gesturing toward some empty cardboard boxes. He quickly fortified one with layers of discarded Styrofoam and added a big black trash bag as a liner.
Together, we emptied some beer and two bags of ice into our new makeshift cooler, and I carried it proudly back to the party.
The drinks stayed ice cold all night.
— Blake Ward
Illustrated by Agnes Lee. Send submissions here and read more Metropolitan Diary here.
