Pursuit, a nonprofit job training program in Queens, was in trouble.
After months of back and forth, the New York State Department of Education last year sent the nonprofit a strongly worded letter warning that it would be hit by a cease-and-desist order, and possibly a lawsuit. criminal, unless it quickly revised its program to meet the agency’s school requirements.
“It’s scary,” recalled Jukay Hsu, co-founder and CEO of Pursuit. “I felt like I was staring into the abyss.”
While small, Pursuit has a track record of success, helping low-income workers get high-paying jobs as software engineers. Experts say it is at the forefront of emerging trends in upward mobility programs for low-income Americans.
But Pursuit’s innovation was about to be its undoing. Their model of courses, tutoring and funding is not like that of a traditional school. Its technical instruction is constantly updated to meet the needs of employers and is tailored to individual learners. And Pursuit teaches “soft skills” like communication, teamwork and resilience.
At the time, Pursuit was seeking approval from the state Department of Labor to become a certified apprenticeship program for software development. His goal was to be another path to opportunity for his students, whom he calls scholarship holders.
After talks between the two agencies, the Department of Education agreed to step aside, said Betty A. Rosa, the state’s education commissioner. The Department of Labor took a more flexible stance, not requiring fixed courses or tuition payments from the traditional school model.
Since the disturbing experience, Pursuit has made a compelling case to state policymakers for more than a one-size-fits-all solution. Legislation was introduced this week in both the New York State Senate and Assembly to define rules and consumer safeguards for non-traditional workforce programs like Pursuit.
The overall goal is to stimulate the creation and growth of programs that are proven to help low-income workers move up the economic ladder. The approach, forged primarily by a handful of nonprofits, is to offer not only training but also well-paying jobs.
To expand such programs, the legislation also seeks to attract more funding for workforce development, including private investors willing to accept modest profits from companies focused on social challenges. The money to repay investors would largely come from successful graduates who would pay a portion of their salary for a few years.
Pursuit has perfected that pay-for-success formula. The key, experts say, is to make sure payments are reasonable and only start if the person gets a good job.
The legislation, for example, stipulates that graduates of approved programs will owe nothing unless they get a job paying $50,000 or more.
“If we do it right and it’s successful, it could become a national model,” said Sen. Michael Gianaris, D-Queens, deputy majority leader and lead sponsor of the bill in the Senate.
Pursuit’s founders, Mr. Hsu and David Yang, grew up in Queens and attended New York City public high schools.
Mr. Hsu went to Harvard, where he majored in economics and later served as an Army captain in Iraq. Mr. Yang studied architecture at Cornell and Yale.
They rejected careers in banking and architecture and returned home in 2011 to found a nonprofit social enterprise, then called Coalition for Queens.
Pursuit’s job training and placement formula is similar to that of older, larger nonprofits that have helped low-income workers, including Year Up, Per Scholas, NPower, Project Quest and WorkAdvance.
The programs combine technical training with basic professional skills such as communications, teamwork, resume writing and job interviews. They also help members with so-called wraparound services, such as transportation, housing, and child care, usually through referrals to community organizations.
Pursuit stands out for the length of its program and the size of its reported revenue gains. Courses and training typically last one year, although they can be extended to suit individual circumstances. This is followed by three years of mentoring and training after a graduate lands a job.
The average salary for people entering the program is $19,000 and the average for graduates is $90,000. More than 40 percent of enrollees are women, nearly two-thirds are black or Latino, and three-quarters do not have four-year college degrees.
Pursuit graduates have been hired at a wide range of companies, including Citibank, Blackstone, Uber, Spotify, and startups.
The evidence to date suggests that Pursuit is “an innovative, excellent, deeply committed program with a lot of promise,” said Lawrence Katz, a Harvard labor economist who studies the impact of worker training efforts.
Pursuit started small with 24 people in its first class in 2013. Now, 200 people a year go through its program.
Erica Stevens dropped out of college and worked as a retail salesperson before coming to Pursuit. The year-long program was not easy and during that time she experienced periods of homelessness.
But Pursuit, Stevens said, not only provided coding instruction, but also persistent encouragement, an occasional place to stay and free monthly subway passes.
When she graduated in 2017, she was hired as a software engineer by Dow Jones, the business media company, earning about $100,000 a year. Her payments, 12 percent of her salary for two years, were “big chunks of my paycheck,” she said. “But it was also good to contribute to this program, to help it continue to do the same thing for other people.”
Today, Ms. Stevens lives in a modern two-bedroom apartment in Brooklyn and owns a car. Restaurant meals and travel, luxuries that were once out of reach in her minimum wage days, are affordable pleasures. Hers He has a growing retirement account for herself and a college fund for her five-year-old daughter. She is saving to buy a house.
More than most of its nonprofit peers, Pursuit has proposed developing private funding sources beyond philanthropy. The field of workforce development, Hsu insists, needs more capital if it is to grow and help many more low-income people.
Pursuit’s innovation is a kind of bond that rewards investors if its graduates get good jobs and make payments. It has experimented with different payment formulas since its first bonus in 2016. The current plan has tiered rates from 5 percent to 15 percent, for workers with jobs paying $70,000 or more.
The financing formula seems to be working. The average salary for graduates is more than $85,000 and defaults are low, said Amy Wang, managing director of Blue Earth Capital, the lead investor in the current Pursuit bond.
The search still depends on philanthropic contributors, but funding from investors is an important complement. (Pursuit also has a for-profit public benefit corporation, whose activities include skills development programs for company employees.)
Payments to students remain controversial, a legacy of abuses committed in years past by some for-profit colleges and commercial tuition companies that share revenue.
Pursuit’s progressive payments, for example, raised concerns at the state education department. A person making $50,000 and someone making $100,000 don’t pay the same amount, and they may not understand that when they sign up, said Ceylane Meyers-Ruff, deputy commissioner of adult continuing education and career services. Pursuit said it tried to make payment terms as clear as possible.
However, attitudes are changing. Until recently, most nonprofit workforce programs did not consider graduates paying toward the cost of training future students. But Gerald Chertavian, founder of Year Up, said the concept had the potential to be “an important source of long-term funding to support economic mobility” if applied fairly.
States are also experimenting. In New Jersey, the government has funded a “pay it forward” program, while in Colorado a group of philanthropic organizations is supporting a similar initiative.
The authors of the New York state legislation, called the Good Jobs Guarantee Program Act, see it as a regulatory model for results-based employment programs like Pursuit, designed to expand opportunities, attract more funding and protect to customers.
For the individual, the financial agreement includes no upfront costs or interest, and no one earning $45,000 or more qualifies.
“The opportunity seeker is at the center of this and the risk lies with the training organizations and investors, not the individual,” said Assemblywoman Nily Rozic, a Queens Democrat who is the bill’s lead sponsor in the assembly.
The legislation also calls for the creation of a $100 million reserve fund, which would limit investor losses to attract private capital. Oversight of the program will be the state’s economic development agency, Empire State Development.
If enacted, the law promises a clearer and more welcoming regulatory environment for Pursuit and similar programs.
“We are small,” Hsu said, “but the problem is much bigger. “We are trying to change the model.”