Briefs 1 and 2 of this series established the methodology behind the Nashville Summit and the seven structural barriers that cut across the housing, workforce and small business development ecosystems. Briefs 3 and 4 instead focused on housing and small business respectively. This brief maintains the previous two briefs’ narrower focus but instead distills the conversations from the participants in the workforce development ecosystem. It documents the barriers raised by practitioners and funders during the workforce development dialogues and the solutions participants raised that would work with limited federal government support.
Devin Thompson, Director, Place-Based Strategies
Key Takeaways
1
Funding for workforce programs pays providers to reach certain placement numbers quickly, not to build long-term, livable-wage careers. Measuring success based on change in a participant’s long-term trajectory instead of 90 day placements will incentivize economic stability and mobility.
2
Training a diverse workforce means little when the best jobs are only accessible through informal networks and ineffective hiring mandates. Formal pipelines into skilled trades backed by enforceable commitments and accountability with teeth is the only way to ensure opportunity is equally accessible.
3
The benefits cliff forces families to choose between a raise and the subsidies that keep them stable, leaving them financially vulnerable to disruptions. Bridging that gap with transitional benefits, accessible emergency support and financial coaching with integrated wraparound services is what allows training to grow into a career.
4
Policy choices and biases towards those with formal degrees are shrinking the labor pool at a moment when industries face critical shortages. Expanding who counts as employable and getting employers to treat talent development as an operating cost rather than a perk is central to a responsive workforce system that meets the needs of a growing local economy.
Specific Barriers in the Workforce Development Ecosystem
While the workforce development ecosystem shares many challenges with other sectors, the dialogues uncovered unique structural flaws that specifically penalize economic mobility and block access to high-quality careers. These barriers center on misaligned incentives, exclusionary practices and policy restrictions that shrink the labor pool.
1. Programmatic Focus on Short-Term Job Placement
Workforce organizations are trapped by funding metrics that prioritize the wrong outcome. Grants typically demand immediate job placement numbers, effectively ignoring whether that job actually leads to a livable wage or long-term stability. The consequences of this mismatch are felt most acutely in these ways:
- The Warm Body Syndrome: Driven by the need to hit quarterly grant targets, providers are forced to place participants in lower-wage jobs just to count them as employed. This transactional approach satisfies the employer’s immediate need for a body but fails to produce a career for employees.
- Incentive to “Cream”: The pressure for speed in job placements creates a perverse incentive to prioritize the easiest-to-place candidates while neglecting those with high barriers to employment, such as criminal records, lack of transportation or housing instability, who require more intensive support. As a result, the people who need the services the most are often the ones it is least designed to serve.
2. Institutional Barriers to Entry in Skilled Trades
Although the skilled trades are often the surest path to a middle-class income without a degree, access to these career pathways are often blocked by entrenched informal networks. Participants described the “FBI” (Friends, Brothers and In-laws) system, where hiring is driven by nepotism rather than merit or training. Practitioners highlighted two primary areas where this lack of access stalls progress:
- The Closed Door: Even when local projects have Community Benefits Agreements (CBAs) mandating local hiring, contractors often bypass these rules by claiming qualified local workers don’t exist in the region. In reality, the jobs often go to those inside the social circle of existing union members or foremen. This reliance on personal networks specifically excludes women and people of color who historically lack these intergenerational connections. It thus renders training programs ineffective if the only way to get an apprenticeship is knowing the shop owner.
- Lack of Political Will: The structure of local hiring mandates is often undermined by a lack of rigorous enforcement and minimal business commitments. In Detroit, for example, large commercial projects included a mandate to hire Detroit residents, but the penalty for failure was simply a fine. Developers frequently “baked the fine into their proforma” as a cost of doing business rather than actively recruiting local talent. An example another participant raised from DC described the developer meeting the “letter of the law” by hiring community residents at a minimum wage rate to hold signs at the project site and use water hoses to mitigate dust during demolition. This lack of enforcement will mean that even when the legal framework exists, the outcomes for the community will lag behind. When the jobs do not materialize for local residents, the community sees no return on the massive public investment, leading to displacement rather than development.
3. Policy Restrictions on Eligibility and Funding
Political shifts are leading to the reduction of the eligible labor pool while creating artificial barriers to employment. This acts as an economic self-injury, cutting off willing workers from industries desperate for talent. There were two themes that were discussed repeatedly:
- Excluding Immigrant Talent: Changes in the interpretation of federal laws like the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA) have restricted the use of funds for training undocumented immigrants or supporting mixed-status families. This cuts off a vital segment of the labor force, with devastating impacts on the construction and service industries, which are facing critical staffing shortages. Immigrant families, fearing government tracking and enforcement actions, are retreating from critical resources such as housing counseling and pre-purchase classes. This fear is hugely disruptive, pushing workers into the shadows and causing organizations to cancel planned training sessions.
- Degree Inflation: Beyond immigration status, the system creates artificial barriers through degree inflation or credential creep. Employers frequently require bachelor’s degrees for entry-level roles like bank teller or administrative roles that could easily be performed by someone with skills-based training. This credential creep locks out capable workers and contributes to the sorting down phenomenon, where over-educated individuals take lower-skill jobs, displacing those without degrees entirely.
4. Lack of Critical Supportive Services
The lack of integrated support services is a fatal flaw in the current program design, creating scenarios where symptoms are often triaged by a programmatic intervention. Connection to additional services that would solve the underlying condition are missed. While the conversions each covered unique aspects, they shared a key central point:
- Fragmentation Costs Us All: A job seeker cannot hold a job if they don’t have childcare or a way to get to work. Yet, workforce funding rarely covers these supportive services sufficiently. A participant might get free welding training and still discontinue the training because their car breaks down or they lose their housing. The system ignores the reality that for a person just beginning to stabilize a flat tire is a career-ending event – setting them up for failure rather than success.
Specific Solutions
Eliminate the Damaging Benefits Cliff
Policy advocates should push for changes that eliminate the benefits cliff to ensure a small wage increase does not result in the loss of subsidies. This would correct the misaligned economic incentives, ensuring workers are rewarded rather than penalized for increasing their income and working towards economic mobility. Participants identified several concrete ways to provide the support necessary to clear the cliff entirely:
- Bridge the Gap with Transitional Benefits: Programs like the Tennessee Alliance for Economic Mobility use algorithms to calculate specific transitional benefits to offset lost SNAP or housing support. Nonprofits need unrestricted, gap-filler funds to cover the dangerous window between program participants losing a benefit and receiving their first higher paycheck. Emergency client assistance funds are also essential for addressing immediate crises, such as car repairs, that typically derail training.
- Focus on Career Trajectories and Credential Stacking: We must pivot from immediate job placement to long-term career development that moves participants beyond the cliff to ongoing economic growth. This involves stacking credentials, such as moving a healthcare worker through from their initial CNA training to LPN certifications and eventually to RN credentials, ensuring wages rise progressively. Training should target creating thriving wages rather than maintaining low living wages that sit on the cliff’s edge. High-growth sectors, like mortgage lending, offer meaningful career pathways with accessible entry requirements.
CASE STUDY: Loans to Bridge the Benefits Cliff by Simon Wang
Problem
Financial disincentives often stall economic mobility for low-wage workers. When the gap created when a pay or hours increase triggers a disproportionate loss in public assistance, the work is effectively penalized, which keeps talent trapped in lower-wage roles. When offered a raise or an opportunity to take on extra hours, workers must receive enough compensation to account for what they could lose in benefits at their new income level.
The difference between the increase in a person’s earned income and the dollar value of services and benefits lost is what’s known as the benefits cliff. Providing bridge financing to cover the value of lost benefits when workers move up the income ladder is very important. Filling this gap removes the financial disincentive to career advancement and promotes economic mobility.
Solution
While not as scalable as broader system reform, targeted bridge support provides the specific capital – such as grants, time-reduced subsidies or low-interest loans – needed to keep a worker’s net income stable through a transitional period, further incentivizing ongoing career advancement.
Bridge financing accepts the current structure and simply fills the gap at the critical moment when workers face the benefits cliff. The financing can come from various sources, including philanthropic funds, employer contributions, revolving loan funds or public-private partnerships.
Implementation
Multiple bridge funding pilot projects, such as Career MAP, have emerged that focus on providing direct cash assistance to offset benefits losses. While these programs show promise, they are difficult to scale and expensive to maintain. Well designed loans offered to workers facing benefits cliffs are scalable and offer some distinct benefits to cash transfers.
One example of this approach comes from Common Wealth Charlotte, an organization in North Carolina that offers “opportunity loans” of up to $1,000 and “credibility loans” up to $120 with 0% interest, no added fees and unlimited deferments on payments. While not solely intended to bridge the benefits cliff, accessing Common Wealth’s loans brings participants into the banking system, helping them build a credit history and receive financial counseling and education, all without being exposed to the risks of predatory lenders.
Impact
Since 2018, Common Wealth’s 0%-interest, no-fee loans have demonstrated that flexible, small-dollar credit is both a viable alternative to predatory lending and a lifeline for those facing the benefits cliff. It has helped more than 2,100 people by providing over $1.5 million in loans with a 93% repayment rate.
Lesson
To scale this model, mission-driven providers (CDFIs, banks, and credit unions) should consider two important factors: product development and client engagement.
For these products to appropriately incentivize further work, it is important to prioritize flexibility by structuring loans without fees, unlimited deferments, and 0% interest rates. The catalyst for a 93% repayment rate is also the support surrounding the capital, it is managed by a loan counselor who can offer trauma-informed financial coaching than a traditional loan officer.
Replication also hinges on the integration with the organizations that witness career-stagnation decisions firsthand and can tell when the loan is the right tool to reach for. Workforce development organizations and employers are often well-positioned to detect employees because they witness career stagnating decisions firsthand. Formal referral partnerships with them, and other local human service agencies, can proactively divert workers towards appropriate solutions as their eligibility changes.
Integrate Services for Holistic Support
Shift from siloed training models to a holistic, person-centric ecosystem that connects workforce activities with housing, healthcare, financial literacy and other services responsive to program participants’ needs. Building a truly integrated, no-wrong-door system requires comprehensive alignment of essential support services. When services are coordinated and interwoven, they provide the robust support necessary for families to achieve and maintain stability. Building a truly integrated ecosystem would require one or more of these support pillars:
- Deploy Shared Referral Technology: Shared digital platforms, like Nashville’s Charity Tracker, enable warm handoffs where client data and history populate across agencies. This prevents the trauma of retelling stories and reduces the administrative burden on clients. Centralized resource hubs or marketplaces can further support this effort by housing standardized toolkits and research for smaller organizations.
- Establish Backbone Teams and Intermediaries: Complex ecosystems need coordination between system actors to ensure they’re operating in ways that serve communities’ interests. Dedicated backbone teams are essential to knitting resources and providers together, ensuring navigators and coaches are relationally connected before a crisis hits. Intermediaries also provide uniquely informed perspectives when managing passthrough federal funds to smaller, specialized nonprofits, empowering grassroots work while tracking collective outcomes centrally.
- Co-Locate Services to Reduce Friction: Physical integration of service providers reduces barriers to access and coordination. Co-locating multiple services allows organizations to catch clients who might otherwise fall through the cracks between appointments. This mini-hub model leverages existing assets to offer multi-faceted support in a single location.
- Cross-Train Practitioners: Integration must happen at the personnel level. For example, health workers in Indiana are trained in housing navigation to provide immediate handoffs for patients. Similarly, shadow job coaches can bridge the transition gap from training to retention by supporting participants on their first days of employment.
Recalibrate Metrics for Long-Term Economic Mobility
We must transition from measuring the speed of reemployment to assessing the full career journey. This requires recalibrating our systemic metrics to prioritize long-term economic mobility and sustainable career growth over immediate job placement, which too often results in dead-end employment and ignores job quality. To align grant deliverables with actual mobility, practitioners suggested these shifts:
- Redefine Success Through Longitudinal Tracking: High-volume, short-term placement numbers tell a shallow story. Practitioners should extend intensive retention support from the standard 90 days to at least 12 months, ensuring participants can navigate the critical first year of a new career successfully. Success should be measured over years, not months, to incentivize changing a participant’s trajectory.
- Adopt an Outcome-Driven Narrative: Workforce development agencies’ logic models should guide the outcomes they center in their grants and their marketing. Reframing the narrative for funders requires moving away from mere outputs to measurable financial outcomes, indicating engagement with the mainstream financial sector.
Formalize Employer Co-Investment in Training and Advancement
Employers must move beyond only writing checks to actively integrating advancement into their operating models. This systemic shift formalizes the commitment between the business and its workers, breaking down entrenched “FBI” (Friends, Brothers, and In-laws) hiring barriers. The following strategies illustrate ways that summit attendees wanted to change partnerships with employers:
- Integrate Learning into Paid Time: Bring community college courses directly to the worksite during compensated hours. To make this feasible in environments with razor-thin staffing margins, staffing substitute programs, a human resource mode where management covers frontline shifts for employees, allowing hourly staff to attend career development training. This keeps the business running and demonstrates deep leadership’s commitment to its employees.
- Bake Talent Development into the Business Model: Employers should treat training budgets as essential operating costs rather than optional perks. This means funding degrees or certifications to ensure entry-level staff do not hit a career advancement ceiling. Programs like KeyBank’s Future Ready Workforce or Bank Works provide templates for preparing current employees for internal promotion.
- Dismantle “FBI” Hiring with Formal Pipelines: Informal, who-you-know networks limit opportunities to insiders. To fix this, providers need to build formal, data-driven pipelines between candidates and employers. The Kentucky and Indiana Mills program demonstrates this success by brokering deals with organized labor. These partnerships allow participants to enter carpenter and IBEW (electrician) apprenticeships that guarantee wage increases and union-backed, high-paying trade positions. Additionally, organizations like RED Academy expose youth to careers in logistics or renewable energy that they would never encounter through traditional school paths.
- Flip the Business Case: To increase the audiences open to our message, advocates must move away from purely social justice-oriented appeals and utilize the language of ROI. The cost of onboarding new staff is almost always higher than investing in the retention of current employees. When employers ask, “What if I train them and they leave?”, the answer is simple: Employees stay where they know their growth is a priority. Providing wraparound support and growth opportunities fosters the loyalty necessary for long-term retention.
We began this report with the hard truth that the “pipes” of community development are broken. For decades, we have relied on a top-down approach to directing capital into our communities. Now, those flows are drying up and the infrastructure is leaking.
Waiting passively for federal policy shifts or reauthorization of funding is not a viable, long-term strategy. The New Normal demands that we build a new distribution system that is led by the practitioners on the ground.
The solutions outlined in this report form the blueprint for this new architecture. When we consolidate back-office functions, we establish new operational efficiencies. When we integrate workforce data with housing intake processes, we eliminate the silos that are a disservice to community residents. When we replace predatory debt with patient capital, we will significantly increase the resources and availability of economic opportunity.
This is the shift from passive recipients of funding to active architects of our own ecosystem that is urgently needed at this moment. We are no longer just painting the walls of a cracking house. We are pouring a new foundation. The blueprints are in your hands. The work begins now.
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