WorkRewards

Economies thrive when people can find their best fit and do their best work, but few economies have systems to encourage people to seek out these opportunities. WorkRewards creates a mechanism to encourage worker advancement, reward work, and better allocate the funds currently used in workforce development.

Here’s how it works: For every week worked, individuals earn a point, tracked through state records. Twice a year, workers are reminded of the points they've earned, and are offered to advance in their current career path or perhaps change careers by redeeming their points at an educational institution or other training site. All the current barriers (program eligibility, access, etc.) become back-office functions to redeeming your WorkRewards.

At scale, this is a game-changer! In any given state, up to one-third of the labor force might steadily improve skills, consider new fields, and/or advance in their careers.

We have three inter-connected problems in our labor market:

1) Unclear pathways for workers. The economy depends on motivated, skilled workers moving through careers to find their best fit and do their best work, yet we do very little to encourage this movement. Additionally, the opportunities available in the labor market are often unclear to workers, who have no way to easily find out where their skills might be most needed. 

2) Unmet employer needs. Employers often cannot find skilled workers, even when they have high-demand in their industry.When they face hiring difficulties, most employers turn to public systems which are often unable to respond in a timely fashion. Large employers that provide extensive in-house advanced training do so at great expense, and small employers can rarely afford to implement such programs. 

3) Inefficient and ineffective funding. Currently, public and philanthropic investments in workforce development are made available through intermediaries -- colleges, nonprofit organizations, and others -- who have to "recruit" to find workers seeking to improve their skills. This is lagging and inefficient, not to mention dehumanizing for workers who must “prove” their eligibility (usually by declaring financial hardship) in order to advance in their career.

WorkRewards is a systems innovation at a state level. State leaders establish the WorkRewards program, assigning points to workers using Unemployment Insurance records. Through a policy team of state leaders from the workforce and education arenas, public programs that currently pay for education and training (WIOA, SNAP, Pell grants, etc.) are apportioned into the WorkRewards program -- phased in over a period of time to ensure a smooth transition. With interest from private philanthropy, community foundations, and business associations, other funds can be put into the WorkRewards 'bucket' to be paid out as individuals redeem their points.

Once funding sources and broad parameters for allowable training and education pathways are agreed upon, each state designs their own redemption mechanism using existing IT infrastructure. When an individual chooses to redeem their points, this mechanism determines which funds can be applied, and creates authorization to make payment to the organization providing the education or training.

Finally, WorkRewards creates a new communication: letters sent directly to workers that contain their earned point tallies and information about their local labor market. This is a new marketplace where states can talk directly with labor supply about future labor demand. Workers redeem their points as desired!

The WorkRewards program applies to every worker. However, in order to create a more equitable labor market and address systemic injustices, some workers need more support than others. WorkRewards addresses these issues as follows:

• WorkRewards begins with the Unemployment Insurance system, assigning points to W-2 wage earners, and then, to the degree that individual states' data privacy laws allow, 1099 earners can also have points assigned for work. Over time, we may be able to capture other work experiences, too.

• WorkRewards is accessible to anyone who works, but specific funds can be put toward WorkRewards to aid specific workers. While the rate at which points are earned remains universal, individual funding sources can support greater value for points redeemed by workers from demographic-, geographic-, or industry-specific pockets. For example, the redemption value for African-American workers or workers laid off due to COVID could be higher than the redemption value of points earned by others. Policymakers can adjust valuation to meet pressing needs and policy goals.

• Long-term unemployed individuals who may not have earned points in the labor market can be assigned "starter points," using existing public funds targeted to these individuals.

WorkRewards mostly closely aligns with the Challenge's goal of increasing access to high-quality, affordable learning. By re-apportioning existing workforce development funds to a point-system, WorkRewards encourages workers to make individual choices regarding their skill-building, rather than placing them on pre-determined pathways that may be inefficient or poor-fits.

WorkRewards goes deeper, however, by building continuous education and skill-building into the fabric of workforce development. By giving the opportunity to redeem points for education to anyone who works, regardless of circumstances, WorkRewards aligns existing employment programs to the Challenge's goal of continual learning for workers and better coordination between employers and educators.

There is one full-time worker and five part-time contractors and advisors.

While LukeWorks, LLC. is the catalyst for this work, the implementation of WorkRewards is a state-level endeavor. In each state where WorkRewards is implemented, there is a focus on addressing equity (principally race & gender) in the labor force. The leadership team in each state represents the individuals being served and is inclusive of BIPOC, women, LGBTQIA+ individuals, and others who have been historically underrepresented or underserved. 

The WorkRewards team of advisors currently includes three women and three men, of whom two identify as BIPOC, and three identify as members of the LGBTQIA+ community. In its fifteen-year history, about 75% of LukeWorks' engagements have been focused on advancing racial equity in the labor market. As WorkRewards is adopted by states, LukeWorks will work to ensure that project staff mirror the populations being served and are focused on bringing forward equitable outcomes for those who are most in need of support.

There are a few significant barriers to promoting learning and skill-building for workers. Perhaps the most obvious is that workers can’t make a meaningful choice about education and training to pursue (with public funds specifically) because the full menu of choices is never presented. Jobseekers are significantly hampered by lack of communication about where there is market demand, and where and how to affordably pursue training. WorkRewards will open a communications pathway, and incent workers to explore a complete menu of career options and then invite them to pursue training driven entirely by their own career interests. 

The current system allocates public and philanthropic funds to training providers and helping organizations who, while able to provide meaningful support, cannot offer individual workers a full menu of career pathways. They need to recruit workers for their “program” and then their compensation is also tied to placement. 

This system creates pockets of inefficiency and hinders workers from seeing all their potential options. An imperfect analogy: Imagine being unable to get the food you want because your grocery money is made available to you only at a corner convenience store, rather than a fully-stocked supermarket.

WorkRewards separates the funding from the deliverer of training (and from specific programs with eligibility requirements) and attaches it to the worker. Now, the worker has agency -- rather than being stuck in a job or randomly dropped into a field from which she was given a limited set of choices. 

WorkRewards is, fundamentally, a new business model to move public and philanthropic funds that support workforce development. States that choose to implement WorkRewards are given latitude to create novel IT solutions for implementation that works best within their existing infrastructure.

There are three significant places where WorkRewards would encourage technology innovation at the state level:

a) On the backside of WorkRewards, when an individual redeems their points, there is an opportunity to automate the process by which states determine which (if any) public funds the individual may be eligible for. There have been successful demonstrations of this process automation (e.g., Bridges to Benefits) that may have other useful applications in state and local governments.

b) Point-awarding based on weeks of work is initially done inside state Unemployment Insurance systems. The status of state systems varies across the country. As states adopt WorkRewards and make modifications to track WorkRewards, they can strengthen this critical infrastructure and link to contracted workers (a reflection of important economic change). 

c) Finally, as payment is redeemed for training at state colleges, universities, and other public entities, there may be differential pricing (lower costs!) for a course that is paid for with redemption of WorkRewards than for one paid for through other means. This creates an opportunity to dramatically improve the internal payment systems in states when public funds change hands from one agency to another. As a very common "central payer," WorkRewards may be able to create significant efficiencies within internal payment processes for states. 

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We know that economies thrive when there is free and informed movement by workers to new/better jobs and through career pathways of their own choosing. With healthcare and retirement benefits often tied to employment with a particular employer, we have a societal disincentive to change jobs. Further, while we have some public and philanthropic support for skill attainment, jobseekers are often stuck where they are because they are uninformed, and lack incentive to make a career move. WorkRewards unlocks opportunity for jobseekers and employers alike by encouraging movement in the labor market.

WorkRewards changes the market design and business processes by which public and philanthropic funds for workforce development are allocated. The activities and outputs associated with the innovation include:

1. Creating incentive for workers to pursue training and education leads to more education and training pursuit by workers.

2. Communicating directly with workers about the outlook for their current fields and where we need more/new workers in the state or region leads to more intentional choice by workers to grow in their current pathway or make an informed choice about another pathway.

3. Moving money from programs to WorkRewards eliminates eligibility-based confusion and disenfranchisement, and leads to more people making more and better use of funds that have already been allocated to serve them.

In the short-term, states see a significant increase in credential attainment; a more informed and energized labor market - with changed perceptions for workers and businesses alike; and a more efficient use of existing public and philanthropic resources. Long-term impacts include: a sustained appreciation of the value of work; longer-term career planning and education pursuit as new points are earned over time; more effective use of existing public and philanthropic funds; greater engagement by the business community who can direct charitable funds to serve trainees for their own employment sectors; and, a state that is in direct communication with its labor force about current and future needs.

A single innovation can create a new market space, strengthen regional and state economies, and make pursuing training and advancement the obvious and easiest choice for workers.

Our intention within the next year is to explore the take-up rate, choices, and trajectory of learners who pursued Coursera offerings in Minnesota; and, work further with state officials to pursue implementation of a pilot or full launch of WorkRewards in Minnesota. The COVID pandemic may have created the ideal conditions for a quick-launch -- inviting those who were displaced by the pandemic to pursue education and training while the labor market gets back on its feet in the coming year (or more). Within Minnesota, there are still policy parameters to be agreed upon; and, the state’s broad-based goals around greater educational attainment would also benefit from a pilot or full launch of WorkRewards.

In the coming two years, with momentum from Minnesota (and exposure through SOLVE!), we will  explore with other states their own steps toward prototyping this approach. By 2026, we would like to be operational in 2-3 states and being pursued for implementation in another 5-7 states.

The primary barrier is getting states to commit to pursuing this approach -- as it is ultimately a significant market disruption. There are smaller policy and technology barriers to overcome; but, the initial barrier is making the decision to pilot and pursue WorkRewards at the state level. The critical constituencies to engage in states include:

1. Legislators and Executive Branch leaders who appreciate the simplicity of the solution and its across-the-board reward of work for all, but who need support to manage the potentially significant disruption for education, nonprofit, and for-profit intermediaries;

2. Education, nonprofit, and for-profit intermediaries will have their business models disrupted -- by waiting to receive students redeeming points -- rather than receiving contracts from public agencies up front. But, with adjustment time, they will still deliver significant services to the people they’ve served before, as well as new groups of learners.

The additional barrier at this point is simply putting the idea in front of state leaders across the country and providing ample support as they consider implementation. The sales cycle for this is fairly long, and requires a good deal of hand-holding along the way. Our current team has few dedicated resources to pursue implementation in key states across the nation. We are hopeful that exposure from SOLVE will be helpful in this regard.

We are continuing to prepare promotional material and slowly reaching out to state leaders, approaching them with WorkRewards as it continually evolves. A few specific strategies are just now beginning to take shape:

1. An advisory group of current and former state-level officials is being pursued, including representation from national organizations including the National Skills Coalition, National Governor’s Association, National Association of Workforce Boards, and others. Our intention is that this group, armed with solid information about WorkRewards and perhaps some logistical support to make connections with current state leaders in their own states, will be push an outreach strategy to help us promote consideration and adoption in key states over the coming years.

2. A technical team is being developed, including senior staff who have managed technology change at state levels and/or implemented some of the technological adaptations mentioned earlier in this application. This team will help identify a menu of technology adaptations that for states to consider along with WorkRewards implementation.

Finally, WorkRewards is developing marketing material for advisors, partners, and contractors to share with state-level decisionmakers. Again, with exposure from SOLVE, we are hopeful that there will be just enough buzz about the prototype to invite further discussion in states across the country.

In Minnesota, in the short-term the take-up rate on Coursera offerings and the choices made by consumers will be an important first bit of data to understand. In each state, data similar to the Minnesota Statewide Longitudinal Education Data System (SLEDS) will be critical to collect and analyze as a precursor to deciding which programs and funding streams would be included in WorkRewards implementation initially and thereafter.

In full implementation, WorkRewards offers a very robust picture for elected and appointed officials, business leaders and others to see who is pursuing training and education, at what levels, in what fields, and where. These are the 'outputs' of WorkRewards implementation. Over time, using UI data and SLEDS (and its equivalents in other states), we can see longitudinal outcomes for workers who pursue education and training and have resulting job changes and income changes.

Among our team, we have current and former leaders in Minnesota’s workforce, education, and human services arenas, including a former Executive Director of the Governor’s Workforce Development Board. We have just enough understanding of how workforce, higher education, and related arenas intersect; and, remain forward-thinking enough to see how it can be fixed! 

Our motivation for devising this solution is to improve efficiency and effectiveness, of course; but, perhaps most importantly, to help individuals who most need support to get the investment, encouragement, and information they need to make the best decisions they can for themselves and their families. Our team sees work, training, and advancement in employment as the surest sustainable path toward individual and community-wide prosperity.

Additionally, our team maintains strong relationships with current state and local leaders who will be the decisionmakers and implementers of WorkRewards in Minnesota and other states. We have the ability to build trust among partners who will test, improve, and advance WorkRewards in their states, ultimately able to use this tool and approach to shift labor markets! We don't have all the expertise -- but we have the vision, communication skills, and trusted connections to advance the idea!

Finally, our team (and our next concentric circle of advisors) includes individuals from multiple races, socioeconomic backgrounds, and representing varied political perspectives and faith traditions. Among our core team of six, three identify as part of the LGBTQI community as well - bringing a perspective that is not often well-represented in this work arena.

Over the years that this concept has been in development, we have taken inspiration from the National Skills Coalition, state and local workforce Boards, the Bridges to Benefits program at the Children’s Defense Fund of Minnesota, and several advocacy organizations that have come and gone on the landscape. 

Currently, WorkRewards closest working relationship is with staff leaders at the MN Department of Employment and Economic Development (DEED). We are excited to explore the outcome of the Coursera offering, and to assess what next steps might be taken to pursue WorkRewards pilot and/or full implementation in Minnesota. 

Through continuing relationships with national organizations and state-level partners in key states across the country, we are confident that promotional work will move quickly as interest is sparked by the SOLVE competition and demonstration of effort in Minnesota and other states.

WorkRewards is licensed by states, and supported through their initial implementation with a fee to LukeWorks (or a successor organization). After an initial implementation period of three years, WorkRewards assesses a fee to states, per a licensing agreement, that includes use of the name, marketing support, technology support, and guidance for ongoing policy decisions in each state. The licensing fee is based primarily on users/transactions (volume of effort) with additional consideration for implementation time.

As WorkRewards is adopted by states, we will grow to ensure that each state has sufficient staff support for its initial adoption and implementation, guidance for ongoing policy changes through implementation, and technical support as WorkRewards advances in any given state.

Ultimately, WorkRewards functions as a license-holder to licensed partners, with revenue coming from initial implementation/adoption and ongoing partner usage. We envision three stages of financial growth:

1. In this first (current) phase, the development of the concept and prototype has been self-funded. This can continue through the first full pilot/implementation in Minnesota (or elsewhere).

2. We have roughly budgeted that implementation in each state costs about $450,000 in WorkRewards staff and materials (exclusive of travel). This is a three-year implementation fee (payable at $150K annually) for WorkRewards staff to guide state leaders through implementation and roll-out of the concept in their state. States pay the initial three-year fee, which provides enough capital to support that implementation as well as a small investment for additional marketing and growth. (Additional costs for technology upgrades and improvements are born by states themselves and not included in WorkRewards fee structure.)

3. As state volume grows, the ongoing licensing fee supports WorkRewards growth and sustainability.

We have not raised outside funds nor are we generating revenue at this time.

At this time, we are not seeking outside funding, other than an implementation commitment from Minnesota or another state.

With a focus on developing a Minnesota pilot or implementation, we anticipate expenses in 2021 to remain low - primarily staff time to engage with Minnesota leaders in consideration of implementation. Given that path we are on, we expect hard costs not to exceed $100K in 2021.

WorkRewards has been in slow development for a decade and it’s time to bring it out in the light! The COVID-19 pandemic, coupled with political tensions and heightened awareness of racial inequities, have created ideal conditions to launch in Minnesota and elsewhere.

WorkRewards would most benefit from visibility among potential states/workforce boards who could pilot or implement the program; and, from technical support provided by IBM experts. Technical support to states, via WorkRewards could be used to streamline eligibility determination, modernize state UI communications systems, and streamline state payment systems.

Perhaps most importantly, it’s time for change in our workforce arena. The labor market continues to restructure more rapidly with each passing day, and we have pockets of “stuck” workers and inequity in the labor market that can only be addressed through significant and meaningful market change. As many have sadly joked, the "workforce system" doesn't always 'work' and it's not much of a 'system'. Right now, we can see how old programs/approaches are not adapting to a rapidly evolving labor market. It is playing out in front of us as we see rising inequity among workers and more people being unable to advance meaningfully in the labor market. WorkRewards is a solution that can address that inequity AND help all workers move forward toward their own full potential.

Business model: We envision the licensing arrangement to be the least intrusive and least expensive arrangement for states, while still providing adequate revenue to support WorkRewards. Some exploration of additional business models would be welcome.

Solution technology: As noted above, there are a couple of key places where tech solutions at the state level will be needed to ensure successful state implementation.

Legal: In addition to crafting a secure licensing arrangement with states, individual states will want assurance that their use of public funds through WorkRewards will be consistent with federal (or other source) requirements. There may also be a need to establish guidance for philanthropic and/or business associations who may wish to contribute to WorkRewards in their own states.

Marketing: As noted earlier, the key here is getting exposure among state leaders; and, to build support/appreciation for the solution among education partners and other intermediaries, and ultimately, workers themselves.

WorkRewards is most readily implemented at the state level - with key partnerships among state Workforce Boards, workforce agencies, state college systems, and nonprofit intermediaries.  

National partners that could be helpful to advancing implementation include the National Skills Coalition, National Association of Workforce Boards, National Governor’s Association, and American Association of Community Colleges. At the national level, promoting WorkRewards and helping states craft policy solutions around implementation would be helpful to advancing our efforts. 

There may be national technology, marketing, or legal partners who could also provide key supports to states during the initial implementation.