Fostering Economic Mobility for America’s Frontline Workforce

This article was originally published on LinkedIn.

Part 1: Sizing the Opportunity
America’s frontline workforce comprises about one-third of all workers and represents a segment brimming with untapped potential. These workers are crucial to numerous industries but, as COVID-19 highlighted, face unique challenges. Although there are many definitions used interchangeably, such as “frontline” and “deskless,” these workers typically are in customer-facing roles across essential industries such as healthcare, education, construction, hospitality, retail and manufacturing. These jobs are disproportionately filled by people of color, women, immigrants or first-generation citizens. They typically make less than $30,000 per year and hold less than an associate degree. Given our Education Impact Fund’s mission to invest in transformative solutions that are improving educational access and outcomes for underserved learners, we are committed to supporting this population because they are economically and socially vulnerable. This employee group has been vastly underserved from an L&D perspective, relative to their knowledge-worker peers.

Over the next several months, we plan to share a multi-part series that dives deeper into the frontline workforce space, with each post highlighting specific verticals that are experiencing the highest needs—and are thus ripe for disruption—along with key themes and areas we are monitoring for impact and investment opportunities. We invite you to follow along and learn alongside us on this journey as we attempt to further the conversation that our friends at other impact investment firms have started. The following are two examples of a few pieces we have read and believe are foundational for anyone interested in this space:

• Rethink Education introduced the concept of talent mobility and provides a market map while making a call for action for more integrated solutions that unlock upward mobility in this excellent piece.
• Emerge Education goes deep using case studies and interviews to showcase how technologically innovative solutions can be applied in impactful ways and offers practical recommendations for L&D practitioners on how to overcome common barriers faced by key stakeholders.

What Is the Market Opportunity?
As population figures suggest, the market opportunity, and accompanying need, is vast. At least ~$102B was spent on training solutions by U.S. employers in 2023, up from ~$83B in 2019. Of this spend, however, only a small proportion currently goes toward frontline workers. Despite employers’ best intentions, given their job roles and types, frontline employees can be notoriously difficult to reach with traditional training. These employees frequently work irregular hours, sometimes coming in for only a few shifts per week, and lack downtime while on the job given many are paid hourly. As a result, frontline employees have historically received limited support and had little control over their development. 76% of frontline employees are interested in training to develop their skills and further their careers but only ~41% of them are afforded a real opportunity to do so, limiting upward mobility. Of the ~181K workers followed in a 2012 study by Harvard Business Review, ~60% remained stuck in the same positions five years later.

Starting in 2015, Guild began popularizing the ROI of training for employees, with research showing that every $1 invested into education benefits returns $2.84. Although employer attitudes were already beginning to shift with greater recognition that frontline employees are a differentiator, COVID-19 fundamentally changed everything by exposing America’s two-tiered workforce and pushing the importance of “essential” workers to the forefront of national discourse. Two COVID-19 catalysts created massive and lasting impact:

• Large and persistent worker shortages in essential industries (such as nursing or teaching) due to burnout, which led to early retirement or individuals leaving for remote-first careers.
• Growing employer (and cultural willingness) to accept online vs. in-person training in roles where traditionally all training was in-person, coupled with an increasing availability of cost-effective solutions.

Both catalysts have accelerated adoption by employers who now report internal mobility as their second highest priority, behind keeping employees engaged. These employer commitments are a key driver in the lofty expectations that the frontline worker training market will grow from ~$22B in 2023 to ~$47B by 2028 (~16% CAGR). That said, we are still in the early innings with only 2% of employers reportedly in the late stages of deploying large-scale upskilling and reskilling initiatives.

Other considerations in this space include the growing role of automation and the need to reskill workers as a long-term tailwind along with the immediate impact of AI. Similar to the adoption of e-learning in 2020, we believe that AI has the potential to deliver similar or better learning outcomes due to personalization, at a lower price. Although we are just beginning to understand and unlock GenAI’s potential, a few use cases that we are excited about include personalized learning assistants or career coaches and hyper-personalized content and learning pathways.

Areas Our Education Impact Fund Is Focused On
Across the five elements of employee learning—onboarding, upskilling, compliance, reskilling and outskilling—we are most excited about upskilling and reskilling, given their potential to drive lasting and potentially transformative career outcomes and advancement. Upskilling companies have continued to gain momentum over the past ~10 years with many well-positioned to raise later-stage funding or, as in the case of Guild, nearing an IPO. Despite incumbents, we continue to see plenty of white space as new training models, such as apprenticeships, gain broader employer adoption and in high-regulation industries that have been more resistant to change, such as healthcare.

Examples of upskilling solutions from across our portfolio include:

• CareAcademy, which is a leading online training platform providing upskilling pathways for home health aides, with ongoing education and specialization.
• Interplay Learning, which is a leading provider of online and VR-simulation-based training for essential skilled trades jobs, creating better learning and career pathways.

We also see interest in reskilling solutions only growing over the next decade, as employers and governments increasingly face the reality of needing to reskill workers being displaced by new technologies, such as AI.

Investments in reskilling solutions are an emerging area for us but one investment we’ve made is Pathstream—a career reskilling platform empowering frontline workers, with a focus on financial services, to advance their careers by working with a coach to select their best-fit career path and complete targeted training programs.

Although companies with employer-led go-to-market motions faced near-term headwinds in 2023—as hiring shrank, layoffs spiked and L&D budgets were compressed—we remain bullish on the long-term market opportunity. Companies continuing to invest in and deliver strong win-win propositions for employers and their employees will be best positioned once market conditions improve
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Hopefully, this post has introduced the market and impact opportunity that has us so excited and has driven our commitment to backing innovative companies in this space. Our next post in this series will dive into healthcare, an industry we believe is desperate for solutions, to highlight some of the extraordinary companies that are rethinking the future of how training is conducted and delivered. If you have made it this far, thank you for taking the time to read this post, and keep an eye out for future editions!

If you’re building a company in this space, please get in touch—we’d love to hear from you!