Skills Savings Accounts

The U.S. Chamber of Commerce Foundation proposes to develop and test a new type of skills savings account, that would function much like a Healthcare Savings Account, but used for quick and easy access to skill development opportunities that can be documented and verified in a digital way. Tied to the individual, these accounts can be portable across jobs and provide a continued means for employees and their employers to build cash reserves to support upskilling and reskilling. Third parties, including government agencies, could also make contributions thereby empowering workers with the resources needed to continually develop their skills. What is more, these accounts could share the same tax benefits or more that traditional employer sponsored tuition reimbursement programs benefit from. 

Should we be successful, 60 million workers employed by small and medium sized businesses could have anywhere from $50 billion to $100 billion available to them annually for upskilling and reskilling resulting in hundreds of millions of digitally verified skills increasing their competitiveness in the labor market resulting in increased economic mobility and advancement.

This proposed innovation builds on recommendations from a recent Talent Finance workgroup on reimagining employee education benefits that was co-chaired by the Chamber Foundation and the Society for Human Resource Management (SHRM). The report can be access at https://www.uschamberfoundatio...

Skills savings account would leverage modern financial services technology to operationalize a new employee education benefits that functions much like a Healthcare Savings Accounts. It would make use of debit technology and would automate the purchasing of training to ensure funds are used for an allowable expense. The accounts can be accessible online and through one's mobile device for ease of use.

In addition, skills savings accounts would require that any skills received would be documented through a Learning and Employment Record (LER). LERs are a new form of digital record or transcript that is based on a data standard and linked to an individual so they can be used toward a wide variety of use cases, including applying for a job or advancement opportunity, searching for jobs, applying for continuing education, searching for career pathways, and sharing ones skills with peers and colleagues.

LERs can be paired with a blockchain technology or other distributed ledger technologies which verifies the transmission of the skills-based LER to the individual.

You can learn more about LERs and the enabling technology that supports them through the T3 Innovation Network at https://www.t3networkhub.org/. You can also video this informational animation: https://www.t3networkhub.org/r....

The beneficiaries of these accounts are incumbent workers for small and medium sized businesses. They can also be for workers in large companies, though we believe small and mid sized businesses are ideal users of these accounts given a much lower barrier to provide (they simply need to make deposits) compared to higher cost tuition reimbursement programs.  

While this proposed innovation is agnostic in terms of specific demographics (e.g., underrepresented populations, historically disadvantaged) and industries, they can be initially demonstrated with priority populations or workers in a specific income bracket or with a particular education level (e.g., high school or some college, but no college degree).  

The Chamber Foundation believes these new accounts are a solution fit for today's workforce challenge, which is upskilling and reskilling workers in a dynamic, ever-changing economy. Currently incumbent workers, particularly those working for small and medium sized companies, lack the financial means to pursue skills attainment while they are gainfully employed. And as more employers move to skills-based hiring, we believe this is an apt solution to empower more workers with skills rather than traditional approaches that favor college degrees. This innovation would also allow any small to mid sized business to participate given they would be operationalized by banks and would only require them to make period contributions, even if they are modest (compared to reimbursing tuition and college degrees). What is more, we believe these accounts, once implemented at scale, will galvanize a new industry geared toward skills-based incumbent worker training. They will also drive a new generation of skills-based records that will empower the American worker. 

Given the challenge includes how technology can help small companies assist workers in advancing their education and skills, we believe this solution aligns closely with it. It not only uses the banking technology to empower workers with more funds upfront for quick and easy access to upskilling and reskilling, but it leverages technology to document and verify skills attained in a digital way (LERs).  An potential indirect benefit is that more online, short-term, skills-based learning opportunities may become available and accessible to workers given this would be a new sources of funds that are primarily supplied by employers and employees.  

Our theory of change is that businesses are uniquely positioned to drive change and create opportunity for learners and workers. By changing employer behavior and processes we can unlock more opportunities for advancing upward economic mobility. 

This proposed innovation seeks to leverage employer leadership through the employee education benefits they can provide. This builds on long established investments employer have made (approximately $30 billion annually) but provides a new product or mechanism to invest in skills. By targeting these accounts toward skills instead of degrees, we believe smaller dollar contributions can go much farther and involve more employers (i.e., small businesses) and employees (though they can be used toward degree programs as well). In other words, by changing how employers invest in these benefits, we can transform how incumbent workers upskill and reskill in a dynamic economy as well as how their skills are documented and shared through technology (LERs).

Much like healthcare savings accounts have proven to be attractive and effective for helping workers manage their healthcare needs and the costs associated with them, skills savings accounts have the potential to be successful as an employer-backed education benefit.

This solution has not yet been fully designed and deployed. Funding from this proposal will help us complete the product design and pilot plan. Should we be successful, we estimate that 100 small to mid sized companies or more would be involved in the first year and it would scale to 10,000 or more companies within five years. In the first year we estimate at least 500-1,000 workers would benefits from the accounts and within five years that number would grow to well over 50,000.

The solution can be applied to employers and employees in any community, but will likely be tested in two states to start. Key decision makers are employers who would adopt the solution and the bank(s) that would operationalize it. Company CEOs and HR leaders will need to buy-in to the solution in order to make it a recognized employee education benefit. The education and training partners would be responsible for issuing the resulting LERs to digital wallets held by the employees.

The Chamber Foundation would likely test with one bank initially but then expand the product to be a multi-bank solution.  

Given this is a private sector led product, government buy-in would not be necessary unless the accounts were to receive a tax benefits or special treatment, or if government wanted to be a contributor to the accounts.

The Chamber Foundation is widely known and respected throughout the business community. Given our affiliation with the U.S. Chamber of Commerce, the Chamber Foundation is seen as a leader in the business community that can bring about positive social impact at scale, including in education reform and advancing workforce development solutions. 

This solution is part of the Talent Finance initiative, which is managed by the Chamber Foundation. That initiative enjoys the support of prominent national organizations such as the National Governors Association, SHRM, Education Finance Council, Federal Reserve Bank of Atlanta, and National Association of Workforce Boards, as well as local stakeholders and leaders, such as the Vermont Business Roundtable and Greater Houston Partnership. We will work through Talent Finance to organize the pilot and recruit partners.

Should we be successful, we estimate that 100 small to mid sized companies or more would be involved in the first year and it would scale to 10,000 or more companies within five years. In the first year we estimate at least 500-1,000 workers would benefits from the accounts and within five years that number would grow to well over 50,000. Our plan is for this to become a ubiquitous product and benefit eventually reaching 60 million workers or more resulting in hundreds of millions of new skills for the talent marketplace.

Funding from this challenge will help us complete the design of the product and pilot test. It will help us recruit the partners needed to implement the solution and gather evidence based on its results and impact. 

The Chamber Foundation can use support in finishing the product design and planning the pilot. We also need support in leveraging the financial service technology that can operationalize the accounts. This includes access to subject matter experts that can consult with us and/or advise the project. We will also need experts to help us develop the long term business plan that supports scaling the proposed solution and sustaining it.