LinkedOut: The Middle-Skills Prospect Riddle

Question: How will employers fill the growing vacancies for jobs requiring middle-skills – those needing at least a high school diploma but less than a bachelor’s degree, accounting for about 24% of the U.S. workforce?

Answer: Not through LinkedIn.

For Frank Britt, CEO of Penn Foster, this comes as no surprise. Among the 75,000 learners using Penn Foster’s employer-funded training programs, just 9% are active on LinkedIn. Britt refers to these students as “LinkedOut”: adult workers seeking “middle-skills” jobs, outside of the career development pathways favored by postsecondary students.

While “LinkedOut” adults often use employer-pay companies like Penn Foster, could middle-skills programs represent a greenfield opportunity for two- and four-year institutions?

Penn Foster: Next-Gen Middle-Skill Employment Services?

Penn Foster (PF) prides itself as a 125-year-old provider of “affordable, accessible, and career-focused learning.” As is the case with similar for-profit brands, it has retooled from a correspondence school to an open-enrollment, online provider of high school diplomas, sub-baccalaureate credentials, and even bachelor’s degrees. Its most recent rebirth came in 2018, when it was acquired by a Bain Capital-led investor group that included former Massachusetts governor and Democratic presidential candidate Deval Patrick.

While PF’s students can opt for a zero interest, “pay-as-you-go” monthly tuition fee, they cannot access any Federal Title IV aid. Fees for its sub-baccalaureate programs can be as low as $10 per week, and are accredited by the Distance Education Accrediting Commission (DEAC).

PF envisions its future, however, as a scalable provider of high-demand, middle-skills credentials, with tuition paid for by a broad consortium of employers, staffing agencies, and regional workforce development organizations. PF currently partners with hundreds of middle-skills employers, such as Penske, CVS, and Job Corps. In its latest iteration, it has modularized its curriculum and emphasized a proprietary online and blended delivery platform. As an alternative to federally-backed schools, PF argues that it can achieve massive growth at low or no cost to the “LinkedOut” consumer seeking a middle-skills job.

PF is not making some wild-eyed, uninformed bet. According to CEO Frank Britt, PF’s surveys of both students and prospective employers suggest strong demand for extremely low-priced programs with low thresholds of entry. For these “LinkedOut” learners, brand and cachet are subservient to their desired outcomes: stable and good paying jobs explicitly tied to their programs of study. Recent analyses peg middle-skills median wages at $55,000, and forecasts project continued growth in PF’s most popular programs, such as the construction trades, hospitality industries, healthcare, and veterinary firms.

What can traditional higher education learn from PF’s business model? Is there enough demand for conventional institutions to justify adding middle-skills programs?

Commitment, Hesitancy, and Skepticism

Figure 1 identifies the credentials most desired by respondents to the Eduventures 2019 Adult Prospect Survey™. It includes responses from adult prospects who were divided into three broad categories based on their stated levels of demand for continuing their educations:

• 17% Committed Prospects: those who will “definitely or probably” enroll
• 26% Hesitant Prospects: those who would be “extremely or very interested” in enrolling if time and money were no object
• 25% Skeptical Prospects: those who would be “somewhat or slightly interested” in enrolling if time and money were no object

Here we can begin to get a clearer sense of the demand for the middle-skills programs that PF and others believe are their futures.

Figure 1.

While there’s strong demand among “Committed” prospects for graduate-level credentials, ”Reluctant” and “Skeptical” prospects express greater interest in programs offering credentials related to middle-skills pathways. This could be a cautionary signal for schools considering a middle-skills enrollment strategy: while there’s an ample supply of prospects who need these credentials, they will be harder to attract, enroll, retain, and support.

When asked more specific questions regarding top preferences for program features, additional patterns stand out. As Figure 2 illustrates, “committed” prospects express greater interest in career services and easier transfer policies, while their more cautious peers are more likely to prioritize features that ease enrollment obstacles. This suggests that institutions that rely on conventional enrollment and financial aid models will encounter additional headwinds with these prospects.

Figure 2.

What do these insights tell us about PF’s focus on the “LinkedOut” adult learner?

On the plus side, PF may be on the right track with its target population. While accredited institutions will appeal to degree-seeking adults willing to access Title IV funding, a large pool of middle-skills prospects will opt for shorter, employer-funded programs. PF’s experience and capabilities in serving the needs of these reluctant yet credential-hungry prospects, is a valuable differentiator.

One area of vulnerability, however, is whether PF can continue to adapt and improve a deep reliance on online and blended delivery modes. Our Adult Prospect Research™ data suggests that adult prospects continue to view wholly online learning as tolerable, but not always preferable.

The Bottom Line

What lessons might PF’s approach have for degree-granting Title IV institutions? While PF is still in a period of transition, schools should take note of several insights:

1. While adult learners are everywhere, those middle-skills prospects can be maddeningly diverse, fickle, and reluctant to continue their educations.
2. As postsecondary enrollment and tuition revenue decline, employer-paid programs could be ascendant, especially for middle-skills jobs. PF’s ability to build alliances with large national employers seeking middle-skills workers could be filling a gap that conventional institutions have ignored for too long. The tougher question is whether this is a replicable blueprint for conventional schools.
3. Older adults seeking to remain employable through intensive upskilling could be motivated less by brand name credentials and more by easing or eliminating barriers to enrollment and avoiding further indebtedness.

While today’s postsecondary sphinx may not completely devour those schools that are unable to answer the riddle of the “LinkedOut” middle-skills worker, PF and similar providers may be on a winning, albeit unique, path.