Uncertainty is perhaps the only certainty in the current economic climate. We do not know how long it will take for inflation to return to normal levels, or what interest rates will be by then. We don’t know how long the public markets will continue on their bear run. And we do not know how the American consumer will react to seeing their investments as well as their cash depreciate in value.
What we know from the past, though, is that the education sector will weather this crisis well and help rebuild the economy. The question: Where will people seek it?
Usually, in times of economic downturn where jobs are scarce but labor is plentiful, people go back to school to learn new skills and make themselves more competitive in the market. We saw this during the last recession, when undergraduate enrollment increased by almost 2.5 million, or nearly 16 percent, to 18.1 million students from 2007 to 2010.
This time however, the situation is flipped. The labor market is tight, with low unemployment rates and employers eager to hire. There are many openings but few available or qualified workers to fill them. At the end of last year, there were nearly two job vacancies for every unemployed worker, and unemployment rates remain low today. What’s also different is that college isn’t the go-to source for upskilling and reskilling as it once was. Spring 2022 enrollment dropped 4.1 percent, extending a trend that started pre-pandemic. As a result, employers are investing more in education offerings to upskill their internal talent and attract others.
Education is resilient. It is a powerful lever for upward social mobility, and whether it is offered through traditional environments or elsewhere, people will seek out opportunities.
At Reach we are seeing this play out in the first half of 2022 with all our portfolio companies focused on skill training for professionals reaching record numbers of students served. For example, Springboard and Coderhouse, which both provide digital skill training to early and mid-career professionals, have had record enrollment rates. Coderhouse has doubled student enrollments in the first eight months of 2022, to almost 60,000. Similarly, Springboard’s most recent cohort starting in September reflects an 80% year-over-year growth rate and a 10,000 annual enrollment run rate.
Historically, the one education sector that has suffered during a recession is corporate training and development for employees. These programs have been primarily focused on compliance and mandatory training (often HR related), but this is quickly changing. With the emergence of automation and digitized operations, companies have been investing in reskilling their workforce. Taking a step further, many large enterprises have started to offer education as a benefit for employee retention and engagement. As a result, learning and development is unlikely to see a slowdown with blue- and white-collar workforce still in high demand.
We have seen companies like Amazon launch the Amazon Career Choice program to help employees, particularly warehouse staff and other hourly workers, pursue their studies and get the degree and skills they need to advance in their career — either within the company or beyond. Guild is doing something similar with partners like Walmart, Disney and Pepsi. These programs are free for workers; the employer foots the bill. As labor continues being tight, even in this market, these initiatives will become even more widespread.
Education enrollment, particularly in skilled training (mostly online) schools will continue to grow as students look for flexible options to reskill. As covered in our 2021 ReimaginED report, 74% of higher-ed students are nontraditional and want flexible learning options. Companies are also investing in their employees.
In turbulent times, education is a steady market. Most importantly, it can contribute to building the fabric that will make the workforce stronger once we emerge from this period of slower economic activity.