Who is serving the rest of the market?

A survey by the Society for Human Resource Management (SHRM) found that 45% of the workforce in the United States. To further clarify the picture, the U.S. Census Bureau, on behalf of the National Center for Education Statistics (NCES) and the National Center for Science and Engineering Statistics (NCSES), has just published the results of a nationwide survey that measures the prevalence of licenses and certifications, as well as the prevalence of vocational certificates (most frequently offered by Trade Schools). The results show that just over 20% of the American workforce has received a vocational certificate, and 41.5% of those vocational certificates were issued by Trade Schools.So who is serving the rest of the market? Specifically in the case of vocational certificates, the second leading provider of these credentials is Community Colleges, often referenced as the primary competition to Trade Schools. But sector of competitors is emerging, Alternative Providers. These alternative providers represent only 13.8% of all vocational certificates held in the workforce, however they are growing rapidly in popularity among Gen Z'ers.

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Stepful is an AI-powered online training company that provides affordable, accelerated programs for individuals, particularly those without college degrees, to launch careers in high-demand healthcare roles such as Medical Assisting. The company was recently named TIME Magazine's #1 EdTech Company in the United States. The company was founded in 2021 and has received $56.1 million in venture capital funding to date. The company has experienced rapid growth, growing from just 50 graduates in its first year, to 30,000 graduates just three years later. The company now boasts having 20,000 active monthly learners. If Stepful was a Healthcare Trade School, it would rank as the third-largest behind on UEI and Ultimate Medical Academy and just ahead of Pima Medical Institute.

Gen Z's share of Trade School enrollment is growing

Part of the reason for the rise of these alternative providers in the vocational and technical education space is the growing share of the audience that is a member of Gen Z. Members of Gen Z vary greatly from older generations in their career expectations as well as their preferences in regards to education and training, and Gen Z also holds a number of perspectives that appear to be contradictory. For example, multiple surveys have shown that members of Gen Z are less likely than their Millennial counterparts to prefer fully online, self-guided learning. Nevertheless, Gen Z has quickly taken to alternative providers in the vocational and technical education space. Additionally, Gen Z is much more skeptical about the value of higher education than their older counterparts, and at the same time, they are less likely to recommend Trade Schools to young people as an alternative than older adults.So what do their revealed preferences indicate as opposed to their stated preferences in the case of Trade Schools and other vocational and technical education paths?Members of Gen Z are more likely than older generations to seek out alternative providers of vocational certificates as opposed to Trade Schools. While 41.5% of all vocational certificates in the workplace were issued by Trade Schools, only 29.4% issued to members of Gen Z have been from Trade Schools. Furthermore, from 2017 to 2022, the number of vocational certificates issued by Trade Schools to members of Gen Z declined 6.8% from 2017 to 2022, the number issued by alternative providers issued to Gen Z rose 212.7%. As of 2022, these alternative providers of vocational certificates now confer more of these credentials to members of Gen Z than either Trade Schools or Community Colleges do.

How should Trade Schools respond to the rise of Gen Z in their prospective student population?

58% of all enrollments in Trade Schools are members of Gen Z, yet only 48% of the online audience searching for Trade Schools is a member of Gen Z. No doubt, a part of this is caused the social stigma that members of Gen Z report feeling about the decision to enroll in a Trade School as opposed to a college or university. Another part of this disparity is no doubt caused by the fact that, when searching for programs that Trade Schools offer, Gen Z is likely searching different terms.

In the case of two different, leading providers of technical and vocational education in the healthcare field, consider the largest Trade School in that category, Ultimate Medical Academy, and one of the leading alternative providers, Stepful. An analysis of the online audiences of these two websites reveal that the only 0.6% of the combined online audience between the two sites is a member of both audiences. The two sites are offering a similar suite of programs, both to a national audience, and they're being met by very different audiences. Accordingly, Trade Schools should ensure that their online presence and online marketing efforts are specifically geared to include messaging for Gen Z.And what is it that Gen Z wants to hear?Survey data from EAB indicates that members of Gen Z are disproportionately more likely to be driven to pursue further education by their desire to pursue their passions. Survey data from Udemy indicates that they are also disproportionately more likely to indicate a preference for learning by working on real-world projects. And survey data from Deloitte indicates that they are disproportionately more likely to desire flexibility and learning on their own terms.While Gen Z has brought about a new challenge for Trade School leaders, this report contributes to the understanding of how these institutions can reach this growing audience and secure enrollment growth.

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