TIME

Medicine Is About to Get Personal

Photographs by Gregg Segal for TIME Dr. Garrison Bliss is shaking up how primary-­care medicine works

How can Americans get better health care for less money? There's a quiet experiment going on among primary-care physicians, and the results are intriguing

Nowhere outside the pages of Dickens is there a more aptly named fellow than Garrison Bliss. A trim, gray man, he has twinkling eyes and a face lit by a smile of such authenticity that it makes you think of Shaker furniture. But he’s a doctor, not a mystic. And he’s smiling because he believes he and his cousin have found the answer to one of the toughest questions in health care.

The idea is deceptively simple: Pay frontline doctors a fixed monthly fee directly instead of through the byzantine insurance bureaucracy. Make the patient, rather than the paperwork, the focus of the doctor’s day. The result will be happier doctors, healthier patients and a striking reduction in wasted expense.

In one of the more intriguing experiments in the medical industry, Qliance Health, the company Bliss co-founded with his cousin Dr. Erika Bliss, 47, is applying this idea to managing the health of roughly 35,000 patients–about half of them on Medicaid. If it can work for them in Seattle, they say, maybe it could work for everyone.

How the Bliss cousins arrived at this notion is a more complicated story. But it’s one worth telling, because it says a lot about how the U.S.–normally adept at hooking up the buyers and sellers of goods and services–managed to make such a mess of its medical economy. The story starts with the fact that Garrison Bliss, 69, wasn’t always so happy.

He is a primary-care physician, and a career in primary care has become a recipe for misery in the U.S. Nearly a third of all frontline physicians ages 35 to 49 expect to quit within the next five years, according to a 2012 survey by the Urban Institute. Young healers who start with dreams of being Marcus Welby often sour when they meet the realities of the job–which can include seeing patients every 11 minutes and having their performance assessed by how many MRIs they order.

Like so many others in his field, Bliss came to feel that he wasn’t in the business of caring for patients at all. His job was to feed payment codes into the grinding machinery of the insurance companies, rushing from exam room to exam room, ordering tests, making referrals, scheduling follow-up visits in which the cycle would be repeated. He knew that a proper exam, with time for counseling and questions, can take 45 minutes or more. Yet even a 15-minute session became a luxury.

“There are no insurance codes for ‘cure,'” Bliss likes to say.

One day about 20 years ago, two of Bliss’s colleagues announced that they were stepping off the treadmill to create a new kind of practice. They invited a small number of their wealthiest patients to become members of a premium health care group. For a five-figure annual fee, those patients would have immediate access to the doctors. They would be able to schedule appointments on short notice and would never again languish in a waiting room. Should they need to see a specialist, their primary-care doctor would be happy to accompany them as an advocate and translator. This model, which was soon emulated by upscale doctors across the country, came to be called concierge medicine.

Coddling the rich was not Bliss’s bliss. Still, he was intrigued. Could the same idea work at a more affordable price? What if, instead of charging $1,000 per month for each membership, he charged $65? He didn’t have to decorate his clinic like a Canyon Ranch spa or set up shop on Seattle’s most expensive real estate. If he brought down the overhead, would ordinary people pay the equivalent of a monthly cable bill for the satisfaction of having a doctor who knew their histories and cheerfully answered their questions?

Bliss launched an affordable primary-care practice, called Seattle Medical Associates, in 1997–and soon had all the patients he could handle. At last, he was working for them. And he was happy.

Considering the health care model Americans are accustomed to, it can be hard to get your head around the approach Bliss had come to call direct primary care. But here’s how it works: for a flat fee every month, patients have unlimited access to their doctor–in person and by phone or email–for routine things like checkups, cuts and burns, infections, flu shots and skin exams, as well as chronic-condition maintenance like blood tests for diabetes or high cholesterol. Under the law, every American is required to have medical insurance–but direct-primary-care patients can seek less expensive policies, because they require coverage only for hospitalizations, surgeries and other specialized care.

It was working for Bliss, so when he heard that his cousin Erika was miserable after just three years in primary care (“burned out, cooked, feeling like a failure and thinking about getting out,” as she puts it), he shared some of his sunshine with her. “Every time I walk into the examination room, I feel like I’m going to a party!” he sang over the phone. “I think this model I’ve been doing has a lot of potential to change health care for the better. Come help me scale it up.”

Since then, they’ve signed up previously undreamed-of populations: big private employers like Expedia and Comcast, public and industry employee unions like the one for Seattle firefighters and–most radical of all–at least 15,000 Medicaid patients.

The private company’s results so far suggest that the model is scaling up nicely. Qliance now serves some 35,000 patients; the cost of about half of them is paid by the government through traditional and expanded Medicaid programs. Treating a wide variety of patients–young and old, healthy and chronically sick, well-off and poor–Qliance claims to be saving approximately 20% on the average cost of care compared with traditional fee-for-service providers. The company’s staff has tripled over the past year, and Qliance is looking to expand beyond Washington.

Unhappy primary-care docs from across the country are streaming to Seattle to find out if some version of Qliance could be their salvation. The American Academy of Family Physicians, which kept concierge medicine at arm’s length for years, is moving quickly to embrace the direct-care concept. And the promise of greater efficiency and better results has attracted the likes of Amazon’s Jeff Bezos and his fellow billionaire Michael Dell to invest in Qliance.

All of which makes Bliss smile.

A NEW MODEL

Concierge care was originally conceived before Obamacare, and it revved up in response to the Great Recession as an escape hatch for doctors fleeing the status quo. The existing fee-for-service system pays caregivers a certain amount for each test, diagnosis and procedure–which, according to critics, encourages overtreatment instead of preventive wellness care. Qliance, along with a growing number of similar operations, aims to be more than an escape. It seeks to be the answer to the quest of health care reformers: healthier patients at a lower cost. Fix the way primary-care doctors are paid, the Blisses argue, and we can cut unneeded tests, premature procedures and excessive ER visits.

The driving insight here is that primary care and specialized care have two very different missions. Americans need more of the first so they’ll need less of the second. And each requires a different business model. Primary care should be paid for directly, because that’s the easiest and most efficient way to purchase a service that everyone should be buying and using. By contrast, specialty care and hospitalizations–which would be covered by traditional insurance–are expenses we all prefer to avoid. Car insurance doesn’t cover oil changes, and homeowners’ insurance doesn’t cover house paint. So why should insurance pay for your annual checkup or your kid’s strep swab?

When people get good primary care, their maladies are diagnosed more quickly and can be managed before they grow into crises. Fewer patients wind up in expensive hospital beds. Emergency rooms treat genuine emergencies, not routine infections and minor injuries. Patients receive timely advice and encouragement from a trusted physician to shed those pounds, change that diet, drink a little less and exercise more. The fee-for-service insurance model discourages this approach. It pays mainly for treating disease, not preventing it. Worse, it makes the life of a primary caregiver so exhausting that students in medical schools and nursing schools are avoiding the field altogether. According to Colin West, a co-director of the Mayo Clinic’s program on physician well-being, the U.S. faces a shortage of tens of thousands of primary-care doctors–at a moment when we need them more than ever. In a definitive survey of third-year med students published in the Journal of the American Medical Association, he found that only about 20% were headed into primary care.

West was particularly dismayed by the number of students who started medical school with primary care as their ideal but gave up by year three. They had figured out, he explains, that the burdens of our health care system “roll downhill to the primary caregivers.” To make up for unpaid time spent filling out forms, docs must see more patients to generate more payment codes.

At the tangled heart of this dysfunction is Medicare, which by its sheer size sets the standards for insurance reimbursements. Specialists dominate the panel that sets its payment rates. Thus the system values surgeries, scans and other procedures more than it values checkups and management of existing conditions. West, a primary-care doc, explains it this way: “If I put in an hour with a patient, I will be reimbursed for one exam–the same payment I would get for seeing that patient for 11 minutes.

“Meanwhile, an ophthalmologist might perform three cataract surgeries in that same hour, and each surgery might be reimbursed at twice the rate of my exam. So that doctor is making six times as much money.”

And if the eye patient has questions after the surgery about her medicine or her recovery, the specialist’s office is likely to suggest that she consult with her primary caregiver. After all, neither doctor gets reimbursed for answering questions on the phone, so the chore is often traded like a hot potato. “We say primary care is critical to a healthier future,” West says, “but in every way we show value, it is at the lowest level.”

DIRECT ACTION, IN ACTION

On a rare crystal day in Seattle, I paid a visit to the headquarters of the online travel agent Expedia. For over a year, Expedia has paid Qliance a fixed per-patient fee to provide a direct-primary-care option for HQ workers. Specialists and hospitalization are covered by traditional insurance.

Expedia was motivated to try direct care for reasons that are familiar to business executives everywhere: health care bills were skyrocketing, but employees were not getting healthier. “We had a number of catastrophic illnesses in 2011 and a disturbing number of deaths–12,” vice president for human resources Connie Symes tells me. “We found Qliance and their model of spending quality time with patients addressed our need to get employees involved in their own care.”

Qliance opened a clinic in Expedia’s building. The clinic is staffed by three doctors and includes several exam rooms, a small lab to perform routine tests, an X-ray machine and a stock of commonly prescribed generic medicines. Expedia employees zip from their desks to the doctor’s office with little or no waiting time. New patients spend 45 minutes elaborating their medical histories; after that, most visits can be handled in 15 to 30 minutes. Patients can also reach their doctors by text and email.

At the end of last year, Expedia surveyed the staff, Symes says, and the response was emphatic. More than half the employees had tried Qliance, and of those, more than 95% said they were satisfied. “They love the doctors,” Symes says. “They love the personal relationships they’re forming.” And although Expedia still classifies Qliance as an experiment, Symes says direct primary care, with its emphasis on prevention, “is taking us in the right direction on lowering costs.”

Seems too good to be true, I tell Erika Bliss, Qliance’s CEO, and she replies that she hears that a lot–but that’s because we haven’t seen, from the inside, how much waste and inefficiency is larded into the existing system. With enough freedom, she says, a primary caregiver can easily find lots of ways to deliver superior health care at a lower price. Bliss suggests that proper primary care should cost an average of about $1,200 per patient per year and will save significantly more than that in emergency care, specialist visits and treatment of chronic diseases.

“The existing system is built around diagnosing and treating complex cases. It rewards expensive, invasive and complicated solutions. But patients don’t want to be complex cases,” Bliss says. She cites a famous study by the Institute of Medicine that estimated that 30% of each health care dollar is wasted in the U.S. While reformers struggle to “bend the curve” of rising costs by squeezing out the waste, “we just lop it off,” she says.

While the results at Expedia are intriguing, the real test of direct primary care began when Qliance became the first practice of its kind to join the Medicaid system. Medicaid patients can be a challenging population because many of them have untreated medical conditions after years of inadequate health care. Absorbing thousands into the Qliance practice–at a reported cost to the government of about $700 per person per year–had made for a roller-coaster year. Medicaid patients are promised the same care as other Qliance customers.

One of those new patients is Jim Papadem, an out-of-work printing-press operator in his mid-50s from Redmond, Wash., who had long ignored his deteriorating health out of fear that the cost of treatment would ruin him. “I was pretty sure I had diabetes, and it turns out I had atrial fibrillation too,” he says. At his first meeting with his new Qliance physician, Dr. Randy Leggett, Papadem detailed his many symptoms. Leggett dispatched him to an eye specialist for treatment of a diabetes-related condition. She also prescribed two generic drugs to manage his blood sugar. Next came a referral to a cardiologist to treat the heart malfunction, which Leggett now monitors routinely. “She calls me now and then to check up on me at the end of the day, and when I have questions, she is available to help me connect the dots,” Papadem said.

So where are the cost savings? For Papadem, proper primary care reduces the likelihood of blindness, stroke and heart failure. More immediately, the Qliance patients now have an alternative to getting their care at the local emergency room. According to a 2010 survey of ERs in Washington State, the vast majority of emergency-room complaints are not actual emergencies. Instead, they involve common maladies that are easily handled by primary caregivers. With the average cost of a child’s ER visit running almost $2,000–and the average adult ER visit more than $4,500–Qliance more than pays for itself every time it keeps a client out of the ER.

Qliance’s large, diverse patient group makes it the first direct-care firm in a position to compile compelling statistics on the promise of direct care. “What will tip the scales for us is when we can produce hard data on savings and outcomes,” Bliss says hopefully. That takes some time, but the numbers are firming up. “If we can show that we are getting 15% to 30% of the costs out by using a model that doctors like and patients want, the whole system is going to flip pretty quickly.”

Centene Corp. is a Fortune 500 company hired by Washington State to manage its Medicaid plans. Jay Fathi, CEO of Centene’s Washington affiliate, tells me that “we already have evidence to show us that they are doing a good job.” Confident that the direct-primary-care model has legs, Centene has joined the growing roster of Qliance investors.

SO WHAT’S THE CATCH?

Of course, there’s a catch–at least in the short term. Docs on the treadmill are often responsible for 2,000, 2,500 or even 3,000 patients each. Direct-primary-care doctors serve far fewer patients. In a nation where there is already a shortage of primary caregivers, this would seem to disqualify direct care as a mass solution.

“It’s a trend that will probably grow a bit, but I think there is probably some ceiling to it,” says Ceci Connolly, managing director of the Health Research Institute at consulting giant PwC. Connolly foresees direct care as one part of a wider mix of patient-directed primary-care options, from drugstore clinics and Weight Watchers outlets to wearable monitors and digital apps.

But leaders of the direct-care movement argue that in the longer term, their model can solve the shortage of frontline doctors. By giving primary caregivers a good living doing work they can love, direct care encourages young physicians to follow their heart.

On a recent visit to Wichita, Kans., I met a young doctor who is doing that. Josh Umbehr, 33, was an aspiring primary-care doctor at the University of Kansas when, like many others, he grew horrified by the fee-for-service system. “It was crazy,” he said. “Insurance paid more for a prostate exam if it was done on a separate visit from a checkup. So the patient would have to come in twice. Medicare would pay for cleaning out earwax–but only one ear per visit. You had to schedule a second appointment for the other ear.”

Then he discovered direct care. As the son of a garbage collector, he understood the idea of one price for unlimited service. With classmate Doug Nunamaker, 34, Umbehr launched a moderately priced clinic called Atlas MD. The idea caught on enough that they recently hired a third doctor. Now they care for about 1,800 patients at an average monthly price of about $50 each.

An entrepreneurial dynamo, Umbehr paints a sky’s-the-limit future in which primary care is transformed into medicine’s most valuable role. To hear him tell it, he’s already living that dream, seeing an average of five patients per day–with other interactions by phone, text and email–while earning $200,000 to $240,000 per year. (The national average for primary-care physicians is well below $200,000.)

His in-house pharmacy, run out of a closet, saves patients hundreds of dollars per year on meds–a major selling point for those who blanch at his monthly fee. Take the uninsured mother who could not imagine paying $120 each month to cover herself, her husband and their two kids. Umbehr asked if she was taking any medications, and she said that was the problem: her prescriptions cost $138 per month. Umbehr buys the generic version wholesale for $1.55. “I told her her membership would cover the drugs. We eat the buck and a half as a cost of doing business, and she gets primary care for her family. At the end of each month, she’s 18 bucks ahead.”

When people say this is going to worsen the physician shortage, Umbehr says, “No. The current system is worsening the physician shortage. The ship is already sinking. We probably talk to 10 doctors per week who are burned out, going bankrupt, ready to retire years before they ought to. And when they see they can take better care of their patients and never deal with insurance companies again, and earn $210,000, $220,000, $250,000 per year, you’re going to see physicians flocking.”

Wouldn’t that be something? After so many years of dire forecasts, of blue-ribbon panels and expert commissions, of alphabet agencies and battles on Capitol Hill–wouldn’t it be amazing if the health care revolution finally arrived in the form of simple family doctors offering better care in exchange for a happier life? It’s worth a try, because if it works, an awful lot of people will be wearing that blissful smile.

TO SEE MORE SOLUTIONS GO TO http://www.time.com/solutionsforamerica

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TIME 9/11

Watch How One Company Is Keeping the 9/11 Survivor Tree Alive

It was found badly broken and burned among the rubble at Ground Zero

Perched at the tip of lower Manhattan, the 9/11 memorial is surrounded by skyscrapers, covered in concrete and has an elaborate system of subway tunnels running underneath. That’s not the most optimal conditions for nurturing the more than 400 trees that grace the site.

The trees are an integral part of the design of the memorial, symbolizing life and rebirth, and when fully grown will create a canopy of archways leading visitors around the area that memorializes the victims of the Sept. 11, 2001, attacks.

In 2007, team members from Peter Walker and Associates, the firm that designed the 9/11 memorial, contacted Baseline Inc. and asked them if their technology would be able to help monitor the trees at the site and keep them as healthy as possible.

Baseline Inc. put their moisture sensors in with the trees while they were growing at a nursery in New Jersey and have continued to monitor them since they were moved to their new homes near the Freedom Tower.

Of all the trees, the Survivor Tree stands out for something greater. It was found badly broken and burned among the rubble at Ground Zero, and then nursed back to health in Brooklyn and replanted at the site. The new life springing from its limbs is a living reminder of both the past and the present, symbolizing resilience and survival.

John Fordemwalt, President at CEO of Baseline Inc., tells TIME that he and his team are committed to making sure that none of the trees, including the Survivor Tree, will die, “as a testament to the lives that were lost and the heroism of that day.”

TIME Solutions for America

Disruptive Technology Is Changing How Kids Learn

Research show new tools can make kids more engaged and more creative

In a few weeks, the halls of a school in Nanuet, N.Y., will teem with mini race cars. The vehicles will sport custom-designed wheels, each set carefully tuned in diameter and thickness to achieve maximum speed.

But the cars’ makers aren’t college-level engineers; they’re middle-school students attempting to learn about physics and technology by using a device that combines both–the school’s 3-D printer. “It’s rewriting what’s possible” in education, says Vinny Garrison, the teacher who organizes the races.

It’s not the only innovation doing so. Nearly three-fourths of U.S. teachers use technology to motivate students to learn, according to a survey by PBS LearningMedia. And that tech is getting smarter: students can now virtually tour ancient worlds to learn history, take quizzes via smartphone and more.

Most of the changes are designed to better prepare U.S. students for careers in fast-growing fields like science and engineering. But they can come at a cost–and not just financially. A $500 million plan to supply Los Angeles students with iPads was recently suspended after students bypassed content filters and some parents complained that the initiative was pulling focus from much needed building repairs.

So far, however, research shows that using next-gen tech in the right ways can make students smarter, more engaged and more creative. Here is a look at six new technologies that are shaping the classrooms of the future.

TO SEE MORE SOLUTIONS, GO TO time.com/solutionsforamerica

TIME Education

What it Really Takes for Schools to Go Digital

Margaret Ramirez—The Hechinger Report Students work on MacBook Air laptops in science class at East Iredell Middle School in Statesville, N.C. on May 19, 2014.

President Obama hailed Mooresville, N.C., as a model for the future of public education. But a neighboring district offers a more accurate picture of the challenges most schools face in bridging the tech divide

As a hazy morning sun rises over this rural North Carolina farming community, middle school students settle into their seats and lift their MacBooks, each face illuminated by an electronic glow.

A seventh-grade Social Studies class is rapt by videos about the toll of World War II, while nearby, sixth-graders work through online math drills, testing their knowledge of ratios and percents at a rapid clip. Across the hallway, English and Language Arts teacher Lori Meyer marvels at how much her eighth graders enjoyed doing their final project: a research paper and iMovie on the 1960s.

“This is the first time in my 12 years of teaching that students said writing the research paper was their favorite assignment,” Meyer says, “and I know it was due to the laptops.”

North Iredell Middle School, about 60 miles north of Charlotte, leaped into the digital learning age in March when it gave each of its more than 650 students MacBook Air computers. The gear is part of a $20-million federally funded plan by the Iredell-Statesville Schools District to issue MacBooks to some 11,300 students across nine middle schools and seven high schools. The grant, part of the federal Race to the Top program, is intended to convert the district to a hybrid approach fusing traditional teaching with digital instruction, a concept known as blended learning that has captured national attention.

“This is about changing the way we instruct students,” says Patrick Abele, executive director of the federal Race to the Top District grant. “It’s not just about technology…This is about having teachers be highly effective and highly engaged with students to close academic gaps.”

Iredell-Statesville didn’t have to look far to see the potential. The neighboring Mooresville Graded School District has been hailed as a national model for the future of technology-aided public education since it made the digital jump in 2009. Last year, President Obama chose the district as the site of his announcement of a new federal program to connect nearly all American schools to high-speed Internet during which he praised Mooresville’s digital classrooms.

Yet while the district’s academic improvement since the digital switch has been substantial, it is not a particularly representative model for the rest of the nation. Mooresville is a relatively small district of eight schools and 6,000 students. Just next door, Iredell-Statesville – with 36 schools and nearly 21,000 students – offers a more realistic portrait of the potential and challenges for larger school districts attempting to navigate the digital conversion.

Iredell-Statesville pulls students from a bucolic cross-section of NASCAR country, a mix of kids from of suburban enclaves and rural farm communities. It’s predominantly white, though not entirely — nearly 69 percent of students identify as white, 14 percent as black and 11 percent as Latino, according to the district’s most recent enrollment figures. And it is not wealthy. Nearly half of students are eligible for free- or reduced-price lunch, a measure of poverty.

The achievement gaps among black, Latino and limited-English students are significant, says Melanie Taylor, associate superintendent of curriculum and instruction. In 2012-2013, only 47 percent of black students and 50 percent of Latino students in grades four through eight scored proficient on math and reading end-of-grade tests, compared to 78 percent of white students. In that same year, only 13 percent of black students and 22 percent of Latino students in 11th grade scored above average on the ACT, compared to 53 percent of white students.

Digital resources had been scant. The school lacked the money to truly integrate technology into the classroom and the early efforts were hampered by painfully slow school Internet connections.

But that began to change in December 2012, when the district was awarded the $20 million Race to the Top grant by the Department of Education. By June 2013, the district had hired 15 full-time blended learning coaches to train and support teachers in the transition to digital and personalized instruction. Parents were required to pay a $20 technology usage fee for each student receiving a laptop. In September, the fee will rise to $50, though low-income families can request a hardship fee waiver. District officials called their program IMPACT, short for Innovative Methods for Personalizing Academics, Complemented by Technology.

The first step for teachers was understanding the concept. Last September, before any MacBooks were handed out, the blended learning coaches began training teachers on how to form small groups or “stations” in the classroom, and creating digital lesson plans tailored for each student.

“A lot of it was understanding what blended learning is,” says Erin Walle, a blended learning coach at North Iredell Middle School. “It’s understanding that this is personalized learning. It’s not just putting a student in front of a computer. I think that was the fear.”

Not everyone was on board. In February, about a month before the laptop distribution, East Iredell Middle School Principal Jimmy Elliott held a parent meeting on the laptop plan and was caught off guard when some said they were against it.

“There are games, videos, music and other things on there and I didn’t want him abusing it,” says Sissy Shew, whose grandson attends East Iredell.

Elliott says he was able to allay most concerns by explaining that teachers used filters to block certain sites in class and would instruct parents on how to do the same at home. But he wishes he had made a stronger case at the outset.

“If I could go back, I would do a better job of educating parents as to what benefit or how much benefit these devices can have in the classroom,” Elliott says. “Because we saw immediate change in the way our kids were engaged. I mean, it was immediate.”

Some teachers, especially those with more experience, also struggled with the changes and questioned why technology was being “mandated” by the district, according to school officials.

“The learning curve is significant for some teachers depending on their comfort level with technology,” says Meyer, the English and Language Arts teacher. “But in the end, it makes teaching easier. I enjoy the creativity it brings into my classroom.”

Across the four middle schools where students have been given laptops, blended learning takes on several different forms.

On recent morning at Mt. Mourne International Baccalaureate Middle School, Spanish teacher Victoria Principe divides her class into three groups. One conjugates verbs online, using the site conjuguemos.com; another busily types as they translate a handout on Costa Rica, and Principe sits with a smaller group engaged in Spanish conversation.

At East Iredell Middle School, Michell Fandino, 13, is a digital learning success story. For Michell, whose parents immigrated to North Carolina from Colombia, math was a weakness and she was close to failing in June. But, after about two months with her new laptop, the chatty seventh grader with long dark hair smiles widely and says she is now getting “A’s.”

The secret? Michell said the digital drills on the MobyMax math program allowed her to review problems independently — in class and at home — until she understood them.

“The laptop makes it fun, so it makes you want to work more,” she says. “The teacher can’t just keep going back for you, she has to keep on going with the whole class. So, with the laptop, I keep working until I get it.”

East Iredell seventh grader Andrew Johnson says the ease of emailing assignments has helped boost his average.

“I would always lose my homework,” he says. “With the laptop, there’s no way to lose it…I feel more organized because I know everything is right there.”

Those sorts of responses are why district officials are figuring out ways to keep the program up and running after the federal spigot runs dry. Iredell district leaders estimate the technology expenses will amount to approximately 8% of their $175 million budget, or about $14 million, and Superintendent Brady Johnson says discussions are underway on how to sustain the technology budget after the Race to the Top grant ends in June 2016.

“Everyone in the school district realizes that we are now a technology rich district and to maintain that, sacrifices have to be made,” Johnson says.

It’s still too soon to say if the laptop program will be worth those sacrifices. In Iredell, the real test comes this fall when the remaining 12 schools receive their laptops. Still, many educators are convinced a change has already occurred. For some students, the simple act of having their own laptop has led to a deeper sense of ownership over their assignments and education, says East Iredell science teacher Angela Trusler.

Before East Iredell seventh grader Iyana James received her laptop, she said she never used her home computer for school. Asked how having her own computer has helped her in school, Iyana starts to answer, then has a better idea.

“For science class, I did a PowerPoint on Newton’s Law,” she says. “Can I show you that?”

This story was produced by The Hechinger Report, a nonprofit, nonpartisan news outlet at Teachers College, Columbia University. This story is part of a Hechinger series examining the digital divide in American schools. Read more about how technology is changing education.

TIME Education

Cracking the Girl Code: How to End the Tech Gender Gap

Engineering giants bet on summer camps to inspire more female engineers

Twenty high school girls sit hunched in front of laptops around a polished wooden table at AT&T’s midtown office in New York City. Riya Satara, 17, types a series of ones and zeros to adjust a paddleball game she’s designing so that the ball follows the right trajectory. It’s only her first week learning to code — writing the instructions that tell a computer what to do — but by the end of a seven-week summer stint with Girls Who Code, a national nonprofit that seeks to close the gender gap in the tech industry, Satara and her camp mates will be designing algorithms that do everything from locate public restrooms to detect false positives in breast-cancer testing.

 

This camp is just one of a half-dozen similar programs around the country — many of which are supported by tech giants like Google, Facebook and AT&T — that offer coding classes developed specifically for girls like Satara who have shied away from the subject. “I’m about to be the president of my school,” says Satara, who hopes to become a neurosurgeon. “I can stand on a stage in front of 700 kids, but I was too scared to take a computer-science class where I would have been the only girl in a room of 19 guys.”

 

Changing that kind of mind-set is a national strategic challenge. By 2020, U.S. universities will not be able to fill even a third of the country’s 1.4 million computing positions with qualified graduates. The industry needs to tap the other 50% of the population if it hopes to find candidates for crucial jobs. At present, only 12% of computer-science degrees go to women. “Our motto,” says Reshma Saujani, who founded Girls Who Code, “is infiltrate, infiltrate, infiltrate.”

 

Since it launched in 2012, Saujani’s program has gone from 20 girls in one classroom to graduating 3,000 girls from clubs and camps across the country. Saujani says 95% of graduates want to major in computer science in college.

 

These future female developers are valuable to tech companies in ways beyond simply filling open spots. Most Internet purchases are made by women, and understanding their instincts is a key to business success. “We’re falling behind the rest of the world if we don’t teach our girls how to code,” says Megan Smith, VP of Google X, a semisecret facility at Google in California working on advanced technology. In June, after revealing that only 17% of its engineers were women, Google launched a site called Made With Code that features free programming projects for girls. The company pledged $50 million to programs like Girls Who Code.

 

Money is only part of the answer. Educators are trying to understand how to engage girls in computer science early and why so few of them stick with it — even though they outpace boys in most other subjects. “If a woman is taking an engineering course, she’s likely to drop out if her grade goes below a B-plus,” says Ashley Gavin, who creates the curriculum for Girls Who Code. “A guy won’t drop out unless his grade goes below a B-minus.”

 

That dynamic explains why some academics have made it their mission to change the tone of introductory computer-science classes so that young women don’t drop out. “At many institutions they are weed-out courses,” says Maria Klawe, president of Harvey Mudd College in Claremont, Calif. “Professors should be saying, ‘We’re thrilled to have you here and know you can succeed.'” Klawe has boosted the percentage of women graduating with computer-science majors at her college from 10% to about 40% in seven years.

 

Klawe implemented some of the strategies that Girls Who Code now emulates: both programs emphasize problem-solving real-world issues because girls tend to want to help their communities. The programs also assign group projects because research shows that girls flourish when they collaborate with others. Many high school programs have also opted for a single-sex approach to help girls build a network they can lean on as they enter a male-dominated workforce. But with so few high-profile female programmers as role models, many girls still have a hard time envisioning themselves in the field.

 

That’s why Google is touting female coders. At the June launch of Made With Code in New York City, alumni from Girls Who Code and Black Girls Code cheered on women like Miral Kotb, founder of iLuminate — a Broadway dance troupe that uses coding to choreograph the lights on their costumes — and Pixar’s Danielle Feinberg, who used code to animate Brave.

 

But gender parity won’t likely be reached until coding is better integrated into the classroom: currently 9 out of 10 schools in the U.S. don’t offer computer science. Code.org, a nonprofit backed by Mark Zuckerberg, Bill Gates and Google, aims to change that by mimicking China, Vietnam and the U.K., where coding classes are offered as early as elementary school and the gender gap is negligible.

 

Some developers aren’t waiting for U.S. schools to catch up. Consider Hopscotch, an app that teaches children as young as 8 how to build their own games with code. Hopscotch CEO Jocelyn Leavitt says her male friends taught themselves programming when they were kids by playing sports- or war-themed video games and then re-creating them. “We wanted to tap into that desire to create something but make it more accessible to both boys and girls,” she says. So far it’s a hit: more than 1.5 million projects have been coded with Hopscotch in the past year, about half by girls.

 

Riya Satara says if she’d learned coding earlier, she wouldn’t have thought it was just for boys. Now she wants to spread the tech gospel by starting a Girls Who Code club at her school. And she’s finally enrolling in a computer-science class.

 

At the advanced level.

 

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TIME Economy

Surprise: The Economy isn’t As Bad As You Think

7 signs America has turned the corner

Nearly seven years after the onset of the Great Recession, the national mood remains troubled. Surveys find entrenched pessimism over the country’s economic outlook and overall trajectory. In the latest NBC News/Wall Street Journal poll, 63% of respondents said the U.S. is on the wrong track. It’s not difficult to see why. Set aside the gridlock in Washington for a moment and appreciate the weakness of the economic recovery: Households whose finances were too weak to spend. Large numbers of unemployed workers who couldn’t do so either. Younger Americans who couldn’t afford their own homes. Banks that were too broken to lend. Yet nearly a year ago, I wrote an essay for TIME suggesting that the economy could surprise on the upside. That hypothesis looks even more valid today.

Despite the pessimistic mood, America is experiencing a profound comeback. Yes, too many Americans are out of work and have been for far too long. And yes, we have a huge amount of slack to make up. In fact, if the 2008 collapse had not happened, the U.S. GDP would be $1 trillion–or more than 5%–higher than it is today.

But in terms of the growth outlook, the news is good. Goldman Sachs and many private-sector forecasters project a 3.3% growth rate for the remainder of 2014. The first half of 2014 saw the best job-creation rate in 15 years. Total household wealth and private employment surpassed 2008 levels last year. Bank loans to businesses exceeded previous highs this year. And income growth will soon improve too. America is finally returning to where it was seven years ago.

As halting as the U.S. recovery has been, the economy is now leaner and more capable of healthy, sustained growth through 2016 and beyond. Our outlook shines compared with that of the rest of the industrialized world, as Europe and Japan are stagnant. The 2008 economic crisis and Great Recession forced widespread restructuring throughout the U.S. economy–not unlike a company gritting its teeth through a lifesaving bankruptcy. Manufacturing costs are down. The banking system has been recapitalized. The excess and abuse that defined the housing market are gone. And it’s all being turbocharged by an energy boom nobody saw coming.

It’s not just economic trends that are looking up: crime rates, teen pregnancy and carbon emissions are down; public-education outcomes are improving dramatically; inflation in health care costs is at a half-century low. That points to something I did not foresee last year: that the social health of America seems to be mending. Americans may still feel discontented, but winter is finally over.

AMERICANS ARE SPENDING LIKE THEY MEAN IT

The biggest piece of the U.S. economy, by far, is the consumer sector. It represents 70% of GDP in most years. But consumers suffered historic setbacks in 2008 and 2009. According to a Federal Reserve Board report, 13% of households experienced “substantial financial stress.” This compares with only 1% during the previous two recessions. And it is why consumer spending fell so sharply in 2009, as frightened households cut back.

It has taken years for total household finances to recover fully, but now they have. Total household net worth is now well above its 2007 peak, driven by the recovery in stock prices and home values. Household debt-to-income ratios are the lowest in more than 30 years. And the first half of 2014 has seen employment begin to take off.

Indeed, consumer spending is strengthening alongside consumer confidence, which is nearly back to prerecession levels. For all of 2014, consumer spending should grow around 3% as real disposable income rises and the savings rate moderates. With an average of 248,000 new jobs having been added in each of the past five months, the unemployment rate is probably on course to fall to 5% in 2016. Although part of the decline in the unemployment rate to date is due to stubbornly low labor-participation rates, the overall outlook for consumer spending, the engine of our economy, is healthy again.

HOUSING HAS COME BACK TO LIFE

A good recovery in the housing sector was inevitable because both the supply of viable housing and household-formation rates had dropped to very low levels. That combination finally triggered a snapback.

At first, it was housing prices that turned up. Over the past year, they rose in each of the 20 largest metropolitan areas. And since its low point in early 2012, the Case-Shiller Home Price Index has risen more than 25%. This revived the housing market and helped restore overall household balance nationwide.

Single-family and multifamily housing starts have also recovered strongly. They exceeded 1.5 million annually in the decade before the crisis but collapsed to less than 500,000 in its aftermath. Now they are over 1 million and should go higher. Most forecasts envision a rate of roughly 1.2 million next year, continuing to rise to 1.6 million over the next few years. Keep in mind that new housing construction and renovations drive a wide range of manufacturing and services output, from appliances to trucking. Indeed, private residential investment has jumped by more than 27% since 2012.

Finally, economic hardship forced record numbers of grown kids to stay with their parents, depressing household formation to rates far below normal. But this too is improving. Harvard’s Joint Center for Housing Studies estimates that formation rates will double to 1.2 million annually as kids finally move out and the adult population increases.

AMERICAN-MADE MAKES SENSE AGAIN

A new factor to add since my previous analysis is manufacturing. A near consensus that this sector was in permanent decline has existed for many years. It was accentuated by the loss of nearly 6 million manufacturing jobs from 2000 to 2010 and by the sense that much lower wages in Asia made continued offshoring inevitable.

But recently the greater role of technology in manufacturing and rising wages in Asia have given our manufacturing sector some life. A recent Brookings Institution report on manufacturing stresses how robotics, 3-D printing and the relentless advance of digital technology are transforming big parts of U.S. manufacturing. Moreover, as China’s GDP has continued to grow, its wages have risen considerably, narrowing the cost differential with the U.S. In many industries, the cost-to-produce difference is now down to 15%.

That explains why certain U.S. producers are reversing themselves and committing to manufacturing goods at home. Walmart announced that it would sell $50 billion more in American-made products over the next 10 years, and the Boston Consulting Group recently estimated that up to 30% of offshore production would return. Although manufacturing has added 668,000 jobs since the 2010 nadir, continued automation will prevent this sector from being a major contributor of new jobs in the future. But the role of manufacturing in our GDP is stable, and the sense that other sectors of the economy would need to compensate for continued declines in manufacturing is out of date.

ENERGY PRODUCTION IS BOOMING

If ever there was proof of the difficulty of forecasting, it is the stunning recovery in our oil-and-gas production. Virtually no one from ExxonMobil on down saw this coming. Nor the way in which made-in-the-USA technology made it happen. The idea that America, whose oil production has been declining for the past 40 years, is now on track to become the world’s biggest producer by 2015 is still hard to grasp. As is the notion that after similar declines in production of natural gas, we now have a 100-year supply of natural gas at current rates of consumption. The U.S. Energy Information Administration expects total U.S. crude-oil production to increase more than 25% to 9.3 million barrels per day by 2015, which would mark the highest level since 1972. Daily natural gas production, which grew by 5% over the past year, is expected to continue climbing, with the U.S. becoming a net exporter by 2018.

This is a plus for growth, for household budgets and consumption, for climate protection and for America’s national security. Given our huge new supplies, natural gas is cheaper here–around $4.70 per 1,000 cu. ft.–than anywhere else. This means lower utility bills across the country. It also means that gas is being substituted rapidly for the dirtiest fuel, coal, to produce electricity. And that both America’s stake in the unstable Persian Gulf and our borrowing from China are diminished as we import less energy. The rise, fall and rise of the American oil-and-gas sector is probably, together with development of the Internet, the biggest economic breakthrough in this country in 50 years.

OUR ENVIRONMENT IS GETTING HEALTHIER

Although there remains a heated political debate over climate change and its causes, few people, regardless of their views on that, actually favor more carbon emissions. But there is also an unexpected positive trend. Carbon emissions in the U.S. actually have been falling. Today they are down nearly 10% from 2005 levels. It is possible that the U.S. will meet its goal of cutting emissions by 2020 to 17% below that 2005 baseline.

Technology and regulation explain this surprising trend. Take the auto industry. At one level, Washington upped fuel-efficiency requirements to a stiff fleetwide average of 54.5 m.p.g. by model year 2025. At another, galloping advances in engine technology and vehicle weight are enabling automakers to improve their mileage more quickly than anyone forecast. And the EPA has just mandated sharp reductions in emissions from coal-fired plants.

The U.S. has been among the worst offenders in emissions. To have any credibility in leading global negotiations on these issues, we need to lead the way.

AMERICAN SCHOOLS ARE WORKING SMARTER

How often have you read that America’s education system, especially public education, is a failure? It has a long way to go, but it has started to improve. This is crucial because differentials in lifetime earnings by level of education are widening. Driven by globalization and technology, labor markets are demanding higher and higher levels of skills. Therefore, to improve incomes for younger Americans, we must get better educational outcomes.

For 25 years, those outcomes were stagnant. High school graduation rates had fallen to 60% or lower in many large cities and rural areas. And just over half of first-year college students would graduate within six years. These are poor results by the standards of advanced countries.

But beginning in 2006, the decline began to reverse. High school completion rates are now up almost 10 points, crossing 80% for the first time.

According to a recent report from Johns Hopkins University, the turnaround reflects countless grassroots efforts toward public-school reform. Instigated by parents, business groups, nonprofits, state and local governments and, in some areas, teacher unions, these efforts have concentrated on teacher training and evaluation, better collection and use of data in supporting students, improved curriculum materials and the restructuring or closing of underperforming schools, sometimes called dropout factories.

It is crucial that these reforms continue because if they do, that same Johns Hopkins study predicts that U.S. high schools will reach a 90% completion rate by 2020. That would be a huge achievement. Over the past decade, college-completion rates also have strengthened, nearing 60%. True, the college readiness of high school graduates has not improved in line with graduation rates. But recent advances that tie online education to different approaches in the classroom may soon improve this too.

SOCIAL TRENDS ARE MOVING IN THE RIGHT DIRECTION

America has seen a drop in crime rates that in earlier years would have been universally viewed as impossible. The overall crime rate has plummeted by 45% since peaking in 1991 and by 13% just since 2007–counterintuitively continuing to drop through the recession and sharp spike in unemployment.

Since 1991, according to FBI data, the number of violent crimes has fallen 36% nationally and 64% in the nation’s largest cities. And in New York and Los Angeles, our two largest cities, it has fallen even further. Property crime has also become increasingly rare. Incredibly, in New York City, car thefts have plunged 94% in the past two decades.

How is this possible? In the mid-1990s, few saw this decline coming, and many warned that crime would surge once again as teens of that era grew into young adults. Today, criminologists still differ on what has caused the nationwide turnaround in crime rates and why those dire predictions never came to pass. But crime-fighting technology, better policing, aging societies, growing urban populations and declining usage of hard drugs are widely cited.

For many Americans, the drop in crime has resulted not only in a much higher quality of life but in a reduced economic burden as well. Safer cities generally mean stronger urban economies.

In the same category of big surprises, teen-pregnancy rates have fallen to their lowest level in more than 30 years, according to the widely respected Guttmacher Institute. They have declined 51% from their 1990 peak, based on the latest available data, and the teenage birthrate is down 43% from that year’s level. Today, fewer teens are becoming pregnant and becoming mothers than at any point since reliable data has been collected by the National Center for Health Statistics. This is also true for women in the 20-to-24 age group. To put it mildly, there were very few predictions to this effect a generation ago.

In addition, overall birthrates in the U.S. have turned up for the first time since 2007–including for children born to women with a college education–to just shy of 4 million.

THE CHALLENGE AHEAD

Our country’s biggest challenge now is the plight of lower-income Americans, who are under severe and sustained economic pressure. Today, America resembles a tale of two cities. Those who own homes or stocks have benefited from the recovery in these asset classes and are moving up again. But 40% of our working-age families earn $40,000 a year or less. Generally they live within 250% of the official poverty level, which is the eligibility threshold for food stamps. Indeed, judging from current trends, half of today’s 20-year-olds will receive food stamps during their adult lives. More broadly, median household income is still 8% below the precrisis level, and those who have not completed college are seeing declines in anticipated lifetime earnings compared with their peers with college degrees.

This is our primary economic challenge. If a third of our population has little purchasing power, it will be hard to achieve the rate of long-term growth we want. We need to improve the work skills of this group, strengthen the social safety net and increase the number of young Americans receiving a full college education.

Although doing more to relieve the financial burdens of working Americans is good economics, it is also, and perhaps more important, a matter of values. For much of the 20th century we strove, with much success, to build a fairer and more inclusive society. But today, too many working families are living paycheck to paycheck or even in outright poverty, while the toeholds to economic stability become fewer and farther between.

With our economy’s near- and medium-term economic outlook strong, now is the time to remove the barriers that are keeping hardworking Americans walking a far too thin financial line.

Altman, who served as Deputy Secretary of the Treasury during the Clinton Administration, is the founder and executive chairman of Evercore Partners

TIME Economy

U.S. Job Creation at 6-Year High, Poll Says

Office Work Station
John Lamb—Getty Images

On par with May levels

The percentage of Americans who say their employers are hiring remains at a six-year high, according to a new poll, in another positive economic indicator following a sluggish winter.

The Gallup survey out Wednesday found that 40% of employed Americans said their workplace was hiring, while 41% reported no staffing changes and just 13% said their employer was letting workers go. U.S. workers have reported increased hiring at their workplaces for five months.

The poll of more than 16,000 Americans put Gallup’s Job Creation Index—a measure of net hiring activity in the U.S.—at +27, matching May’s index as the top score in more than six years. The index does not measure the actual number of jobs created, but rather reflects the percentage of employers who are hiring.

Another survey by the payroll processor ADP showed that private employers in the U.S. added 281,000 jobs in June, up from 179,000 added in May.

TIME green living

Tracking Carbon Footprints and Saving Money: The Pecan Street Project

Walk around the Austin Mueller neighborhood in Texas’s capital city and you’ll see a modern planned, green community with homes that sport solar panels and garages that shelter electric cars. But the most important innovation in these homes can’t be seen by the casual observer. It is the smart circuitry that allows residents to track their homes’ electrical use appliance by appliance, in real time, showing clearly how they consume power and enabling them to reduce their power bills and minimize waste.

“You can literally see when a lightbulb is turned on,” says homeowner Dan McAtee. “It’s been educational.” He’s learned, for instance, to lower his monthly utility bill by using his most power-hungry appliances at night, when electricity costs less. And he knows just how much power is generated by the solar panels on his roof — far more than his family consumes, as it turns out, allowing them to send the surplus back into the grid.

McAtee’s home is one of more than a thousand participating in the Pecan Street Project, the most extensive smart grid in the United States. Since 2009, the project has provided homeowners incentives for installing renewable energy and buying plug-in electric vehicles, while also helping them reduce their carbon footprints.

Across the country, use of two-way “smart meters” has been growing, with more than 40 million already in use. Pecan Street meters are far more precise, however and provide both residents and their municipal utility, Austin Energy, with enormous amounts of constantly updated, detailed and actionable data that benefits both individuals and the community. When replicated in other cities, the system may help solve pressing environmental and infrastructure challenges affecting the entire country by making us smarter about how changing individual behavior can benefit society as a whole.

TIME Education

The Ambitious Plan to Teach 100,000 Poor Kids to Code

Kids Who Code
Cyrus McCrimmon—Denver Post/Getty Images 11-year-old Nuh Mahamud works on a computer at the Bridge Project, which provides educational opportunities for children living in public housing neighborhoods, in the South Lincoln area of Denver on Jan. 23, 2012. Yes We Code plans to partner with such existing organizations to focus specifically on preparing kids for careers writing computer code.

#YesWeCode looks to close the coding inequality gap

Shortly after Trayvon Martin was shot and killed in February 2012, liberal activist Van Jones was talking with his friend Prince—yes, that Prince—about the circumstances of the shooting.

“I think he made the observation,” Jones told TIME, “that when African-American young people wear hoodies people think they’re thugs, but when white kids wear hoodies you assume that they’re going to be dot-com billionaires,” a reference to the outerwear favored by Facebook founder Mark Zuckerberg and his ilk. “We just started thinking: ‘Well, how do we turn that around?’”

Out of that spark was born Yes We Code, an ambitious initiative of Jones’ Rebuild the Dream organization aimed at preparing 100,000 low-income children for careers writing computer code. While good-paying blue-collar jobs continue to disappear in the U.S., computer science is a rare bright spot of opportunity for people without a college education. “This is another opportunity for people to make a really serious, solid middle-class income,” said Jones, a former environmental aide in the Obama Administration.

It’s an old yarn by now that computer science is one of the fastest-growing, highest-paying career paths in America. By 2020, half of all jobs in the STEM (Science, Tech, Engineering and Math) fields will be in computing, according to the Association for Computer Machinery. The latest salary survey from the National Association of Colleges and Employers says the average starting salary for computer science majors in 2014 is more than $61,000—just about $1,000 shy of the top earners, engineering grads.

Contrast that with the fact that computer science education in STEM has seen a decrease in enrollment in the last 20 years, with a particularly precipitous drop in the past decade as school districts have reconfigured curriculums to meet standards set by the No Child Left Behind initiative. Those students who do enroll in computer science are overwhelmingly white and male. In 11 states last year, not a single black student took the Computer Science Advanced Placement exam for college credit. That may not mean much in a place like Maine, but in Mississippi, where more than 37 percent of the population is black, the statistic takes on a whole new significance.

Put simply, many parts of the country have systematically reduced educational opportunities in the growing field of computer science for students who depend on the public school system. “It has become privileged knowledge,” said Chris Stephenson, executive director of the Computer Science Teacher’s Association. “The haves have continued to get access and the have-nots, however you want to define that, have not.”

There are dozens of organizations around the country working to address this disparity—Black Girls Code, Hack the Hood, and many others. What Yes We Code hopes to do is connect those groups with the tools and resources to radically scale up. “There’s a ton of wasted genius in low-opportunity communities,” Jones said, adding that Yes We Code does not exist solely to serve black children. “African-American, Latino, low-income Asian, Native American, Appalachian. We aren’t only for African-Americans,” he said.

Beginning with a launch at the 20th annual Essence Festival in New Orleans on July 4—Prince agreed to headline the event on the condition that Yes We Code be included in the festivities—the group will unveil its website to connect coding education organizations with low-income pupils. At the festival, Yes We Code will also launch a fundraising drive to amass a $10 million scholarship fund to pay for the cost of coding education for kids who can’t afford it on their own. (Disclosure: The Essence Festival is a production of Essence magazine, which is owned by Time Inc., the parent company of TIME.)

The cadre of young, poor kids Jones hopes to help teach to write code will not be young forever and Jones hopes they won’t be poor forever either, creating a new generation of role models he sees as lacking in their communities today.

“Athletes, or rappers, or hustlers or President Obama. That’s it. All four of those are very hard and unlikely pathways for success,” Jones said. “We just haven’t really been putting a spotlight on this opportunity.” Yes We Code intends to turn on that spotlight.

“The future,” Jones told TIME, ”is being written in code.”

TIME energy

Harley Davidson Goes Electric

Harley Davidson, battery powered, 2014, Motorcycle
Grant Cornett for TIME Profile full body photograph of Harley-Davidson’s 2014 battery powered motorcycle, taken on June 5, 2014 at the Harley-Davidson headquarters in Milwaukee, WI.

Will this battery-powered hog help the famed cyclemaker grow beyond aging boomers?

It’s bike night at the Harley-Davidson Museum near downtown Milwaukee. Outside this Modernist cathedral of chrome, hundreds of riders have parked their Harleys to admire one another’s bikes, swap stories and enjoy a perfect May evening. Anyone from a corporate marketing department happening on this scene might have been horrified, because it would not suggest a growing market. Bike Night in Milwaukee sure looks like Old White Guys’ Night. The only diversity among this group of aging boomers is in the beer brands in the cozies they carry. But Mark-Hans Richer, who is indeed Harley’s marketing boss, isn’t bothered. “We love old white guys,” says Richer, who is not quite one. “Our old white guys are great customers, we love them, and we never want to walk away from them.”

That said, Harley is in the midst of a complete reimagining as it increasingly tries to appeal to African Americans, Hispanics and women, not to mention riders in China and India, all of whom have become target customers. Global demographics–more young people with less money to spend–are forging big changes at the iconic firm. Harley still sells the rebellious, hell-raising, American free-spirit ideal that it rode to fame in the 1950s and ’60s. But that isn’t a strategy for running a company in 2014.

The Great Recession drove Ford to the wall and Chrysler and GM into bankruptcy, forcing drastic operational and cultural changes that made them more efficient, higher-quality operators. Harley was in better shape than the auto companies going into the recession but fared worse after the downturn: motorcycles are typically a second or third ride for Americans. Harley’s sales plunged from $5.8 billion in 2006 to $3.1 billion in 2010, even as autos were recovering. Its U.S. market share fell from 51% in 2006 to 43% in 2008, according to the Trefis research firm. The average age of its customers increased to 49 from 44.

Worse, perhaps, is that when sales turned up again, Harley reverted to form. And form wasn’t particularly good. Harley’s product line was full of retreads, and it had little to offer consumers in emerging markets like India and China. “There was a recognition that it was a great company, 108 years old,” says CEO Keith Wandell, a former auto-parts executive who took over in 2009 and began to force Harley to behave. “A lot of great things had happened, but I think what was apparent was that we’d become stuck in time. We had become sort of resistant to change and doing things differently.”

This year Harley’s sales should increase 9.7%, to $6.5 billion, and it will move perhaps 283,000 motorcycles. It’s introducing new lower-powered, lower-priced models for young riders and taking its biggest technology risk ever: the LiveWire, an electric-powered, urban globocycle whose high-pitched, jetlike whine sounds nothing like the Harley roar–that hurricane of sound that tells you a V-twin gas-engine hog is approaching even before you check your rearview. “We have a powerful brand and a powerful product–that’s why we are doing this. It isn’t the better-mousetrap strategy,” says Wandell. If the bike sells, it will punctuate the turnaround of a uniquely American corporation.

The electric Harley sitting on a small test track behind the company’s development center in Wauwatosa, outside Milwaukee, isn’t going to be confused with some of the putt-putt electrics on the market today. The design of LiveWire is gnarly enough to be Harley: it’s angular and agile, with a cast-aluminum exoskeleton sitting on a short wheelbase with 18-in. tires. The tires are a little bigger than normal and the seat a little higher, so the cycle can more easily jump curbs and handle the potholes of New Delhi or New York City. The turn signals and rear lamp are glowing LEDs, like those found on high-end Audis. What’s missing is the steroidal engine sitting under the rider–replaced by a lithium-ion-battery-powered motor.

In electric cars, the compartment for the battery that powers the vehicle takes up a disproportionate amount of space and produces a lot of heat that has to be dissipated. That’s a lot harder to do on a bike. Engineers jammed as much battery into the bike as they could to deliver sufficient acceleration. LiveWire generates 75 horsepower and goes from zero to 60 m.p.h. in four seconds.

Sound was another challenge because Harleys rumble even at low r.p.m.–a sound referenced, onomatopoeically, as potato, potato, potato. The LiveWire’s gearbox-and-motor combo produced a new and somewhat unexpected sound, which the engineers tuned. “We knew immediately we had something cool,” says Jeff Richlen, the chief engineer.

What’s it like to ride? The beauty of all electric motors is that you get torque–the force that turns the wheels–on command. You don’t have to go through the gears. Twist the throttle and LiveWire responds like an impatient New Yorker, even if the engine growl lags. (The pedal-to-engine-noise disconnect is familiar to owners of electric cars like the Chevrolet Volt, Toyota Prius and Nissan Leaf.) LiveWire’s speed tops out at 92 m.p.h, by which time it sounds like a big Fourth of July rocket whizzing by. “We wanted to make this a real Harley,” says Richlen. Right now, the bike has a range of 100 miles–fine for city riding–and recharges in about three hours.

Harley isn’t releasing LiveWire for sale until customers and dealers have a chance to weigh in. The company began offering test rides to select customers this month. Can they accept any battery-powered bike as a true Harley? Yes, says Gail Worth, who owns Gail’s Harley-Davidson, located outside Kansas City, Mo. “The world is ready for a Harley-Davidson e-bike,” she says. “Electric bikes are going to be on the street. That is the one element left that will allow Harley to just take over the motorcycle market.” Harley hasn’t priced its rocket yet, but as with electric automobiles, consumers will typically pay a 10% to 20% premium for electric bikes, which suggests something north of $20,000. Worth expects LiveWire to debut in a year.

The electric-motorcycle market is generating a lot of interest these days. BMW already sells a $22,500 C Evolution e-Scooter in Europe. Although the market for e-cycles is still small, the consultancy Navigant Research predicts that domestic sales will grow tenfold and reach 36,000 units by 2018. A couple of specialty manufacturers, such as Brammo and Zero, are already in the market. Harley says it isn’t worried about being late to market. “If it’s green, it’s badass green. It has character,” says Richer. “We don’t see our competitor understanding that.”

Livewire isn’t just a flashy new concept for Harley; it’s also the product of a painful corporate revolution long in the making. In the depths of the downturn, the company produced print ads that proclaimed, “We don’t do fear … Screw it, let’s ride.” The bravado was a misdirected rallying cry. “We were heading downhill–not spiraling but walking down this hill pretty fast,” says Worth, who also heads Harley’s dealer council. Sales of the company’s best-selling heavy bikes fell 50%.

When Wandell arrived in 2009, sales had begun to pick up, but the company had no new products in the pipeline to meet the increasing demand. Harley’s 1,500 dealers vented, but Harley’s product-development cycle was so sluggish that the company needed far more time to get new products to market than the competition: some five to six years. New cars are created in half that time.

Global regard for the Harley brand had long insulated it from bad management. In 1969 a conglomerate named AMF, which you might know from its bowling pins, bought Harley. The motorcycle company suffered from corporate inattention, and in 1981 a management-led investor group bought it back. But it remained a boom-bust outfit that relied on periodic economic upticks to bail it out.

Wandell spent most of his career at Johnson Controls, an auto-components maker. So his being chosen to become Harley’s boss attracted some criticism–he wasn’t a Harley guy. But Wandell quickly drew up a “short list of big things” that had to change: how the company designed products, how it made them and how it interacted with customers. Everything, in other words. He replaced all but one of the top bosses, mostly with talent he found being squandered in middle management.

One of those talented people was Michelle Kumbier, whom Wandell tapped to reshape Harley’s product development. Though not an engineer, Kumbier took an engineer’s approach, benchmarking the company against other manufacturers like Ford. Then she shared the not-so-pretty results: by any measure, Harley was a laggard in both product-development cycles and manufacturing efficiency. “Engineers were able to accept the truth if you showed them the data and the evidence. We showed them the road map. This is how we are going to get to world class.” Since then Harley has cut its time to market in half.

In another big shift, Harley says it has become customer- and dealer-led. Worth says the listening is real. “It used to be lip service,” she says. “‘Let’s sit down and have a beer.’ They’d fix onesie-twosie things. Now they handle it as business. We don’t sit around drinking beer with each other anymore.” Oddly enough, for an outfit with such a devoted following, Harley used to build products based on its managers’ gut feelings, which was fine when the customers were mostly white boomers. But now the customers could be newly wealthy Chinese looking for style, city-dwelling millennials who need utility and affordability or retirees who want a trike that doesn’t embarrass them.

That shift led to a company initiative code-named Rushmore, whose mission was to produce new products for this multiculti world. Harley took a fresh look at every aspect of motorcycling–the issue of the rider’s head being buffeted by wind, the position of the saddlebags, the passenger’s viewpoint–and integrated new technology like GPS. How, for instance, could a rider use a touchscreen while going 80 m.p.h. and wearing leather riding gloves? The research led to more than 106 changes in the way that its touring bikes are built.

Harley-Davidson’s plunge into advanced technology–a third of its engineering is now focused on innovation–led it to LiveWire. A small group of developers was freed to work on the project. “It’s a symbol of what we can be,” says Matt Levatich, Harley’s president, “not what we shouldn’t do. Why not us?”

More immediately, Rushmore yielded something that wouldn’t have been contemplated before: smaller bikes for younger riders, especially women. This year Harley introduced its lower-end Street series, high-riding bikes with 500-cc and 750-cc engines that still provide a Harley feel for less than $7,500. “Street is about access over engine displacement,” says Richer. “It is designed with a global customer in mind. You can grow up in Beijing and Chicago, and you might have a cultural connection that your parents didn’t have 25 years ago.”

With Street, the company now has models that can compete in developing nations such as Brazil, South Africa and India, where price matters. Harley is a latecomer to India, but it is now assembling bikes in Bawal and sponsoring group rides in places like Goa that can attract 5,000 cyclists who want to taste the American ideal. Harley is feeding that hunger: overseas cycle sales now account for 36% of the company’s total. Indeed, there are now group-ride events in China, Africa and India.

The smaller bikes are also a better fit for Europe, where consumers prefer sport and utility cycles like Street over Softail cruisers. In China, Harley doesn’t have the opportunity that American automakers have. Motorcycles are banned from many highways and urban areas. But just as they prefer big Buicks, Chinese riders are hog lovers, as are riders in Japan, home to giants such as Yamaha and Kawasaki.

So far, the strategy appears to be working. Harley has picked up two market-share points in Europe on BMW. And while Street models are now heading to U.S. dealers, the company is living you-know-where on the hog with its traditional cruiser bikes. It owns 56% of the market, up from 41.5% in 2008, according to Wells Fargo Securities. Even better, the supply of white guys over age 35 figures to be about 50 million strong in the U.S. for the next 25 years. “We’re not dying a slow death,” says Levatich. “We’re creating a new future.”

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