Apprenticeships combine standard classroom learning with paid on-the-job experience. They are often seen as a win-win: employers ensure that their workforce has the skills needed to succeed on the job and benefit from the productivity of apprentices; apprentices earn a salary and the opportunity to directly apply these skills, which can be much more engaging than sitting in class.
Policymakers seem to agree that increasing the number of apprenticeship spaces can build a healthier and more resilient US economy. What will it take for this to happen?
First, because engaging employers is such a sustained and intensive effort, the Biden administration and Congress should offer more incentives to intermediaries to help them. Projects like the American Apprenticeship Initiative show that nonprofits, industry associations, staffing firms, and other private businesses can help employers scale up, at a cost of around $4,000. per apprentice. South Carolina’s Apprenticeship Carolina hired and trained consultants who helped handle some of the paperwork. Along with state tax credits for employers, this has led to a jump from about 90 programs in 2008 to more than 613 in 2013 and 1,199 today. Gains were strongest in health care, information technology and manufacturing.
Second, the process of formal recognition of learning, which can take several months, must be improved. Some states limit registration by not approving programs that might compete with existing ones. The New York agency is so restrictive that it has fewer apprentices than Indiana, despite having three times the number of employees.
Another barrier to expansion is the ratio requirements set by state agencies and the Federal Office of Apprenticeship. Mandating one or more qualified workers per apprentice can be dissuasive for employers. The Biden administration should relax or eliminate ratio requirements and speed up program approvals for companies that agree to follow certain national standards. Congress should also fund a public-private body to develop and oversee compliance with these guidelines, and ultimately the performance of apprentices, expanding on work begun by the Urban Institute in recent years.
Finally, the federal government should increase funding for “off-the-job” learning. Theoretical courses that complement the skills acquired on the job are essential. To become fully competent in a profession, a health care apprentice may need anatomy; a computer scientist may need a theory of programming; and an electrician must learn the science of electricity. Part of the funding for these courses is already available as part of vocational and technical education at secondary level; Pell grants; and the GI Bill — but the scope is limited.
Today, about 40% of 25- to 29-year-olds have a bachelor’s degree or higher, but many of these workers lack job skills. Apprenticeships can fill the void and prepare many young people for well-paying careers, especially those without a college education. Although we are unlikely to reach the participation levels of Germany and Switzerland – at 50% and 70% of young people, respectively – reaching 20% to 30% is a reasonable target. But additional subsidies will not get us there.
Fortunately, the success of other free-market countries is showing the way. Australia, Canada and the UK are investing the equivalent of billions of dollars to support apprenticeships and are all creating national skill standards. Special Covid-related funding in Australia and the UK, which has backed incentives for companies and intermediaries, has boosted learning for hundreds of thousands of young workers. Although the programs themselves generate high-skilled, high-paying jobs in these countries, their completion also generally improves opportunities for higher education. Apprenticeships leading to a university degree are increasingly common in the UK.
Institutional change of this magnitude is difficult and will take time, but with such effort, companies can get the workers they need, while increasing their incomes through increased worker productivity, expanding access to rewarding careers and improving the lives of millions of Americans.
This column does not necessarily reflect the opinion of the Editorial Board or of Bloomberg LP and its owners.
Robert Lerman is an Institute Fellow at the Urban Institute and Chairman of the Board of Apprenticeships for America.
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