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The Rise of the Modern American Apprenticeship

November 10, 2017

President Trump’s “America First” plan places significant focus on the creation of job opportunities for the millions of currently unemployed Americans. The expansion of Apprenticeship programs, having received bipartisan support, is one strategy being used to meet this goal. Senators Tim Scott and Cory Booker introduced the “Leveraging and Energizing America’s Apprenticeship Programs Act”, or LEAP act, this February, providing tax credits to companies per apprentice hired [1]. In the summer, President Trump affirmed his commitment to create 5 million new apprenticeships by 2022. [2] He signed an executive order this past June doubling the money for apprenticeship grants to $200 million while cutting the Department of Labor’s (DOL) main job training vehicle, the Workforce Innovation and Opportunity Act (WIOA), by 36%. [3]

“Internships” Are Few But Mighty

According to the DOL, an apprenticeship is a paid “combination of on-the-job training and related instruction in which workers learn the practical and theoretical aspects of a highly skilled occupation.” Apprenticeship programs are officially registered with the DOL’s Apprenticeship Office (AO), responsible for apprentice welfare and granting apprenticeship graduates industry recognized “Certificates of Completion.” [4]

A big problem in the American workforce is the skill gap between job searchers and job openings. 45% of employers are unable to fill entry-level vacancies in their organizations because applicants are not skilled enough to even get their foot in the door. [5] Millions of these unfilled positions are often in professional services like healthcare, manufacturing, and insurance, which require training post-high school but do not necessitate 4-year college degrees. [6] Apprenticeships are also cheaper than college education: Apprenticeships cost the US $5,500 per person, while community college costs $16,000 per person. [7]

Unfortunately, apprenticeships exist in low numbers. These programs graduated around 50,000 apprentices in 2016. In total, 500,000 people participated in apprenticeship programs in the US last year. [8] Two million students received bachelor’s degrees the same year. [9] Across the US, individuals working under apprenticeship programs comprise 0.2% of the total work force, which is far lower than the 3.7% apprenticeship participation rate Germany boasts. [7]

Bureaucracy, Insufficient Incentives, and Poor Marketing Weaken Apprenticeship Expansion

Both supply and demand asymmetries dictate why apprenticeship programs exist in small numbers. A demand-side explanation is that the public is unaware of the existence of apprenticeships as an alternative career path. Anecdotally, apprentices surveyed recently by the American Enterprise Institute commented that their friends from high school always thought their work and school constituted their only options, unaware of apprenticeship programs. [10] Additionally, among students who are actually aware of apprenticeships, a stigma exists that apprenticeships only lead to “blue collar” jobs. [11]

Image: Most Apprenticeships are in construction, the military, and manufacturing, resulting in their “blue collar” association. Source: The United States Department of Labor

Image: Most Apprenticeships are in construction, the military, and manufacturing, resulting in their “blue collar” association.

Source: The United States Department of Labor

A supply-side explanation for lacking apprenticeship programs lies in ineffective information management. The confusing federal-state administration, a result of allowing 25 states to independently run and evaluate their own programs, makes data collection for apprenticeship evaluation difficult. Additionally, this landscape obstructs efforts to establish a uniform national certification system for apprentice graduates. This nationally heterogeneous ecosystem makes finding information about apprenticeship programs more challenging for employers. Distinct registration processes and compliance practices also increase the cost of participation for employers. [12]

Image: 25 states independently run and manage their apprenticeship programs. Source: The United States Department of Labor

Image: 25 states independently run and manage their apprenticeship programs.

Source: The United States Department of Labor

Additionally, employers do not want to train employees in house: only 41% of big companies provide middle-skill internships. Amongst those that offer training, the immense number of unregistered apprenticeships, such as internships or general training programs, characterizes the difficulty apprenticeship offices have in convincing organizations to join systematic efforts in expanding employment to local communities. [13]

 

Funding has also been historically low: even now that the Apprenticeship budget has increased to $200 million (while cutting government job training programs), this funding scheme is nowhere close to Germany’s $27 billion in apprenticeship investments. [14] College financial aid is prohibited from funding schooling for apprenticeship programs, which could otherwise incentivize individuals and employers to participate in the program. [7]

 

Opposition to national apprenticeship expansion centers on implementation. One of the Center for American Progress’s main contentions is the redefinition of “apprenticeship” in Trump’s executive order [15], which fails to include guidelines for specific training structure and cedes authority to allow ‘qualified’ third parties to recognize apprenticeships. [16] CAP argues loosened certification requirements and training structure requirements undermine the quality assurance of apprenticeship programs meeting federal standards, thus weakening the credibility and skill portability of federally Registered Apprenticeships to businesses nationwide. Furthermore, CAP argues that WIOA’s 36% budget cut could cause 571,000 workers and 33,000 mostly minority youths to lose access to career development services. [17] President Trump argues more jobs will be created as private entities spearhead their own apprenticeship initiatives, motivated by Trump’s new apprenticeship grant money pot and reducing the role of the heavily bureaucratic federal apprenticeship system. [3]

Local Networks, Evident Skill Need, and Strong Startup Funding Create Strong Apprenticeship Programs

The following case studies are from a comprehensive review of successful apprenticeship programs by the Center for American Progress, examining indicators of successful local program implementation. [18]

Apprenticeship Carolina

Apprenticeship Carolina, a division of the South Carolina Technical College System, emphasizes making the apprenticeship process as seamless as possible for employers. [19] The program leverages corporate tax credits and grants funded by the South Carolina state government to provide corporate partners with consultants, who coordinate the entire apprenticeship registration process and facilitate collaboration with the South Carolina Technical College System and the DOL’s AO. These consultants support all 950 occupations registered through the AO in industries ranging from healthcare to construction. Apprenticeship Carolina works regularly with their 16 partner technical colleges, trade associations, and workforce investment boards, which learn from the state program’s management, listen to employer needs, then offer apprenticeships as a solution to their workforce development and training needs. Apprentices benefit from guaranteed progressive wages, mentorship, and simultaneous job training and schooling in partner colleges for 1-2 years before becoming eligible for full time positions. They graduate to earn a DOL Registered Apprenticeship Certificate of Completion and an associate’s degree from the college they studied in. [18]

Michigan Advanced Technician Training Program (MAT²)

MAT² is a consortium of manufacturers working with the Michigan Economic Development Corporation (MEDC) to address the skills gap problem in vacant mechatronic and IT technician jobs. The program started with a Michigan-funded consultant who assisted in starting up the program and running through initial administrative hurdles. Since then, MAT² has been self-sufficient. Partner companies like Siemens pay for apprentices’ tuition, provide a stipend for time in classes, and pay an increasing wage as apprentices become more skilled over the 3-year program. Unlike Apprenticeship Carolina, work and school are rotational throughout the 3 years. Partnered employers worked together to devise a competency based and standardized curriculum delivered by multiple colleges, aligning their courses to match those curricula to MAT² student cohorts.  MAT² works hard to replicate the highly successful German modeling of apprenticeship: its compliance with US and German apprentice standards results in each of their graduates additionally earning a German DIHK-issued certificate useful for skill portability in Germany. Pre-existing relationships and a local focus were key in successful apprenticeship implementation. [18]

Vermont HITEC

Vermont HITEC is also a nonprofit focusing on placing apprentices in high-demand healthcare IT jobs in Vermont starting after the Dartmouth-Hitchcock Health System expressed a need for medical coders. Through the US DOL and the Vermont DOL, Vermont HITEC has received $3.5 million in funding since 2011 and continues to use funding from the Workforce Investment Act (WIA) to pay for support services and training contracts. The program hosts an accelerated 10-week class preparing vetted apprentices before becoming full-time paid apprentices for one year, earning a gradually increasing wage. It recruits participants, creates curriculums for the program, and educates the cohort. During this time, Vermont HITEC funds student coursework but does not pay students a wage. Although the cohorts are generally small (the first was for 14 positions), this program is distinct from Apprenticeship Carolina and MAT² in the fact that Vermont HITEC guarantees their apprentices full-time employment post-completion of the apprenticeship program. Graduates earn similar benefits to Apprenticeship Carolina, in addition to certification as a Certified Professional Coder from the American Academy of Professional Coders. Since then, Vermont HITEC has grown to include other apprenticeships in related tech fields. They note that the program has been highly effective in rural areas. [18]

Conclusion

While apprenticeships are not the end-all solution to our employment skill-gap dilemma, these programs are an effective means of recruiting the rural labor force into needed jobs. Successful programs had strong startup funding, a coordinated effort amongst local employers, nonprofits, and colleges, ultimately earning their DOL certification to prove their competency. Time will indicate the outcomes of deregulation as an incentive for successful private sector training programs.

References

  [1] https://www.congress.gov/bill/115th-congress/senate-bill/393

  [2] http://fortune.com/2017/06/18/donald-trump-apprenticeships-programs-executive-order-millennials-news/.

  [3] http://www.politico.com/story/2017/06/15/trump-apprenticeship-executive-order-239590.

  [4] https://www.dol.gov/general/topic/training/apprenticeship.

  [5] http://www.aei.org/publication/apprenticeships-as-the-pathway-to-entrepreneurship-for-millennials/.

  [6] http://www.aei.org/publication/heres-what-a-worker-first-policy-might-look-like-for-the-trump-admin-think-apprenticeship/.

  [7] https://www.brookings.edu/wp-content/uploads/2016/07/policies_address_poverty_in_america_full_book.pdf Pg. 83-84, 86.

  [8] https://doleta.gov/oa/data_statistics.cfm.

  [9] https://www.cnbc.com/2016/05/16/college-grads-enjoy-the-best-job-market-in-years.html.

  [10] https://www.aei.org/publication/yes-the-us-has-apprenticeships-but-they-probably-arent-what-you-think/.

  [11] http://www.aei.org/publication/skills-oriented-apprenticeship-can-trump-bachelors-or-bust/.

  [12] https://www.americanprogress.org/issues/economy/reports/2013/12/02/79991/training-for-success-a-policy-to-expand-apprenticeships-in-the-united-states/

  [13] http://www.hbs.edu/competitiveness/Documents/bridge-the-gap.pdf Pg. 25.

  [14] https://www.bloomberg.com/view/articles/2017-06-14/how-trump-can-make-apprenticeships-a-hit.

  [15] https://www.federalregister.gov/documents/2017/06/20/2017-13012/expanding-apprenticeships-in-america

  [16] https://www.americanprogress.org/issues/economy/news/2017/06/15/434541/trumps-executive-order-undermine-quality-apprenticeship/.

  [17] https://www.americanprogress.org/issues/economy/news/2017/05/23/432842/trump-budget-undermines-economic-security-working-families/.

  [18] https://cdn.americanprogress.org/wp-content/uploads/2014/09/ApprenticeshipInnov-report1.pdf. Pg. 6-11, 16-17.

  [19] https://www.brookings.edu/blog/the-avenue/2015/04/07/building-one-of-americas-fastest-growing-apprenticeship-programs-a-qa-with-brad-neese-of-apprenticeship-carolina/.

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  • <h3>Congressional Budget Office</h3><p><img width="180" height="180" alt="" src="/live/image/gid/4/width/180/height/180/380_cbo-logo.rev.1406822035.jpg" class="lw_image lw_image380 lw_align_right" data-max-w="180" data-max-h="180"/>Since its founding in 1974, the Congressional Budget Office (CBO) has produced independent analyses of budgetary and economic issues to support the Congressional budget process.</p><p> The agency is strictly nonpartisan and conducts objective, impartial analysis, which is evident in each of the dozens of reports and hundreds of cost estimates that its economists and policy analysts produce each year. CBO does not make policy recommendations, and each report and cost estimate discloses the agency’s assumptions and methodologies. <strong>CBO provides budgetary and economic information in a variety of ways and at various points in the legislative process.</strong> Products include baseline budget projections and economic forecasts, analysis of the President’s budget, cost estimates, analysis of federal mandates, working papers, and more.</p><p> Quick link to Products page: <a href="http://www.cbo.gov/about/our-products" target="_blank">http://www.cbo.gov/about/our-products</a></p><p> Quick link to Topics: <a href="http://www.cbo.gov/topics" target="_blank">http://www.cbo.gov/topics</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>
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  • <h3>National Bureau of Economic Research (Public Use Data Archive)</h3><p><img width="180" height="43" alt="" src="/live/image/gid/4/width/180/height/43/478_nber.rev.1407530465.jpg" class="lw_image lw_image478 lw_align_right" data-max-w="329" data-max-h="79"/>Founded in 1920, the <strong>National Bureau of Economic Research</strong> is a private, nonprofit, nonpartisan research organization dedicated to promoting a greater understanding of how the economy works. The NBER is committed to undertaking and disseminating unbiased economic research among public policymakers, business professionals, and the academic community.</p><p> Quick Link to <strong>Public Use Data Archive</strong>: <a href="http://www.nber.org/data/" target="_blank">http://www.nber.org/data/</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>
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