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Policies States Can Enact to Promote Apprenticeship

obama speech

SOURCE: AP/Jeffrey Phelps

President Barack Obama speaks about job training at General Electric's Waukesha, Wisconsin, gas engine plant.

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In response to growing concerns among employers and economists that the United States faces a looming shortage of skilled workers, policymakers across the country are taking a new look at an old idea. Apprenticeship—the time-tested worker-training model that combines on-the-job training with classroom-based instruction—is gaining traction as a possible solution to America’s workforce training and development challenges. From Iowa to South Carolina to Vermont, state governments are making important new investments in this critical training program.

As detailed in the recent Center for American Progress report, “Training for Success: A Policy to Expand Apprenticeships in the United States,” apprenticeships help businesses meet their demand for skilled workers while offering workers higher wages and better employment outcomes. Although young people around the world enter the labor market through apprenticeships, the training model is relatively underused in the United States. Thus far, lack of awareness and misperceptions among both businesses and workers have prevented the formation of a more robust U.S. apprenticeship system. However, this could be changing.

As President Barack Obama stated in his 2014 State of the Union address, the United States needs “more apprenticeships that set a young worker on an upward trajectory for life.” His fiscal year 2015 budget called for $2 billion to double the number of apprentices in the United States over the next five years. Additionally, the U.S. Department of Labor, or DOL, recently announced a $100 million apprenticeship grant program to support promising new partnerships. In Congress, Sens. Cory Booker (D-NJ) and Tim Scott (R-SC) have introduced legislation that would implement CAP’s recommendation of a $1,000 tax credit for companies that sponsor apprentices.

Policymakers at the state level are also getting behind apprenticeship. Starting in 2007, South Carolina launched Apprenticeship Carolina, and with it a major expansion of apprenticeships in the state. Iowa recently budgeted $3 million per year to help businesses and trade unions pay for the startup costs of apprenticeship programs. In Vermont, Gov. Peter Shumlin (D) has proposed expanding apprenticeships, saying “graduates will have a bright future in Vermont and earn good wages as skilled tradespeople.” Indeed, there are a number of steps states can take to promote apprenticeship.

Take advantage of federal funding sources

Apply for American Apprenticeship Grants

The Obama administration recently announced $100 million in American Apprenticeship Grants, which will support promising new apprenticeship partnerships. States should partner with stakeholders such as community colleges, employers, and training providers to craft proposals that will open up new career pathways for apprentices, target high-growth industries, and expand high-performing apprenticeship programs.

Increase Workforce Investment Act dollars going to apprenticeships

Workforce Investment Act funds may be used to cover some apprenticeship costs, but it is ultimately up to state and local Workforce Investment Boards, or WIBs, to make the money available for this purpose. For example, Kansas WIBs pay the cost of related instruction for apprentices, and Maryland’s WIB gave $50,000 of its performance measures incentive funding to the state apprenticeship agency to market apprenticeships. Following these examples, state and local WIBs should allocate a portion of their funds toward apprenticeship efforts.

Generate business interest

Offer financial incentives for businesses to sponsor apprenticeships

Unlike most other countries, the United States offers no federal funding to companies that hire apprentices. Government subsidies not only help businesses offset the cost of training apprentices, but they also bring employers to the table and provide a boost to marketing efforts. For example, South Carolina created a state tax credit of $1,000 per apprentice per year to employers, which was followed by a 570 percent increase in employer-sponsored apprenticeship programs in the state from 2007 to 2012. Government spending on apprenticeship has been shown to be an especially smart public investment. Washington state, for example, found the taxpayer return on investment for apprenticeships to be significantly higher than that of any other workforce-training program at $23 in net taxpayer benefit for every $1 invested by the state.

Improve marketing and business outreach

States should promote apprenticeship by developing dedicated marketing campaigns that reach out to businesses and prospective apprentices. In addition, state apprenticeship agencies should allow the DOL to handle the process of apprenticeships registration, in which apprenticeship sponsors register their programs and apprentices with the federal government or a delegated state agency. By allowing DOL to handle registration, states can use the freed-up resources for business engagement and promotion. While few states engage in large-scale marketing, even a relatively small investment can spur significant interest among businesses. For example, with just six dedicated employees, Apprenticeship Carolina was able to grow the number of companies in South Carolina that hire apprentices from 90 in 2007 to 603 in 2012.

Sponsor a statewide workforce skills assessment

States—in partnership with local chambers of commerce, business associations, and economic development corporations—should sponsor an assessment that identifies their unmet need for skilled workers, the potential efficacy of using apprenticeships to close that gap, and any institutional or cultural barriers that stand in the way. In South Carolina, a 2001 assessment by the Governor’s Workforce Education Task Force found a persistent skills gap emerging in state.  This eventually spurred both public and private actors to improve their state’s job-training initiatives with a particular focus on apprenticeship training.

Give college credit for apprenticeships

Apprentices should be able to turn thousands of hours of classroom instruction and on-the-job training into college credits. To that effect, states should ensure that community colleges join the Registered Apprenticeship-College Consortium, a new effort that will allow graduates of registered apprenticeship programs to turn their on-the-job and classroom training into college credits toward an associate’s or bachelor’s degree. As U.S. Secretary of Labor Thomas Perez put it, those who complete apprenticeships “will not only have better access to jobs that lead to a sustainable career, but they’ll also have better access to an education—all with little or no debt.”

Promote apprenticeships in the state workforce

State governments should lead by example and establish apprenticeship programs for state employees. Some state law enforcement agencies, for example, offer apprenticeships. Furthermore, as large purchasers of goods and services, state governments can include a preference for businesses that employ apprentices as part of their overall criteria in evaluating contracting bids.

Apprenticeships are a proven workforce-training tool. As the DOL has noted, apprentices earn an average starting salary of $50,000 and make an average of $240,037 more than non-apprentices over their lifetimes. Improved and expanded apprenticeships can help states create a pipeline of skilled workers and give businesses a competitive edge in a global economy. As discussed in the previously mentioned CAP report, there have been a number of hurdles—including poor public awareness and a lack of research, weak incentives for businesses, inconsistent certification systems, and little coordination with other stakeholders—that have prevented the development of a more expansive apprenticeship system throughout the United States. With smart policies, states can play a major role in addressing the challenges and expanding access to this highly effective training model.

Sarah Ayres is a Policy Analyst on the Economic Policy team at the Center for American Progress. Ethan Gurwitz is a Special Assistant with the Economic Policy team at the Center. Ben Schwartz is an intern with the Economic Policy team at the Center.

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