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An Alternative to Debt: Apprenticeships Update

An Alternative to Debt: Apprenticeships Update

By Reid Setzer

Over the past two years, Young Invincibles has been happy to be part of a renewed focus on apprenticeships as a means to getting young people marketable skills so they can support themselves, their families, and their communities. Policymakers in Congress, the executive branch, at the state level, and private businesses have taken actions to promote apprenticeships that have yielded tangible results already. This is evidenced by hundreds of stakeholders promoting National Apprenticeship Week, taking place November 2-8, 2015. But first a refresher–why are apprenticeships so good for young adults?

From a big picture perspective, apprenticeships are a valuable tool we can use to address the current and future challenges facing our country. The United States is projected to have a deficit of five million workers with postsecondary education by 2020.  Expanding apprenticeships is one promising and cost-effective solution for closing that gap. Apprenticeships offer postsecondary training that will result in an essential industry certificate at minimum, a two-year degree in many cases, and four-year degrees in others, all while the apprentice is earning a paycheck. In an era of skyrocketing tuition and student debt, this debt-free, earn-and-learn model is an enticing alternative to student loan debt.

Apprenticeships also pay off in the long term. A 2012 DOL study found that those who participate in Registered Apprenticeships make over $300,000 more than those who do not over their lifetimes, including employer benefits. The study also showed that even those who participate in Registered Apprenticeships without completing them earn over $124,000 more over a 36-year career than those that never participate. But unfortunately, apprenticeships are not plentiful enough. In 2012, there were only 358,000 registered apprentices in the United States, which was only seven percent of the total number registered in England that year.

Since the release of several recent reports detailing the positive aspects of apprenticeship, there have been numerous positive developments in a variety of areas. First, in Congress, policymakers have developed legislation to promote apprenticeships in a variety of ways. Senator Cory Booker (D-NJ) and Senator Tim Scott (R-SC) introduced the Leveraging and Energizing America’s Apprenticeship Programs (LEAP Act), which would create a federal tax credit for employers that establish and/or expand Registered Apprenticeship programs. Senator Patty Murray (D-WA) and Rep. Mark Pocan (D-WI) also introduced the Promoting Apprenticeships for Credentials Act (PACE Act), which would increase pre-apprenticeships and apprenticeships through a federal grant program promoting public-private partnerships, and strengthen the federal Office of Apprenticeship’s ability to publicize the benefits of apprenticeships. Most recently, Senators Maria Cantwell (D-WA), Susan Collins (R-ME), Tim Kaine (D-VA) and Kirstin Gillibrand (D-NY) introduced the Apprenticeship and Jobs Training Act of 2015, which would also create a federal tax credit for employers that establish Registered Apprenticeships, as well as facilitate veterans receiving apprenticeship credit for military training. Young Invincibles proudly supports all three initiatives. It is very encouraging to see members of Congress taking a leadership role to improve our nation’s apprenticeship system.

Furthermore, the Obama Administration and the Department of Labor have also been proactive in promoting apprenticeship in recent years. After discussing apprenticeships in his 2014 State of the Union Address, the President announced an American Apprenticeships Grant program to help fund the expansion of apprenticeships. In late 2015, the Administration followed through on that announcement by awarding $175M in grants to 46 public-private partnerships with the goal of creating 34,000 apprenticeship programs. The Department of Labor has also reached out to hundreds of stakeholders to help promote National Apprenticeship Week, and held a White House Summit on Apprenticeship in during early September.

Even before the federal government began getting more involved in promoting apprenticeships, state-level success stories were vital in demonstrating how apprenticeship can work in the United States. In South Carolina, Apprenticeship Carolina was launched in 2009, complete with a state-level tax credit for employers and trained Apprenticeship Consultants to facilitate the creation of individual programs. The state spent roughly $1M a year to expand its program. The results speak for themselves: there has been a 748 percent increase in Registered Apprenticeship programs within the state, and a 726 percent increase in the number of apprentices in the state since 2007. In North Carolina, Apprenticeship 2000 was founded to offer technical career opportunities to high school students and employment after graduation. Since then, there have been other apprenticeship programs founded around the state by local manufacturers, as well as German industrial giant Siemens.

Finally, businesses have also gotten involved in promoting apprenticeship in a big way. A 2009 survey of over 900 employers indicated their apprenticeship programs were valuable and a net gain. Since then, over one hundred companies have signed up to be Apprenticeship Leaders to create their own programs and promote apprenticeships nationwide.

The combined efforts of the federal government, state governments and private businesses have resulted in strong early growth in apprenticeships. From mid-2013 to mid-2015, apprenticeship participants went from approximately 375,000 up to over 430,000. More than 170,000 individuals entered the apprenticeship system in fiscal year 2014. These numbers are trending in the right direction, but the level of overall Registered Apprentices is still lower than it was in fiscal year 2008, indicating there is much more work to be done to reach and exceed that figure. A committed effort to expand apprenticeship programs will help young people acquire the skills they need to succeed in the 21st century economy.