Revitalizing the Federal Apprenticeship System

When policymakers discuss noncollege pathways, their focus invariably turns to apprenticeships—and for good reason. Apprenticeship programs, especially in their European iterations, have a history of success. They have long been viewed as a way to address labor shortages in middle- and, more recently, high-skill occupations.

The current unprecedented moment in the labor market underscores the appeal of apprenticeships. Initial unemployment claims have returned to pre-pandemic lows, but labor force participation remains stuck at rates not seen since the late 1970s. According to the Bureau of Labor Statistics, 11.4 million jobs were open as of April 2022, even as several million workers are missing from the labor force. As Baby Boomers continue to retire, the shortfall is likely to persist in many skilled occupations. Labor shortages may be the norm rather than the exception for the next chapter in the American economy.

Although this challenge could be addressed by additional skill-based immigration or improved outcomes from existing workforce investments, there is little evidence of bipartisan appetite for substantial change on either front.¹DHS and DOL did add an additional 20,000 H2-B visas to the annual cap in January 2022. In response, employers are looking for ways to build a sustainable workforce and, in many cases, have been forced to alter their assumptions about worker qualifications, training, and retention.²Note that firm investment in apprenticeships is somewhat related to the business cycle and expectation of scarce skilled labor.

Policymakers have a unique opportunity to incentivize apprenticeship to meet the needs of employers and the labor market; to meet the moment, they must embrace broader, not narrower, thinking about apprenticeship innovation.

The Promise and Peril of American Apprenticeships

The appeal of apprenticeships is due, at least in part, to their flexible and work-centric teaching model. They integrate classroom instruction, on-the-job learning, mentorship, and paid employment and confer a recognized credential for completers. Sponsors, such as employers, groups of employers, labor unions, or similar organizations, design the programs to meet industry-specific workforce needs. Student-workers are hired into the programs as apprentices. The success of many apprenticeship programs demonstrates that classroom-based learning is neither the only nor the ideal way to learn marketable skills.

The outcomes are often quite strong. The current average starting salary for apprentices is over $70,000. Over 91% of apprentices gain employment at the end of the program (often with the training employer). Hired apprentices have an 89% retention rate over the first three years. Moreover, unlike traditional higher education, apprentices are paid competitive wages during training, earn a recognized credential, and have little or no education debt when they complete the program.

In theory then—if not in practice—apprenticeships hold the promise of a viable alternative to the college-for-all education model. They could provide flexible, innovative pathways for connecting the next generation of students to the workforce, as well as retraining incumbent workers who need or want to switch careers and broadening access to family-sustaining jobs.

Apprenticeships have been a bipartisan policy priority for nearly a decade. The Obama administration launched the American Apprenticeship Initiative with $175 million in five-year grants to expand registered apprenticeships. The Trump administration launched two rounds of H1-B fee-funded apprenticeship grants totaling nearly $300 million: Scaling Apprenticeship through Sector-Based Strategies in June 2019 ($184 million) and Apprenticeship: Closing the Skills Gap in February 2020 ($100 million). The Biden administration’s latest Training and Employment Services (TES) budget requested $303 million dollars for apprenticeship efforts. For comparison, there was no direct TES apprenticeship funding in the 2015 enacted budget; funding for apprenticeships has increased almost every year since then.³This is not to imply there was not apprenticeship funding; it was simply coming from other non-TES sources.

But the American apprenticeship system is quite broken. Prevailing attitudes consider an apprenticeship a second-tier option to a college degree, even though apprenticeships often offer significantly better value, especially when compared with non-degree completers. American apprenticeships differ from the successful models prevalent in many Western economies. For example, the Swiss education-to-work pathways are clearer and more flexible than the U.S. model; apprenticeship and higher education are not seen as opposing options for young people who often connect elements from both training options. In fact, over 70% of Swiss high school students choose apprenticeships as their first training option during and after high school.⁴Some of these statistics are changing as Switzerland’s immigration and worker profile has shifted.

The Swiss, German, and British models apprentice students across a more diverse array of occupations than the American system, in which over two-thirds of registered apprentices are concentrated in the construction and building trades.⁵This is not to say there are not a wide range of apprenticeable occupations in the U.S.; there are simply proportionally more construction apprentices. See the U.S. Department of Labor’s list of acceptable occupations. Related: Swiss teenagers show more diverse career interests than their peers, which is attributed in some part to the prevalence of vocational training. Non-construction employers may not know about apprenticeship, are often deterred by the significant bureaucratic hurdles to register an apprenticeship program with relevant government entities, or may not be able to justify the costs necessary to establish a program.⁶Some employers also list poaching of trained employees or apprenticeship drop-outs as barriers.

Despite a bipartisan consensus on funding, there is not agreement on what kinds of apprenticeships are acceptable. In workforce policy settings, the term almost exclusively refers to the Registered Apprenticeship (RA) program established by the 1937 National Apprenticeship Act (NAA).⁷This less-than-500 word statute is still the foundation of today’s RA programs. The RA program is beloved by left-of-center legislators and labor unions, and recent efforts to build additional apprenticeship pathways have faced resistance.

In summer 2020, the Trump administration launched the Industry-Recognized Apprenticeship Program (IRAP), designed to allow a parallel, flexible path for non-construction apprenticeships. IRAP apprenticeships adhered to most of the core principles of the RA program, but (as the name implied) empowered specialized industry standards-setting bodies, rather than the Department of Labor or state apprenticeship agencies (SAA), to approve apprenticeship programs. This shift would have opened more apprenticeship opportunities, more flexibly met needs of non-construction employers, and ensured that training standards evolved in step with industry standards.

Despite nonpartisan requests to test the IRAP program’s worth, the Biden administration dismantled the program in early 2021. Congress also recently passed a version of the NAA reauthorization bill, now combined into HR 4521, authorizing $3 billion in grant funds over the next five years and cementing the registered apprenticeship system in place with prescriptive language—including requiring the Department of Labor to report any vacant state apprenticeship director job to Congress within 90 days, requiring all SAA-run states to reapply for recognition, requiring multiple new layers of state reports and data collection, specifying apprenticeship, pre-apprenticeship, and youth apprenticeship program standards, and precisely constraining a new apprenticeship expansion grant program.⁸The standalone reauthorization was later incorporated into HR 4521 text. The reauthorization language was not in the Senate equivalent bill on competitiveness with China. Previous reauthorization summary from 116^th Congress can be read here. Adding overly prescriptive legislative language and a massive funding infusion to the status quo is unlikely to create an environment for innovation and scaling.

For a policy area with so most promise, policymakers seem to have reached an impasse. But there are common-sense reforms that would revitalize the apprenticeship system in ways that better serve American workers and industry.

A Vision for Revitalizing Apprenticeships

A revitalized apprenticeship system should keep core quality elements (such as paid employment, a mix of classroom and on-the-job training, mentorship, and recognized credentials), while also allowing the model to adapt to the evolving needs of sponsors, apprentices, and the labor market. It should promote flexibility and innovation within the existing apprenticeship framework—and outside it.

First, policymakers should encourage innovation outside the current apprenticeship system with increased funding. Unlike the vast funding available to higher education institutions through the federal student loan program, federal funding for apprenticeships is opaque, piecemeal, and limited. The Department of Labor supports some sponsors of apprenticeships, but limits funding to pre-apprenticeship, youth apprenticeship, or registered apprenticeship programs. Federal funding for other work-based learning models, such as the Workforce Innovation Opportunity Act (WIOA) funding, can be used to fund some but not all on-the-job training and often has prohibitive requirements for smaller employers. As a result, apprenticeship costs accrue mostly to employers and remain a significant barrier to sponsoring apprenticeships.⁹Apprentices have the clearest and easiest to measure rates of ROI after apprenticeship. Efforts to measure return on investment for employers are very limited (albeit positive).

In light of these limitations, states or industry groups should pilot and temporarily fund a variety of work-based learning and apprenticeship-style programs and rigorously evaluate outcomes to better identify scalable success models. Innovation could take various forms, and targeted incentives (financial or otherwise) should be tied to outcomes such as apprenticeship completions. As these efforts are likely outside the bounds of the registered apprenticeship program and its constraints, funding may need to come from non-federal sources or be housed in different state agencies, where relevant. Pilots could include funding to cover costs of data collection and program evaluation to ensure the sponsor capacity to contribute findings for future data-driven investments.

Second, policymakers should pursue structural reforms that shift the internal momentum of the registered apprenticeship (RA) system. Many employers have written off the RA program due to its paperwork and reporting burden, slow approval timelines, or inflexible program requirements. Others remain unconvinced of the return on investment, especially when designing an apprenticeship program from scratch. These factors can be valid headwinds for apprenticeship sponsors, and reducing them is a prerequisite of apprenticeship expansion.

Employer costs could be reduced with greater use of occupational frameworks, wider adoption of competency-based or hybrid frameworks (rather than the time-based models prevalent in construction trades), and apprenticeship on-ramps through collaboration with both high schools and higher education institutions.¹⁰Note that Swiss apprentices can start at age 15 (equivalent to a 10^th grade level), but American apprentices generally cannot start until age 16, or for certain occupations, age 18. There is a persistent employer knowledge gap on apprenticeship, but employer outreach and education on apprenticeship does often lead to program growth. Continued federal and state investment in such employer education should also incorporate learning fromemployers about what’s not working and address barriers. Related, quality unregistered programs have been able to produce high-skill, in-demand graduates, and the registered program should be willing to learn and adapt from other successful models.

In addition to the time burden, employers bear the up-front cost of wages and benefits for not-yet-productive apprentices and their classroom related training instruction (RTI). These costs vary significantly by industry and change the cost/benefit analysis for a firm. Employer and/or apprentice costs are often subsidized or offset in European models. For example, Swiss canton (state) government pays for the in-classroom training for high school-aged apprentices (who can also start earlier than American counterparts). As of 2017, the United Kingdom levies a tax on employers of a certain size to fully fund off-the-job training for British apprentices. Other countries provide employer tax credits or targeted incentive payments for apprenticeship outcomes. In short, the U.S. system likely needs additional industry-specific creativity about how to reduce the employer costs barrier where apprenticeships could otherwise develop. Apprenticeship expansion efforts should better understand this subset of employers whose cost/benefit analysis would shift given smaller changes, rather than broad, generalized apprenticeship outreach.

Structural change might also include addressing the historical split between federal and state-led apprenticeship oversight. Thirty state or territory apprenticeship programs are managed by State Apprenticeship (SAA) agencies, and 26 are run directly by the Department of Labor’s Office of Apprenticeship (OA). This separation has historical roots and adds significant complexity to the administrative structure—including time lags in program approvals as well as the granularity and cadence of data collection.¹¹Note that a new data portal for SAA states has alleviated some of the reporting gaps. Five states are still outside RAPIDS and the portal but are expected to be integrated by fall 2022. See an example of the data gap causing methodological gaps here. It also affects funding, as multi-state apprenticeship programs approved by the Department of Labor as a national program may not be eligible for certain state funds if not also approved by the state agency. If the apprentice is a veteran using GI Bill education and training benefits, the sponsor must apply to a separate state agency run by the Department of Veterans Affairs.

At the least, national program approval should translate to approval to operate in all states and territories. Detailed apprenticeship office performance metrics on relevant lead and lag indicators of apprenticeship success should be collected and publicized for both SAA and OA states to inform the best organizational structure going forward. States that demonstrate consistent positive outcomes could be recognized and rewarded with additional funding or regulatory relief to allow further innovation.

There is much positive policy enthusiasm around apprenticeship—including the recently reconstituted Federal Advisory Committee on Apprenticeship and the newly formed nonprofit Apprenticeships for America. Such efforts are critical, especially in partnership with broader discussions about secondary and post-secondary education reform. Ensuring that incoming student-apprentices are aware of and ready for an apprenticeship is as important as ensuring graduating apprentices can smoothly transition into the workforce. In short, it will take sustained, open-minded, bipartisan, and strategic creativity to move apprenticeship from a productive but niche model to a flourishing ecosystem of quality programs across industry sectors.