Is the Time Right to Use Apprenticeship Programs to Train Your Employees?

With repeated reference to his long-running television series, during the week of June 11, 2017, President Trump made multiple speeches and issued an executive order proposing to significantly expanding apprenticeship programs by the end of his term in office. This initiative comes amidst widespread agreement about a shortage of qualified workers in several sectors of the economy – a recent United States Department of Commerce report found that American employers could not fill 4.8 million jobs because they could not find qualified workers. Apprenticeship programs, which combine classroom education with extensive on-the-job training, may offer a solution to the so-called skills gap, as well as providing additional benefits to employers who use them.

Apprenticeship programs are typically far more rigorous than internships and provide the type of practical experience that colleges and universities simply do not offer. Under existing regulations, an apprentice must receive at least 2000 hours of on-the-job training and 144 hours of instruction before he or she completes the apprenticeship. Since training is commonly overseen either directly by the employer or by an industry association, an apprentice learns skills directly responsive to the employer’s needs. The employer can directly assure itself of an apprentice’s increased skills by witnessing his or her work performance, and, once the apprenticeship program is operational, it is ensured that it will receive a stream of trained job candidates in the future. The connection that develops between an apprentice and an employer also results in a higher retention rate – studies have shown that 91% of former apprentices remain employees nine months after being hired, while 33% of hires “off the street” quit or are terminated within six months of the beginning of their employment. 

The extensive training offered by apprenticeships comes at a substantial financial expense to businesses, but there are ways to mitigate this burden. Companies are required to make substantial outlays for startup costs, training materials, tuition fees, wages for the apprentices and their mentors and overhead costs. The Department of Commerce recently determined that companies typically spend anywhere from less than $25,000 to $250,000 per apprentice during training. However, many of these costs can be defrayed. Unlike interns, apprentices perform work for an employer – at a lower wage than regular employees. This allows employers to assign higher paid employees to more valuable work. Furthermore, employers can save costs by joining an apprenticeship program sponsored by a trade or industry group instead of developing their own programs. Finally, some states, but not Illinois, offer tax credits to employers who utilize apprenticeship programs.

Many employers also view apprenticeships as too unwieldy and limited to specific economic sectors to be worthwhile.  Indeed, under current regulations, all apprenticeship programs must register with the United States Department of Labor or state level agencies and develop and implement a plan specifying the program’s terms and conditions. Moreover, apprenticeships are only permitted in trades requiring manual, technical or mechanical skills that are customarily learned through apprenticeships. Nonetheless, the registration requirement ensures that all apprenticeship programs meet minimum quality standards. Further, while it is commonly thought apprenticeships are limited to construction trades like plumbing or iron working, the Department of Labor has approved apprenticeships for emergency medical technicians, childcare providers, cyber security workers, solar panel installers and several other occupations outside of the construction sector. Many experts believe that apprenticeship programs are especially effective to train workers in STEM (science, technology, engineering and math) positions.

President Trump’s initiative may make it more attractive for employers to use apprenticeship programs. The executive order issued on June 15, 2017 proposes a change to the current regulations to authorize “industry recognized apprenticeship programs,” which would be developed and approved by trade and industry groups, nonprofits, unions or joint labor/management organizations and would have far less oversight by government agencies. If the regulations are revised, apprenticeship programs would become more flexible and tailored to industry needs, although it remains to be seen if private sector controls will ensure the quality of apprenticeship programs as much as government oversight. President Trump’s executive order also directs the Secretary of Labor to use all available funding to promote apprenticeships, which may mean that apprenticeship programs obtain additional government funding or that companies offering apprenticeship programs may receive new types of tax credits or deductions.

Given the increased use of apprenticeship programs in fields outside construction and the new emphasis by the federal government on such programs, apprenticeship has become a more relevant method of worker training than it has been for decades. Obviously, apprenticeships are not appropriate for employers who only employ low skilled workers or which have high turnover. However, if your business relies upon highly trained employees, an apprenticeship program may be an effective way to develop precisely the type of workforce you need.