Apprenticeships

Introduction

Updated as of January 2020.

For decades, economists have considered the costs and benefits of adopting variations of highly developed apprenticeship systems operating in Germany and Switzerland. Such efforts are based on the belief that apprenticeships are almost always a “win-win” for employers and apprentices. For employers, it is an efficient and cost-effective way to address skills and knowledge that are deficient in the workforce. For apprentices, it is a way to acquire hard and soft skills that boost employment prospects and wages.

Nevertheless, not all firms have the incentive or capacity to support apprenticeships. Businesses in the United States have reasonable concerns about the costs and benefits of work-based programs. During the initial apprenticeship period, the cost of paying wages to apprentices and trainers, supplying apprentices with requisite equipment and materials, and compensating for lost productivity may far exceed any short-term benefits. Studies of apprenticeship programs in Germany, Switzerland, Austria, and England indicate that as many as 88 percent of firms incurred a net loss from apprenticeship programs. A separate study found that 60 percent of all Swiss firms that sponsored apprenticeship programs encountered a net loss.

Only when the apprentice obtains knowledge and skills comparable to trained workers and applies what he or she has learned for an extended period does the business begin to recoup its initial investment. But studies of German and Swiss apprenticeship programs indicate that only between one-third and one-half of apprentices remain with the firm that trained them. As such, businesses may be reluctant to invest in an apprentice because they believe that it will ultimately benefit their competitors. While a valid concern, research suggests that the likelihood of “poaching” talent depends on the industry, the quality of the apprenticeship program, and market conditions.

The size of the business also plays a role. Larger firms can train several apprentices simultaneously, thereby reducing the marginal cost of training each. Additionally, large businesses are better positioned to recoup their costs because they are likely to have post-apprenticeship job opportunities available. Small and medium enterprises, on the other hand, have limited financial and human resources and are less likely to have post-apprenticeship job openings.

Key Facts

• The North Carolina Community College System oversees pre-apprenticeships and apprenticeships in its ApprenticeshipNC program. Pre-apprenticeships are short work-based experiences that introduce high school students to an industry or profession. Apprenticeships are intensive programs that require participants to receive both post secondary classroom instruction and on-the-job training. Although requirements vary by occupation, most apprentices must have a high school diploma or GED.
• According to the North Carolina Community College System, more than 30,381 North Carolinians and 1,041 employers have participated in apprenticeship programs since 2008.
• During fiscal year (FY) 2018-19, the North Carolina Community College System’s program served 11,399 youth and adult apprentices. Construction, advanced manufacturing, and energy were the three most popular industry sectors for apprenticeships in the state.
• Among the 491 youth apprentices participating in apprenticeships in FY 2018-19, 73 percent worked in advanced manufacturing.
• Nearly 2,000 active duty service members received training through an apprenticeship program in FY 2018-19.
• High school students may receive academic credit for satisfactory participation in work-based programs, so long as they meet the requirements established by the North Carolina State Board of Education. To receive one credit, a student must log between 135 and 150 hours, depending on the type of schedule used by the school. School districts may increase hour requirements at their discretion.

Recommendations

1. North Carolina should strongly encourage participation of students and employers in apprenticeship and work-based programs. Rather than attempting to emulate European apprenticeship systems, businesses and educational institutions should work together to customize work-based programs to meet their short- and long-term needs.
2. Financial or tax incentives should not be used to subsidize work-based programs. Subsidies or tax incentives for firms that sponsor apprenticeships may put small businesses at a competitive disadvantage. Rather, participation should be based on the belief that it is in the best interest of the business to do so.
3. Other types of work-based programs should be considered. Field trips, cooperative education, entrepreneurial experiences, internships, job shadowing, mentorships, school-based enterprises, and service learning are viable work-based learning strategies districts may offer to students interested in an industry or profession.