Apprenticeships: Can Trump Create More Apprentices Than On His Previous TV Show?

As we commemorate Labor Day, we reflect on the state of the labor market and how the workforce contributes to the economy. How we think about labor employment has shifted since the beginning of the Great Recession. There is more worry about automation, increased costs of livelihood, and whether or not the American dream still exists. We can look at the time since then and say some facets have improved. The unemployment rate (even that of U-6 unemployment) has dropped below pre-recession levels. Wage growth has been on the uprise, and so has job growth. Yet there has been some unease about the labor market. Yet there are some concerns nearly a decade after the Great Recession. Labor force participation is as low as it has been since women made their way into the workforce. Even with the low employment, the United States has not experienced this high of a level in job vacancies in over a decade.

There are those in the public policy world who see the increase in job vacancies as indicative of a skills gap (see here and here). The people over at the centrist Third Way even provide a report on which industries are experiencing a skills gap (see below). One way to potentially alleviate the skills gap, as well as improve the labor market more generally, is to increase the number of apprenticeships in the United States. 

There is an appeal to wanting to approve the status of apprenticeships in this country, given the labor market. The premise behind an apprenticeship is to "combine higher education with transferable and marketable work skills." Apprentices work alongside more seasoned employers, learn skills, and take college courses to complement the work training. The idea is to provide skills that will translate into employability and greater stability in the labor market for that individual. On the longer term, apprenticeships integrate practical skills with an understanding of fundamental principles. President Trump was so intrigued by the idea that he signed an executive order in June to bolster apprenticeships in the United States. Just last week, Congress introduced a bill to include apprenticeships from Section 595 of the IRS tax code, which is a college savings plan that would help give apprenticeships an advantage. One of the appealing outcomes is that nine out of ten Americans who join an apprenticeship find a job within the first year that makes at least $60,000 a year. Apprenticeships also have the potential to boost productivity and earnings (Lerman, 2010). These programs are also shown to have particular advantages for disadvantaged youth (Neumark and Rothstein, 2012). Greater support for apprenticeships has another feature that is seemingly uncommon these days: bipartisan support.

Some like to laud the German case study as an example of how it could be implemented in the United States. However, there is a distinct possibility that the differences in the German labor market might be great enough where the German framework cannot be imported to the United States, particularly with high unionism, industry-wide labor contracts, and professional licensing. The United States also has a cultural bias against non-college secondary education and "blue-collar work," not to mention a laxer labor market that makes it easier for an employee to switch employers than in a place like Germany. Additionally, there is recent research (Hanushek et al., 2017) that concludes that employment gains from apprenticeships can be offset by less adaptability and employability in the future, much like we see in the case of Germany. For more information on the advantages and challenges of implementing apprenticeships in the United States, read this Cato Institute report here. 

We should certainly be looking at alternatives to the four-year college degree since it is not an automatic guarantee for success. There are ways to enhance the presence of apprenticeships in this country, whether it is to provide more subsidies, tax credits, or to better define the role of government, employers, and educators and how they should created workforce development programming. Given the recent research, I think apprenticeships would be more successful for older people with lower education or less skills to gain an advantage in the labor market. I also think that apprenticeships are a good supplement for more disadvantaged students. Even so, we are going to need workers with general cognitive skills that can adapt to an ever-changing work environment, which means that apprenticeships can act as a short-term solution to a more complex problem. At best, apprenticeships are but one piece of the puzzle, which means that we need to better account for and find other alternatives to remedy failing K-12 education.