Homer said “It is a wise child that knows his own father.” Well, Ivanka Trump surely did a much-needed goody for her dad by convincing him of the great importance of apprenticeships, a woefully underappreciated vehicle for supporting human capital development and boosting economic growth.
Last week President Donald Trump signed an executive order to increase apprenticeships and job-training programs. While this new action is not a departure from the past — the Obama administration actively supported apprenticeship training and Hillary Clinton championed it during her campaign — there are some unique features of the new directive, projected to cost $200 million. First, the executive order takes some authority away from the U.S. Department of Labor and instead outsources more to third-party companies and schools. Companies, trade associations, and unions will in fact develop their own apprenticeship program guidelines. Second, Trump’s order will create a task force to evaluate the 43 separate work programs costing nearly $17 billion a year and carried out by 13 federal agencies.
As Labor Secretary Alexander Acosta points out, the skills gap is especially challenging for the U.S. economy, especially in fast-growing sectors such as financial services, health care, and information technology.
Although the federal government has regulated and certified apprenticeships since 1937, these programs have never really received the attention and promotion they deserve. The norm has been for the private sector to hire from vocational and technical schools and to train employees on the job.
The marketplace reality is that there are 6 million vacant jobs in the United States today, including 360,000 in manufacturing. For the last 40 years the Occupational Handbook of the United States, published by the U.S. Department of Labor, has reported that the fastest growing demand is for jobs of a technical nature — the vast majority not requiring a college degree. Yet apprentices comprise only 0.3 percent of the American workforce (compared with 60 percent in Germany, the industry standards for apprenticeships), even though 90 percent of them are employed upon competing their apprenticeships and earn an average starting wage of $60,000 per year.
While companies such as IBM and Dow Chemical in the manufacturing sector offer top-notch apprenticeship programs, the retail and services sector are following suit, with firms such as Walmart, CVS, Hertz, and Sears leading the way. These programs do not come cheap, costing as much as $170,000 per apprentice or more. As for labor, the North American Buildings Trades Unions and other unions have run very successful apprenticeship programs for more than a century, often through labor-management partnerships.
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