Apprenticeships can help workers in dynamic economy

Brenden Bodily and Megan Jenkins, Tribune News Service

After graduating from high school in Vernal, Utah, Kray Haslem spent seven years gaining the licenses and experience he needed to become a commercial airline pilot. In 2019, Kray was working as a flight instructor to gain flight hours and advance his career. One day, he was on a practice flight with a student when shortly after takeoff, the engine failed and the plane crashed. Thankfully, both Kray and his student survived. But Kray’s injuries made it impossible for him to continue his aviation career. In one moment, the years of effort he had invested in his career were no longer relevant. As he recovered, he started looking for a new career path to support his family. Kray decided to complete a programming apprenticeship and eventually began working as a back-end web developer.

Tragic circumstances like Kray’s aren’t the only reason people are forced to switch careers. Today, advances in artificial intelligence are leading many to wonder how workers will stay competitive. Research by Goldman Sachs estimates that as many as two-thirds of jobs in the US and Europe could be at least partially automated by AI in the future. This challenge isn’t new. Throughout history, technological advances have pushed workers to gain new skills or move into new industries to remain relevant. For example, from 2000 to 2010, 5.6 million US manufacturing jobs were lost. Researchers at Ball State University estimated that 87.8% of those losses were caused by productivity improvements, largely driven by technological development.

As the pace of innovation continues to increase, how can we help displaced workers become qualified for work in new industries? This process is known as reskilling. Our research found that the most effective programs have industry-driven curriculums, often bolstered by high levels of employer involvement. They also provide transparent employment outcomes and widely recognised skill signals, such as credentials. Apprenticeships like the programme Kray participated in are strongly suited to provide these. In an apprenticeship, students are trained on the job, typically with supplemental classroom instruction. They learn the trade by doing the trade, learning to handle the unanticipated challenges and unique customer requests that arise in any real job. For example, after Kray developed an understanding of the programming languages his company used, he solidified his skill set and built a portfolio of experience as he was put to work on real projects for clients.

Another example is electricians, who accounted for the largest share of American apprentices in 2021. Apprentices in this field take classes on electrical theory and regulation all while completing the 8,000 work hours needed for certification. This on-the-job experience is supervised by an experienced electrician. Employers face a direct incentive to give their trainees the highest-quality training possible. A highly skilled apprentice is better equipped to create more value for their company. Our research finds that this training approach is a powerful one. In one study, apprentices saw wage growth that was 2.7 times faster than that of similar workers without the same hands-on training. Ninety percent of registered apprentices keep their jobs when they finish training.

Although apprenticeships are common in many countries, they are relatively uncommon in the US. This is despite hundreds of millions of dollars in federal funds being spent over the past few decades to support their development. Why aren’t apprenticeships more common? In many states, workers in specific industries must hold an occupational license before they are allowed to work, making it impossible for apprentices to learn on the job. Some states have recognised this barrier. In Utah and Minnesota, lawmakers have recently allowed for nursing apprenticeships in combination with a traditional nursing programme. These changes are crucial to encourage more workers to move into in-demand fields like health care.

Another reason apprenticeships aren’t more common is that businesses aren’t rewarded for providing them. Currently, employers can’t deduct the cost of investing in human capital like they can for physical assets like equipment. One way to expand apprenticeships would be through a simple change to the tax code. Labor economist Michael Farren suggests allowing businesses to deduct the cost of reskilling their employees from their taxes. This would incentivise more employers to start their own training programs, including in industries where on-the-job training is not currently a common practice. These programmes could also address labour shortages in fields like nursing, IT and automotive work.