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How the US Can Make the Apprenticeship Model Work

With the US unemployment rate near a five-decade low and job vacancies close to a record high, businesses say they are scrambling to find workers. Many complain that large and growing skills mismatches prevent them from getting the staff they need. While the Biden administration has pushed for large government spending increases to support college students and former college students, apprenticeship is a far lower-cost, quicker pathway to high skills and good jobs. This summer, the Labor Department announced the latest recipients of a $121 million grant to expand such programs. But more can be done — and fortunately, there are practical solutions.

Apprenticeships combine standard classroom learning with paid, on-the-job experience. They’re often seen as a win-win: Employers ensure that their workforce has the skills to succeed on the job and benefit from apprentices’ productivity; apprentices earn wages and an opportunity to directly apply those skills, which can be far more engaging than sitting in class.

Policy makers appear to agree that increasing the number of apprenticeships can build a healthier and more resilient US economy. What will it take to make that happen?   

First, because getting employers on board is such a sustained and intensive effort, the Biden administration and Congress should offer more incentives for middlemen to help. Projects such as the American Apprenticeship Initiative show that nonprofits, industry associations, staffing companies and other private firms can make it easier for employers to ramp up, at a cost of about $4,000 per apprentice. South Carolina’s Apprenticeship Carolina hired and trained consultants who helped handle some of the paperwork. Along with state tax credits for employers, this led to a jump from about 90 programs in 2008 to over 613 in 2013 and 1,199 today. The gains were sharpest in health care, IT and manufacturing.

Second, the process for formally recognizing apprenticeships, which can take several months, must be improved. Some states limit registration by not approving programs that might compete with existing ones. New York’s agency is so restrictive that it has fewer apprenticeships than Indiana, despite a workforce three times the size.

Another barrier to expansion is the ratio requirements set by state agencies and the federal Office of Apprenticeship. Mandating one or more skilled workers per apprentice can be a deterrent to employers. The Biden administration should ease or eliminate ratio requirements and speed program approvals for businesses that agree to follow certain national standards. Congress also should fund a public-private body to develop and oversee compliance with such guidelines, and ultimately the performance of apprentices, expanding on the work begun by the Urban Institute in recent years.

Finally, the federal government should increase funding for “off-job” learning. Theory courses that complement skills learned on the job are critical. To become fully competent in an occupation, a health care apprentice may require anatomy; an IT worker may require programming theory; and an electrician must learn the science of electricity. Some funding for these courses is already available through high school-based career and technical education; Pell grants; and the GI Bill — but the scope is limited.

Today, about 40% of 25- to 29-year-olds have a bachelor’s degree or higher, but many of these workers lack professional skills. Apprenticeships can fill the gap and prepare a large share of young people for well-paying careers, especially those without a college education.  While we are unlikely to achieve the participation levels of Germany and Switzerland — at 50% and 70% of youth, respectively — reaching 20% to 30% is a reasonable goal. But incremental grants won’t get us there.

Luckily, the success of other free-market countries points the way. Australia, Canada and the UK invest the equivalent of billions of dollars to support apprenticeships, and all create national skill standards. Special Covid-related funding in Australia and the UK that supported incentives for firms and intermediaries boosted apprenticeships for hundreds of thousands of young workers. While the programs themselves yield high-skill and good paying jobs in these countries, completion generally enhances opportunities for higher education, too. College degree apprenticeships are increasingly common in the UK.

Institutional change of this magnitude is difficult and will take time, but with such an effort, businesses can get the workers they need, while increasing earnings through added worker productivity, expanding access to rewarding careers, and improving the lives of millions of Americans.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Robert Lerman is an institute fellow at the Urban Institute and board chairman of Apprenticeships for America.

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