Is the ‘American Dream’ Holding Back Apprenticeship?

We talk with Ryan Craig, an investor and author of “Apprentice Nation,” about why the US lags other countries on apprenticeship and what we could learn from them.

Ryan Craig is all in on apprenticeship. As an investor and author, Craig has long focused on college alternatives like bootcamps. But in recent years he’s been bullish on apprenticeships.

As the co-founder of the nonprofit Apprenticeships for America, Craig says government incentives for apprenticeship intermediaries are crucial to getting employers to give the earn-and-learn model a whirl.

Craig describes how the US can become an “apprentice nation” in a new book. Work Shift spoke with Craig about how this vision could become a reality. The exchange follows.

How did we end up in a distant last place on apprenticeship?
Ryan Craig, managing director at Achieve Partners and author of Apprentice Nation

A. Part of it comes down to the fact that college is just so it’s identified with the American ethos, which is that anyone should be able to do what they want to do, what they’re capable of doing—the American Dream. And that worked a generation ago when not just the cost of tuition, but room and board and fees were affordable. For most Americans, it’s not anymore. And it worked before an era of digital transformation, which has completely changed the jobs that college grads want to get. And so now we have a skills gap, we have an experience gap, and traditional colleges and universities aren’t doing the job for most students.

Apprenticeship is an obvious answer because it addresses the skills gap, it addresses the experience gap. It addresses socioeconomic mobility because it’s the only pathway that doesn’t require tuition, doesn’t require the job seeker or student to take a financial risk. It’s a full-time job that pays a living wage with built-in training and career progression.

It’s just become so identified with the trades, the construction trades, plumbing, roofing, electricians. For most Americans, that’s a great job for someone else’s kid, not for their own kid. And it’s viewed as this thing off in the corner. But if we could reframe our thinking around it and look at other countries that have a much more balanced approach to career launch than the US, we would make a lot of progress on a lot of issues.

What can we learn from other countries?

A. What is useful is looking at the UK and Australia in particular, which a generation ago looked almost identical to the US on apprenticeship. They had relatively small apprenticeship sectors, almost all in the construction trades. And through smart policy, that’s changed now. And so those countries are now 8X where the US is in terms of apprentices as a percentage of the workforce. And it’s very common to launch careers in financial services, tech, healthcare, logistics, virtually every sector through an apprenticeship, whether or not you have a degree. That’s not the case here. A lot of what the book focuses on is: How did they do it? And what do we need to do to follow that pathway to become an apprentice nation?

Employers don’t launch apprenticeship programs of their own beneficence. What the UK and Australia have done is recognize the central role played by intermediaries who were for-profits, nonprofits, and public agencies that do the work that these chambers of commerce and unions do in Germany and Switzerland, which is setting up and running these apprenticeship programs. And by the way, that’s what unions do in the construction trades in the US. That’s why we have a vibrant apprenticeship sector in the construction trades. So, the question is how do we identify and incentivize these intermediaries to launch, effectively, apprenticeship service provider services to large employers? 

Often when employers run these programs, it’s small scale, it’s token almost. In the UK, you have 1,200 intermediaries running around, knocking on the doors of large and midsize companies offering to do the heavy lifting of setting up and running apprenticeship programs for them. Companies like Multiverse, for example. It makes all the difference in the world to have a specialized provider who knows how to set up and run these programs that remove much of the financial risk and are subsidized effectively by the government. So that’s how the UK and Australia have done it is by creating subsidies for these apprenticeship intermediaries. Intermediaries get paid for every apprentice they hire and train. And we don’t do any of that in the US, or at least we didn’t until last year.

Will governments in the US step up to invest in apprenticeships?

A. At the federal level, while apprenticeship funding has increased over the past seven or eight years, the Department of Labor is trying to pick winners. They’re trying to identify and give the money to intermediaries. Those who apply are those who are good at getting Department of Labor grants—mostly community colleges and local workforce boards. And they can be intermediaries. But in the book, I differentiate between high-intervention intermediaries who do the heavy lifting, thereby reducing the risk for employers and low-intervention intermediaries. A community college is typically a low-intervention intermediary. What they might do with $5M from the Department of Labor is develop the related technical instruction, the classroom curriculum, register the program, and kind of sit on their hands and wait for an employer to come along and say, we’d love to use that curriculum for our apprenticeship program.

But that’s not how apprenticeship programs work. That’s certainly not how they’ve spread in the UK. They’ve spread because you have high-intervention intermediaries knocking on the doors offering to set up and run the programs. Not just deliver the curriculum, but literally run the apprenticeship program and in many cases hire the apprentice and serve as the employer of record, which is the biggest barrier. Not too many employers are excited about hiring and paying a resource they know will be unproductive for months or longer.

And so I’m most excited about the fact that already through the work that I’ve done with Apprenticeships for America, California last year announced the first formula-based funding for apprenticeship, what we call pay-per-apprentice funding, where intermediaries get paid for every apprentice they hire and train. We’re hopeful that we’ll see other states follow in California’s wake. And then we’re going to begin to see at the federal level performance-based or formula-based funding for apprenticeships, probably starting at a sectoral level. You can imagine semiconductors, cybersecurity, those sectors where there’s already a lot of focus from a national security strategic standpoint, will begin to build that necessary apprenticeship infrastructure by incentivizing intermediaries to get into the business of setting up and running these programs for employers and delivering them the talent that they can’t find today.

Your book says an America more focused on apprenticeship would be fairer. Why?

A. Think about your typical high school graduate. Today they’re going to a guidance counselor, and 90% of it’s about college, or maybe it’s about community college, but that’s where we’re directed. And I don’t care whether it’s a free college program or you’re spending $80K a year on tuition at an Ivy League University—those are all costly options because you’re not going to be working fulltime. You’re going to have to support yourself. You might have to support dependents as well. And it’s going to cost you tens of thousands of dollars a year. Most people would need to take out student loans to do that. You’re going to have that debt and there’s no guarantee that you’re going to complete the program. There’s no guarantee of employment at the end. So it is a risky, risky pathway and particularly risky for those who most need the leg up that postsecondary education ostensibly provides.

Compare that to a future vision of an apprentice nation, where we have as many apprenticeship seats and apprenticeship programs or apprentice jobs as we have seats in freshman classes at colleges and universities in this country, and college guidance counselors spend as much time on career interest and directing students towards earn-and-learn apprenticeship programs as they do on college and universities. Those who don’t want to take that risk—those who are at least able to take that risk—will have the option to take a fulltime job with built-in training and career pathways.

Most of the challenges plaguing higher education, and most of the negative outcomes that students are seeing, at least at the undergraduate level, are a result of what I call asymmetric information, which is students who are selecting colleges and programs where they hope they’re going to be successful. But colleges who are enrolling these students with these profiles, they see their profile and they either know or ought to know that they’re not likely to be successful or that only one in five or one in 10 is likely to complete. But they enroll them, they have them pay tuition, take out loans, and pay to support themselves, even though they know they’re not likely to be successful.

We’re going to have millions of people making better decisions about postsecondary programs if, instead of enrolling in a tuition-based, debt-based program right away, they can work for a few years and support themselves and earn and learn and understand their interests and competencies and make a more informed decision. We’re going to have better decision making around postsecondary programs, if we can switch that order from high school to college, to work, to instead, for many, high school, then work, then college.

In your research for the book, did anything surprise you?

A. When I started the book, I was not intimate with Department of Labor apprenticeship grants. Folks in that workforce world have been living in a bit of a bubble by declaring victory for giving a series of $5M and $10M grants to community college and workforce boards who may or may not actually be creating apprenticeship programs and hiring apprentices. Maybe the most surprising thing was looking at the Department of Labor’s RAPIDS database, which is the database of all registered apprenticeship programs. What I tried to do was to exclude those that are in the construction field, not because they’re not valuable, but because the whole point of the book is that apprenticeship is for all sectors of the economy. And so you take out construction, you still have about 6K programs in RAPIDS. Then we looked at which of these programs are actually real apprenticeship programs, not just paper apprenticeship programs, not just community colleges that developed the curriculum and registered it but aren’t actually hiring apprentices. So we went to every website, and found that of that 6K, only 200 are real apprenticeship programs.

We’re not funding enough and we’re funding the wrong thing. And folks in the workforce world who are used to funding things like Job Corps and other WIOA programs, which are notoriously ineffective, have been fine with it. But if you take an outside view, this is not fine. We should be doing a lot better and we could be spending our money, our apprenticeship dollars a lot smarter. And so I’m hopeful that this book will help start a conversation around how to do that.

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