Are Apprenticeships the Answer for Struggling Millennials?

German-style apprenticeships are gaining momentum as a way to help America's young workers.

In America, the rite of passage that comes with turning 16 is to get a drivers’ license. In Germany, it’s to become an apprentice.

Since the 1970s, nearly two out of three young Germans opt at age 16 to enter the country’s apprenticeship system, which covers roughly 350 different occupations from mechanics to hairdressers, electricians to office workers.

Apprentices sign a contract with a company for up to four years in exchange for job training, skills certification, and, often, a permanent job at graduation, all the while continuing school. Roughly half a million German firms recruit 1.5 million new apprentices each year.

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Six million young Americans are neither working nor in school.

Though critics say the system is too rigid – students can’t switch careers once they’re in – the benefits of job security have been especially obvious since the recession. In October 2013, Germany’s youth unemployment rate was less than 8 percent, compared to 57 percent in Spain, 41 percent in Italy and 24.4 percent for the rest of the Eurozone.

While some American workforce experts, such as the Urban Institute’s Robert Lerman, have championed apprenticeships for years, most existing state apprenticeship programs have, until recently, remained very small. In the District of Columbia, for example, the Center for American Progress (CAP) reports that only about 200 workers participated in the DC Apprenticeship Council’s program in 2013.

Potentially changing the equation, however, is an epidemic in joblessness among American young people, coupled with a shortage of skilled workers. Add in soaring college costs, and the result is new momentum in some states for adopting or expanding German-style apprenticeship programs.

According to research by Opportunity Nation and Measure of America, 6 million young Americans ages 16 to 24 – or 15 percent –  are neither working nor in school – the highest rate in years. Meanwhile, studies such as Manpower’s Talent Shortage survey find that many employers – 39 percent in 2013 –  are having trouble finding qualified staff, with shortages in skilled trades at the top of the list.

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The two-year degree that apprentices typically receive at the end of the program means a free college education, with no burden of debt.

And while the Georgetown University Center on Education and the Workforce predicts that nearly two-thirds of jobs will require a post-secondary education by 2020, the real cost of a college education has more than doubled in the last 30 years.

Fittingly, it’s German-based companies such as Siemens that are leading the charge to expand the apprenticeship model in the United States. The Washington Post recently profiled a Siemens-sponsored effort in North Carolina to offer high school students apprenticeships at its high-tech manufacturing facility in Charlotte.  At the end of the program, apprentices gain four years’ work experience as well as an associates’ degree from Central Piedmont Community College. During the apprenticeship, they earn $34,000 a year, with the prospect of earning much more in a permanent job with Siemens.

In November, the German embassy launched a road show of its “Skills Initiative,” which aims to educate policymakers about the German system and to tout the successes of companies such as Siemens, the medical equipment maker SARSTEDT, and other German firms championing the apprenticeship model in America.

While it isn’t necessary or even desirable to fully replicate the German system in America – many Americans would object to the rigidity of “tracking” students for life at age 16, and the institutional infrastructure to create a full German-style system would require more money and political capital than is currently feasible – even a modest expansion of apprenticeship opportunities could still confer significant benefits.

The two-year degree that apprentices typically receive at the end of the program means a free college education, with no burden of debt. As in Germany, American apprentices also typically get a permanent job offer at the company where they apprentice, which means job security. Moreover, because of the connection with employers, apprentices know they’re getting currently marketable skills that fit an industry’s needs, even if they don’t stay at the company where they apprenticed.

According to Ben Olinsky and Sarah Ayres at CAP, workers who finish an apprenticeship earn an average starting salary of $50,000 and earn an average of $240,000 more over their careers than a comparable worker without that experience.

For companies, the benefit is a steady stream of workers tailor-made to their needs. And while companies need to invest in the cost of training apprentices, some of these costs are shared through the support provided by partnering community colleges, schools, local governments and even the workers themselves, who are paid a lower wage than their permanent counterparts.

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South Carolina offers employers a $1,000 tax credit per apprentice.

These benefits are what’s prompting some states to make apprenticeships more available as an option.

The Siemens program in North Carolina, for example, is actually part of a larger initiative, Apprenticeship 2000, launched four years ago with the North Carolina Department of Labor, seven school districts and Central Piedmont Community College. Siemens is one of eight companies participating in the effort.

South Carolina likewise launched an apprenticeship program in 2009, Apprenticeship Carolina, that now involves nearly 4,600 apprentices (small by German standards but among the largest in the United States). In addition to advanced manufacturing, apprenticeships are also available in such industries as health care, tourism, transportation and logistics, energy and construction.

Best of all, expanding an apprenticeship program can be achieved at relatively modest cost.

South Carolina, for example, spent a mere $1 million a year to expand its program, with the bulk of the funding going toward a $1,000 tax credit per apprentice for employers.  Even though this amount barely defrays the cost of training an apprentice, “the availability of the modest $1,000 per year tax credit for each apprentice for each year opens the door to conversations about establishing an apprenticeship program,” writes the Urban Institute’s Lerman.

That, in turn, could open more doors for young Americans for whom opportunity is now elusive. goldbrown2

This article first appeared on Republic 3.0 and was republished with permission.

At UPS, we always aim to treat our workers right – and a large part of that effort is making sure they have the necessary skills to excel at their jobs. Our training processes are varied and comprehensive – and thanks to our partnership with the Department of Labor’s Registered Apprenticeship program, our potential employees know that. UPS has pledged to send 2,000 people through its program by 2018. These new workers will work not just in package delivery, but in operations and automotive repair. This expansion builds on UPS’ longstanding commitment to the apprenticeship program. Click here to learn more about this initiative.

Anne Kim is editor of Republic 3.0.

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