Are apprenticeships worth the investment?

New Case Western Reserve University, U.S. Department of Commerce report documents value to companies when investing in apprentices

A Case Western Reserve University Weatherhead School of Management professor was a key researcher and co-author for a U.S. Department of Commerce study that validates the value of apprenticeships in American business.

Susan Helper, the Frank Tracy Carlton Professor of Economics at Weatherhead School of Management, participated in a recently released report from the commerce department, titled “The Benefits and Costs of Apprenticeships: A Business Perspective.” Helper served as the department’s chief economist during 2013 to 2015, and as senior economist at the White House Council of Economic Advisors from 2012 to 2013.

The report, by Commerce’s Economics and Statistics Administration in partnership with Case Western Reserve, is among the first nationally to capture employers’ perspective on the value of the apprenticeship model.

Helper also wrote about the research on her blog.

The companies in the study found value in their respective apprenticeship programs and identified benefits that more than justified the costs and commitments they made to the apprentices.

Susan Helper
Susan Helper

“I was honored to work with my former colleagues at the Department of Commerce Office of the Chief Economist on the report that Secretary Penny Pritzker released,” Helper said.

In 2014, while Helper was in her economics research role at Commerce, President Barack Obama set a goal to double the number of apprenticeships nationally to 750,000 by the end of 2018. According the new report, the half-million mark was passed this year.

However, the report noted, despite their increasing popularity and proven benefit to workers, apprenticeships are not fully understood in the United States, especially from the point of view of employers.

Helper said the report shows that companies may be missing an opportunity if the metrics they use don’t capture the full benefit of investing in apprentice workers.

“The report shows companies how they can use data they already have to look at the returns to investing in apprenticeships,” she said. “That is, firms can use our analysis to help them evaluate investments in their workforce in the same way they evaluate investments in marketing or in acquiring another firm.”

These benefits lead to a potential win-win-win—for companies, workers and communities, helping them stay strong and to compete by providing innovation and good jobs, she said.

“Several companies found success by partnering with strong secondary school vocational programs or community colleges,” Helper said. “Ultimately, expanding the use of apprenticeships could help the United States become both more innovative and have more good jobs.”

The role of apprentices and the amount a business invests in them varies widely, making measuring their return on investment difficult. Helper was part of a team that closely monitored the use of apprentices at 13 businesses and other organizations across occupations, industries and regions.  The study team analyzed how each company used its apprenticeship program.

Other findings

  • One of the companies studied, Siemens USA, experienced at least a 50 percent rate of return on its apprenticeship program, compared to hiring machinists hired straight to the job without the training that apprentices receive. Siemens gained more flexibly to fill its capacity in a plant that makes generators for electric utilities and seeks work repairing generators, the study reported.
  • Apprenticeship programs vary significantly in length and cost. The longest program studied lasted more than four years; the shortest, one year. Not considering start-up costs, the most expensive program in the study cost $250,000 per apprentice; the least less than $25,000. Paying apprentices was a major cost. Other costs included program start-up, tuition and educational materials, mentors’ time and overhead.
  • Ninety-one percent of apprentices find employment after completing their program, and their average starting wage is above $60,000. Because of these positive results, the U.S. Department of Labor has invested $265 million since 2015 to expand apprenticeships. Many states are increasing funding for technical assistance, tax credits to employers and career and technical training to prepare students for apprenticeships.
  • Skilled trades that support the construction industry still represent the core of American apprenticeships, but many other industries, like health care and information technology, are adopting apprenticeships to create a skilled workforce for hard-to-fill jobs. The report also documents that businesses, by starting apprenticeships, also are creating opportunities for women and minorities.

This article was originally published Nov. 22.