Rather surprisingly, Hillary Clinton made a shrewd policy announcement last week. Until recently, Clinton’s main answer to sluggish wage growth has been to cheer on labor activists calling for a higher minimum wage. Yet she has just embraced a far more attractive policy proposal that enjoys considerable bipartisan support. Drawing on legislation backed by Senators Tim Scott (R., S.C.) and Cory Booker (D., N.J.), Clinton is calling for a new tax credit that would encourage employers to create and expand apprenticeship programs. Conservatives would do well to follow her lead, and to go further.
To understand the appeal of apprenticeships, consider a central dilemma facing employers and workers alike. Many employers report that they are struggling to find qualified workers to fill vacant jobs, despite high levels of unemployment and underemployment, particularly among young adults. One obvious solution would be for employers to hire on the basis of a worker’s potential to do a job well rather than her ability to do it well right off the bat, and then to provide the worker in question with the necessary training. This is easier said than done, however, as this training process can be costly. And once a worker is fully trained, she may well jump ship to another employer, in which case the employer who provided the training will have wasted a lot of time and money.
Workers could endeavor to ready themselves for the labor market by, say, enrolling in a local community college. But even the best vocational curriculum is no substitute for on-the-job learning. As Peter Cappelli, a leading expert on job training at the University of Pennsylvania Wharton School, has observed, schools are not well-suited to providing work-based skills and experience. “Instead,” he argues, “employers need to be much more involved, not just in telling schools what they want but in providing opportunities for new grads to get work experience and learn the relevant expertise.” Apprenticeships are one way to square this circle. Essentially, apprenticeships allow entry-level workers to gain work-based skills and experience at a wage commensurate with the fact that they have yet to master their new jobs. As a general rule, apprenticeships combine work with classroom instruction, and they culminate in some kind of occupational credential. Employers benefit by expanding the ranks of qualified workers they can hire as full-fledged employees. Workers benefit by gaining skills and experience they couldn’t gain otherwise.
#related#Given the potential benefits of apprenticeships, why are they so rare in the U.S.? Why aren’t employers flocking to establish apprenticeship programs, even in the absence of a tax credit? Don’t forget the risk that newly trained workers might decide to go from one employer to another. Employers can mitigate this risk by paying an apprentice a somewhat lower wage while she gains skills and experience, but not necessarily by enough to make an apprenticeship program an attractive proposition. By offering a modest public subsidy, like the tax credit proposed by Scott and Booker (and now Clinton), apprenticeship programs would become a better bet for more employers.
Of course, money doesn’t grow on trees. Why should we spend scarce resources on increasing funding for apprenticeships rather than something else entirely? Robert Lerman of the Brookings Institution, an economist who has been advocating the expansion of apprenticeships for years, has cited promising research from Washington State on the long-term impact of apprenticeships:
Studies show U.S. apprenticeships are extraordinarily cost-effective. Analyses conducted for Washington State’s Workforce Board show that taxpayers net almost three times their spending on apprenticeships within two and a half years of the program’s completion, and the combined benefits accruing to participants and taxpayers are about five times the costs. By the time former apprentices reach age 65, benefits to taxpayers reach $23 for each dollar spent.
These findings should not be treated as definitive, and it is entirely possible that Washington State is an idiosyncratic case and that its experience might not apply elsewhere. Nevertheless, there is mounting evidence that on-the-job learning has benefits that traditional higher education does not, which makes it all the more striking that taxpayers spend so much on higher education while spending so little on helping young people gain meaningful work experience. Lerman has noted that increasing federal and state funding for apprenticeships threefold would mean spending a small fraction (2 percent) of the 2013 increase in funding for college loans. The case for rebalancing federal spending from traditional higher education to other post-secondary alternatives, including apprenticeship programs, is quite strong.
Even if we accept that it makes sense for the public sector to invest in apprenticeship programs, why should the federal government play a role? South Carolina, for example, has created a successful statewide apprenticeship program at relatively low cost. While state initiatives can and should continue, the case for a federal role is simply that state governments don’t have a strong incentive to finance the training of workers who might eventually move to other states to take full advantage of their skills. Workers enrolled in apprenticeship programs in South Carolina might eventually make their way to North Dakota, and while that might not be ideal from the perspective of South Carolina, it’s not a bad thing at all for the country as a whole. This isn’t to say that the federal government should micromanage apprenticeship programs — far from it. Ideally, different firms and jurisdictions would pursue different approaches, tailored to different job functions and to different populations of workers. But a modest federal tax credit is a perfectly reasonable first step to take.
There is another reason to support the expansion of apprenticeship programs, albeit a more tentative one. Lerman has suggested that on-the-job training can engage many young people who struggle with formal education, and that it can help them become better husbands and fathers. University of Virginia sociologist Brad Wilcox has in a similar vein identified apprenticeships as a key part of a broader strategy to strengthen the economic foundations of marriage. Are they right to suggest that apprenticeships will make much of a difference in promoting family stability? I can’t say. Yet the possibility is intriguing, particularly for those who see the presence of stable male parents in the home as important to the success of young men.
Clinton is the first presidential candidate to make apprenticeships a centerpiece of her domestic-policy agenda. But there is no reason she should be the last. Indeed, one could argue that apprenticeships are a better fit for conservatives than for liberals. After all, it’s the left-of-center coalition to which Clinton belongs that is so committed to the care and feeding of the public higher-education institutions that have done such a poor job of preparing young Americans for the workforce.