Tuesday, January 13, 2015

Apprenticeships Could Be Gateway to Middle Class: European style earn-as-you-learn programs are gaining traction in the U.S.



Hope Johnson and David Whelan divide their weeks between courses at Central Piedmont Community College and the factory floor at Siemens USA in Charlotte, North Carolina, where they’re enrolled in high-tech, European-style apprenticeships manufacturing gas and steam turbines for power plants.


Johnson, 20, and Whelan, 18, are gaining more than just experience. Once they’ve completed their apprenticeships, they’ll each have an associates degree in mechatronics – paid for by Siemens – and a full-time job at Siemens making about $55,000 a year – well above the average salary for similarly educated young adults.

The two frequently visit their old high school, Olympic, to talk about the program and to debunk common misconceptions about careers in manufacturing.

“When people think of an industrial factory, they think dark, dirty and heavy lifting and it’s not that way anymore,” Johnson says. “I’ve worked since 5 o’clock this morning and I don’t look any dirtier than someone who just came in. People don’t understand that manufacturing has come so far. It’s meant for somebody with higher analytical skills and higher troubleshooting abilities [as well as for somebody] who can turn a wrench.”

Advocates of such earn-as-you-learn programs say they’re a win-win: For the apprentice, it’s a pathway to good wages and a solid career that doesn’t require taking out loans to pay for a four-year degree. For the employers – especially for ones in science, technology, engineering and mathematics fields that are facing an upcoming shortage of workers as the labor force ages – it builds a fresh line of talent from the bottom up.

Bob Lerman, economics professor at American University and fellow at the Urban Institute, says it’s “undeniable” the U.S. hasn’t put in the kind of effort that other countries have in building up apprenticeship programs, but American firms seem to be warming up to the idea.

A graphic reading: "For the apprentice, it’s a pathway to good wages and a solid career that doesn’t require taking out STUDENT loans. For the employers – especially for ones in STEM fields that are facing an upcoming shortage – it builds a fresh line of talent from the bottom up."

“Some people might look American employers and say ... they’re short-term maximizers and not going to get into training in a serious way,” Lerman says. “People said the same thing about employers in England about eight years ago. They’ve managed to dramatically increase employer hiring and create apprenticeship slots. Some of them are not that elaborate, but they’ve gotten into the system.”

The apprenticeship model is much less common in the U.S. than in other parts of the world. Apprentices make up 0.2 percent of the U.S. labor force, whereas in Canada they comprise 2.2 percent, in Great Britain they constitute 2.7 percent and in both Australia and Germany, they make up 3.7 percent, according to a Brookings Institution report published in June 2014.

In December 2014, the U.S. Labor Department announced $100 million in grant opportunities to fund registered apprenticeships – the biggest investment in apprenticeships of its kind – as part of the government’s push for training in high-skilled jobs in “high-growth” industries like health care, advanced manufacturing and information technology.

Thomas Perez, the U.S. Labor Secretary, says response from the business community on apprenticeship funding has been “exceedingly positive,” and that the number of qualified applicants for the grant program may even outstrip the government’s ability to fund them.

“Apprenticeships are a remarkably successful pathway to the middle class,” Perez says. “As a nation, over a period of the last couple of decades, we have undervalued apprenticeships. We’ve allowed our commitment to whither and we have done so to our detriment.”

The apprenticeship model seem like a no-brainer from an economic perspective, so it’s easy to wonder why more firms aren’t catching on. In manufacturing, aside from trying to counter misconceptions about the industry, companies may find it difficult to pay for such programs and to know for certain what demand will be years down the line.

Siemens USA estimates each apprentice costs the company $160,000 to $170,000, which includes tuition, books and wages paid during the 3 ½-year program.

“The apprentice program does a much better job of aligning the needs of the marketplace with the skills and the training, and therefore it’s much easier to connect a lot of these high school students with at least a start of their career,” says Eric Spiegel, CEO of Siemens USA.

The American arm of the German industrial giant that launched its apprenticeship program in 2011, Siemens USA is one of a steadily growing number of corporations in the U.S. to have implemented such programs to develop a pipeline of young workers. Other companies to have also done so in the U.S. include German automakers BMW in South Carolina and Volkswagen in Tennessee.

Siemens USA is one of a consortium of eight partner companies in the Charlotte region to offer technical training through apprenticeships. Siemens USA kicked off a similar program in Fort Payne, Alabama, in October 2014 and programs will launch in Sacramento, California and Atlanta in early 2015.

Spiegel says it’s necessary to have the support of high schools and community colleges as well as other area businesses to run a successful program.

“There’s a big onus on the business community,” Spiegel says. “This isn’t really a skills gap, this is a training gap. You can’t expect these students ... to know where the jobs are. You can’t expect the community colleges, technical schools and universities by themselves to understand where the jobs are. You have to go and work with them to do that.”

Similarly, Nick Wyman, CEO of Institute for Workplace for Workplace Skills and Innovation and author of an upcoming book on apprenticeships called “Job U,” says there’s a competitive advantage for business to invest in training a young workforce.

“Some of these companies may come off like they’re doing everyone a favor, but let me tell you, they’re doing themselves a favor,” Wyman says. “Their older workers are marching off into retirement -- they've got no option but to invest in skills. Some smaller- to mid-sized businesses try to train foreign workers or bring in foreign workers ... and what they found out is retention rate of those employees is extremely low.”

According to the U.S. News/Raytheon STEM Index, demand for workers in science, technology, engineering and mathematics fields outstrips supply by a wide margin. After more than a decade of measures intended to boost the number of graduates with STEM skills, industries in the U.S. still struggle to find the highly skilled workers they require.

And a recent Harvard Business School report argues that the erosion of middle-skills jobs – “springboards into the middle class” that require more education and training than a high school degree but less than a four-year diploma – is a strain on U.S. competitiveness and on workers’ standard of living.

Citing multiple surveys, the report said almost half of employers say job candidates lack either the technical or soft skills their firm requires, and the aging of 76 million baby boomers will exacerbate the skills gap further. But only about 45 percent of respondents to the HBS survey said they offer job training or apprenticeships for middle-skills jobs.

Advocates say such programs could help alleviate unemployment among young people who’ve had an especially tough time recovering jobs since the Great Recession. According to the Labor Department, the jobless rate of Americans 19 to 24 years old is 12.8 percent, more than twice the national rate of 5.8 percent. Their participation rate, which measures the share either working or seeking work, has fallen to the lowest levels in recent history as so many drop out of the labor force.

But, Germany for example, aided by its strong dual educational apprentice model, has a “strikingly low” youth unemployment rate of about 8 percent, according to Brookings, compared with its national jobless rate of 6.7 percent.

Adding to the difficulty in kicking off the apprenticeship model in the U.S. also is the hard-to-escape fact that college graduates make a lot more money than those with less education, and their earnings have steadily increased as pay has eroded for those with a two-year college degree or just a high school degree.

In 1965, Americans aged 25 to 32 with a four-year college education or more made a median of $5,178 more per year than those with an associate’s degree and $7,449 more than those with just a high school degree. In 2012, the pay advantage for that highest educated group rose to $15,500 and $17,500 more, respectively, compared with those with an associate’s degree and just a high school degree, according to the Pew Research Center.

But an apprenticeship can be a lucrative option for those who don’t want to or are not able to seek a four-year degree. According to the White House’s own estimates, 87 percent of apprentices are fully employed after they finish their programs, and their average starting salary is over $50,000.

Formal education, furthermore, doesn’t necessarily have to end when the apprenticeship concludes.

“It's all about the right education at the right time,” says Wyman, who himself was a culinary apprentice years before attaining his MBA at Harvard.

No comments:

Post a Comment