The Benefits and Costs of Apprenticeships: A Business Perspective

The basic components of apprenticeships are the same today as in 1937, when the National Apprenticeship Act set the foundation for apprenticeships in the United States. Apprentices enter into a structured training program of classroom and paid on-the-job training under the guidance of a mentor. As their skills increase, so do their wages. Upon completion of the program, apprentices earn an industry-recognized credential and usually are hired into a job that marks the start of a career. The payoff for workers is clear: 91 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 (DOL) 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. The biggest investment in apprenticeship programs, however, is made by businesses themselves. Yet surprisingly little is known about the payoff to businesses from these investments. A handful of studies have estimated the benefits of apprenticeships to American workers or society as a whole, but there is very little research that estimates how these programs affect American businesses. This study seeks to understand the costs and benefits of the training programs for a diverse set of apprenticeship-sponsoring companies currently registered in DOL's ApprenticeshipUSA LEADERs (Leaders of Excellence in Apprenticeship Development, Education and Research) program. Based on interviews and site visits, this report includes 13 profiles of organizations actively involved in administering successful apprenticeship programs. The report profiles firms, consortia, an educational institution, and others. The report also included two quantitative case studies that examine the relative benefits of apprenticeships versus other staffing options. Together, the profiles and case studies led the study team to identify a series of critical decision points that bear significantly on the costs borne and benefits reaped from apprenticeships. The report also outline how companies--whether they are considering an apprenticeship program, just starting one, or with one well underway--should measure the costs and benefits of their program. This report presents findings from this study and consists of four parts: (1) Overview of apprenticeships; (2) Major decision points (for implementing apprenticeships); (3) Roadmap to measurement; and (4) Case studies. Two appendices are included: (1) Quantitative Results and (2) Literature Review.