Education & Workforce

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Investing in Apprenticeships to Fill Labor-Market Talent and Opportunity Gaps

10.21.24 | 9 min read | Text by Jan Jaro

Over the last 20 years, the cost of college has skyrocketed, with tuition costs far outpacing wage growth. At the same time, many employers complain that they’re unable to find high-quality talent, in part due to an excessive focus on the signaling effect conferred by college degrees. Although the last three administrations have made significant strides towards expanding the number of pathways to high-earning jobs through apprenticeship programs, they remain under-utilized and have significant potential for growth. To maximize the potential of apprenticeship programs, the federal government should develop a cohesive approach to supporting “apprenticeships of the future,” such as those in cyber, healthcare, and advanced manufacturing. These apprenticeships provide high pay and upward mobility, support economic growth, and serve vital national interests. To maximize the benefits provided by an expansion of high-quality apprenticeships, the federal government should articulate degree pathways and credit equivalencies for individuals seeking further education, collaborate with industry associations to create standards for skills acquisition, and develop an innovation fund that supports cutting-edge labor market innovations, including those in apprenticeship programs.

Challenge & Opportunity

While recent student debt cancellation received significant attention, the key underlying driver is the spiraling cost of college: tuition at four-year universities has risen by more than 125% in the last twenty years, far outpacing inflation and leaving students with an average debt load of $28,000 by graduation. To alleviate the strain, policymakers have increasingly recognized the potential of non-degree training, particularly apprenticeships, which mix on-the-job training with targeted academic skills acquisition. Apprenticeships, which typically last between a few months and 2 years, enable an individual in a high school or tertiary education program to work with an employer, earning a wage while developing skills that may lead to a permanent position or enhance future employability. President Obama spent $260 million on apprenticeship training, while the Trump administration spent $1 billion. Thus far, the Biden administration has spent $730 million to expand registered apprenticeships. 

Nevertheless, apprenticeships in America remain vastly underutilized compared to some of our peer economies. In Germany, 1.2 million adults are enrolled in apprenticeship programs across 330 occupations. By contrast, the U.S. has roughly half as many apprentices despite enrolling 6.5 times as many college students as Germany. Moreover, apprentices are overwhelmingly concentrated in roles such as electricians, machinists, plumbers, and other industries historically classified as “skilled trades.” 

American employers have put a significant premium on college degrees. Research from the Harvard Business School highlights the pervasiveness of degree inflation in many middle-skill, well-paying jobs. The figure below shows the “degree gap percentage,” which is the difference between the percentage of job descriptions requiring a college degree and the percentage of job holders holding a college degree.

Historically, employers’ emphasis on degrees has made wide-scale adoption of apprenticeships outside of skilled trades more challenging. However, attitudes towards apprenticeships continue to change as more employers realize their versatility and applicability to a variety of industries. Over the past few years, companies have started to take action. For instance, JP Morgan Chase has provided $15 million since 2018 to create apprenticeship programs in operations, finance, and technology, while Accenture has led the way in developing apprenticeship networks across the U.S. Apprenticeships have clear momentum and strong applicability to critical, strategic jobs, and federal, state, and local officials should capitalize on the opportunity to create a coherent strategy.

Policy Framework For Strategic Jobs

To identify areas of policy synergy, policymakers should consider the following criteria for jobs that should attract government funding and policy support:

1. Essential to economic growth: roles that are frequently employed in high-growth industries, or else required to improve the future general productivity of businesses.
2. Necessary to protect American interests: jobs that have broader implications for American national interests, including economic competitiveness, national security, green energy, and public health.
3. Middle-skill roles that do not require college degrees: while higher educational attainment is generally desirable, it is not a suitable nor affordable option for all individuals, and many roles can or should support workers who have alternative credentials. Simply put, these jobs should provide pathways into the middle class without excessive education debt burdens.
4. High current job shortages: demand for roles far exceeds current labor supply.

Using this framework, there are three  areas in which the U.S. has clear, pressing needs:

1. Tech job shortages in the United States will cost the American economy over $160 billion in revenue, driven by a shortage of over 1.2 million workers.
   1. Cyber attacks alone cost the American economy 1% – 4% of GDP , which can be partially addressed by eliminating the existing talent shortage of 350,000 cyber professionals.
   2. In addition, 50% of the federal tech workforce is over the age of 50 and just 20% is under the age of 40, indicating a large “retirement cliff” in the medium-term horizon.
2. Although the U.S. has had a long-standing need for nurses and medical professionals, the COVID pandemic highlighted their importance and exposed systemic workforce shortages. By 2030, the country will be short over 500,000 nurses.
   1. The country also suffers from a lack of healthcare educators, with nearly 80,000 qualified nursing applicants turned away due to a lack of training capacity.
   2. While many critical healthcare roles (e.g., RNs and NPs) require at least a bachelor’s degree, apprenticeships are a great way to increase the pipeline of lower-level medical staff (e.g., medical assistants, CNAs, LVNs), who can then be upskilled into the RN role or higher.
3. Today, the U.S. has over 600,000 unfilled manufacturing jobs, which may hamper efforts to bring back clean energy and semiconductor manufacturing despite the hundreds of billions invested by the Inflation Reduction Act, CHIPS Act, and Bipartisan Infrastructure Law. Cumulatively, this talent shortage could reduce American GDP by $1 trillion. The gap is most acute in a handful of roles, including assemblers, production supervisor, inspectors, and welders. However, these roles are essential to empowering the advanced manufacturing revolution, and need to be filled in order to maximize American industrial potential.

Policy Recommendations

In order to maximize the potential of apprenticeship programs in key strategic areas, the next administration should focus on coordinating resources, defining standards, and convening key stakeholders, which include employers and higher education providers, including private sector providers who demonstrate strong outcomes. To achieve this, the next administration should focus on the following policies: 

Recommendation 1. The Departments of Labor and Education should jointly lead the creation of a national strategy for increasing apprenticeships and blended work-learn programs in essential roles and industries. In conjunction with other government agencies, they will stand up a “Strategic Apprenticeships” Task Force. This task force will consist primarily of governmental agencies, including the Department of Defense, Department of Treasury, and the Fed, that have clear mandates for improving worker outcomes which are tied directly to national strategic priorities. This task force will cooperate with the Advisory Committee on Apprenticeships (a committee convened by the Department of Labor that consists of labor unions, community colleges, and other institutions) to set short, medium, and long-term priorities, propose funding levels, and develop a coherent apprenticeship and training strategy.

• The Strategic Apprenticeships Task Force should adopt a “whole of government” approach and when appropriate, include other stakeholders such as the Department of Commerce or the Department of Defense. The task force will then work closely with bodies with deep domain expertise on apprenticeships (e.g., the Advisory Committee on Apprenticeships) to ensure that the proposed standards and structures are appropriately designed and implemented. This will culminate in the development of a strategic plan for apprenticeships that is renewed every five years and outlines key roles, skills, technologies, and training pedagogies that merit greater attention.
• Where necessary, the task force should create standards for apprenticeship programs that qualify for federal funding. The Registered Apprenticeship Program provides a repository of federally or state validated apprenticeships. However, occupations in cybersecurity and software development remain highly under-represented compared to roles in “traditional” industries such as manufacturing. The task force should work with industry certifications and associations, such as the ISC(2) and ISSA, to develop skill acquisition standards that will form the backbone of new apprenticeship programs.
• To ensure that students have multiple pathways to acquire additional educational credentials, the federal government should create a set of competency-based standards that equate on-the-job activities with classroom learning, creating clear pathways for students in apprenticeships who want to later receive an associate’s or bachelor’s degree. While this applies to all apprenticeships (and is a defining feature of the very successful Swiss and German systems), creating federal learning standards will improve the appeal of apprenticeship programs in strategic sectors while giving individuals a path to higher credentials in the future. Great strides were made for the cyber workforce, but more can be done in other sectors as well.
• At the state and local levels, elected officials should work with local chambers of commerce, community colleges, universities, and alternative education providers such as coding bootcamps to translate learning standards into apprenticeship opportunities, course credit, and pathways to an associate’s or bachelor’s degree. Where possible, local officials should also engage with nonprofits and other service organizations to provide wrap-around support structures such as career coaching, financial planning, and mental health resources which have been shown to improve persistence and outcomes.

Recommendation 2. Congress should commit federal funds for apprenticeships in cyber, software engineering, healthcare, and advanced trades (“apprenticeships for the future”), which will be allocated by the Department of Labor as prioritized by the Strategic Apprenticeships Task Force. Given the strategic value and existing job shortages for these roles, the Department of Labor should direct at least 50% of funds to roles that (a) provide strong pathways into middle-class jobs and (b) address pressing economic and strategic shortages in our economy:

• Past presidents’ increased funding for apprenticeship programs demonstrates broad bipartisan appeal for apprenticeships. This can be paired with the increasing bipartisan consensus on China, thereby linking job creation in key industries with national security implications (e.g., cybersecurity). The Jumpstart Our Businesses by Supporting Students Act of 2019 and the Bipartisan Workforce Pell Act both call for Pell Grants to be used for certain short-term learning programs. New legislation can go one step further by adding funding for short-term programs in “strategic roles.” 
• Funding policies can take into account other economic and social justice priorities. For instance, the U.S. Department of Labor recently announced $87.5M of funding to expand diversity in registered apprenticeship programs. In addition to expanding the amount of funding targeted at women and individuals of color, the next administration could create funds for former apprentices of color to enter quality 4-year degree programs that continue expanding their earnings potentially (e.g., HBCUs).
• Department of Labor apprenticeship funding should transition away from proposal-style “contests” towards a more consistent and predictable schedule of funding. Currently, the Department of Labor will announce that a pot of money will be made available for competitive proposals and is typically distributed to State Departments of Labor and sometimes to large nonprofits. Going forward, apprenticeship funding, particularly those focused on jobs of the future, should be a consistent budget line item with clear paths towards funding renewal. In addition, the Department of Labor, in conjunction with the Strategic Apprenticeships Task Force, should publish guidelines for roles and skill development as outlined in their strategic plan.

Under the Biden administration, progress has been made on higher education accountability: for example, the Gainful Employment Rule was reinstated, requiring for-profit programs to demonstrate that typical graduates’ debts are less than 8% of their earnings, or 20% of their discretionary income, to maintain access to federal student aid. Moreover, the rule requires more than half of graduates to demonstrate higher earnings than a typical high school graduate.

Nonetheless, more can be done to buttress progress that has been made on higher education, particularly given stronger regulations around ROI. The policies suggested above can roll up into an “Apprenticeships of the Future” initiative jointly managed by the Departments of Labor and Education. By using a coordinated approach to apprenticeships, policymakers can ensure that more attention is paid towards strategically important industries and roles while creating clearer pathways for individuals seeking apprenticeships and for former apprentices looking to gain further skills and training in 4-year degrees and other “alt-ed” training programs. Moreover, the initiative could make diversity and economic advancement for underserved communities a core part of its mission.

This idea was originally published on November 29, 2021; we’ve re-published this updated version on October 21, 2024.

This action-ready policy memo is part of Day One 2025 — our effort to bring forward bold policy ideas, grounded in science and evidence, that can tackle the country’s biggest challenges and bring us closer to the prosperous, equitable and safe future that we all hope for whoever takes office in 2025 and beyond.