U.S. Markets closed

'The other 4-year degree’: Why everyone’s talking about apprenticeships

Apprenticeships are having a moment.

Youth employment rates are still abysmally low in the U.S. (for 16- to 19-year-olds, the unemployment rate is 17.9%, nearly three times the national rate) and college has never been pricier. Apprenticeships, which some have dubbed “the other four-year degree,” offer a low-cost way for young people to get jobs and an education without incurring loads of debt.

The better-looking, higher-earning sister of the internship, an apprenticeship matches workers up with employers who offer one to four years of job training. The average starting pay for apprentices is $15 an hour, double the federal minimum wage. At the end of a program, workers are rewarded with an industry-recognized certificate and, ideally, a full-time job offer.

Apprentices earn an average starting salary of $50,000 a year and go on to earn $300,000 more over their lifetime than those with just a high school diploma, according to the Department of Labor.

Youth Unemployment | FindTheBest

For Jan Welch-Selckmann, 27, becoming an apprentice was never his Plan A. The Indianhead, Md., resident enrolled at a state university right out of high school like many of his friends. But after a year and half struggling to cope with his daily course schedule, he realized college life “just wasn’t for me.”  

[Get the Latest Market Data and News with the Yahoo Finance App]

A family friend got him into the plumbing business, and it was through this work that he heard about an apprenticeship program offered at a local steamfitters union. It was a highly competitive five-year program that required apprentices to work eight-hour days and then attend classes two to four evenings per week.

“It was a pretty big decision but I gave it a shot,” he says. After passing a required math test and interview, he claimed one of 300 open spots. Right away he earned $19 an hour and his wages increased each year until graduation, when his hourly rate rose to $39.  Some of his colleagues eventually dropped out, he admits, but the work suited him.

“Looking back at it now, it’s definitely worth it. I was making money the whole time. I’m not in debt. I don't owe any student loans. I have a house, car, family, kids. It’s worked out really good for me.”

Making it worth their while

The Department of Labor oversees apprenticeship programs in 25 states and the federal government is under pressure from both sides of the aisle to offer more incentives for businesses to participate. Apprenticeship participation rates tumbled after the 2008 financial crisis, largely owing to the fact that more than half of the registered programs were offered within the construction industry, which suffered following the housing bust. Since 2008, the number of apprentices working at registered programs in the U.S. dropped 18%, from from 442,386 to 362,123, in 2012. They’ve since rebounded to 410,000, and a spokesperson says they are redoubling their efforts to fortify the program against future economic downturns.

For the first time this fall, the agency will disburse $100 million in grants to help expand registered apprenticeship programs in high-growth industries such as healthcare, biotech, information technology and advanced manufacturing.

They have plenty of support from Capitol Hill. The LEAP Act, a bipartisan bill, is currently under consideration in Congress. It would provide $1,000 to $1,500 in tax credits to businesses that offer apprenticeship programs. Last week, presidential hopeful Hillary Clinton unveiled a similar proposal to offer tax credits to businesses that offer apprenticeships. Tax incentives have been proven to work in states like South Carolina, which has seen substantial growth since it began offering $1,000 tax credits last year and partnering with the state’s community college system to match interested students with apprenticeships in various fields. Agape Senior, a chain of long-term-care facilities in the state, became the first business to offer registered certified nursing assistant apprenticeships. The number of apprenticeship programs in the state has grown from 92 to 741 since 2007.

Federal tax credits are an effective way of getting businesses to participate in apprenticeship programs, says Reid Setzer, legislative affairs analyst with Young Invincibles, a youth advocacy group. “Absent incentives, businesses have less motivation to agree to federal oversight." (In order to be officially recognized by the Department of Labor, an apprenticeship program must meet certain standards, including promising wage increases in line with skills learned and proof that training leads to a real job.)

Catching up with the cool kids  

The U.S. is no trendsetter in the apprenticeship space — in fact, we’re seriously behind our peers abroad. Germany’s apprenticeship program is legendary, offering more than 1.4 million participants training in more than 300 fields. Over the next five years, the British parliament, which saw 400,000 new apprentice starts in 2013, has committed to adding 3 million by the year 2020.

By contrast, U.S. leaders will be thrilled if they can manage to reach 750,000 new apprenticeship starts by 2020, about double the current figure.

Jason Kuruvilla, a spokesperson for the DOL, says they have been closely studying Germany’s apprenticeship model, which leans heavily on partnerships between community colleges and industry.

“We’re trying to replicate that in a way,” says Kuruvilla. “We’re working with community colleges to do industry-focused partnerships that will train people in [fields like] mechatronics, healthcare … and employers will partner with those colleges so they can have a pool of candidates to pull from.”

Have an apprentice story to share? Shoot us an email at yfmoneymailbag@yahoo.com.

Follow Mandi Woodruff on Facebook >

--

Take the Social Secuity quiz that 72% of Americans failed

Telling young people they need a four-year degree is a disservice

3 reasons money isn't making you happier