What are the Benefits and Costs of Apprenticeship Programs

Finding skilled labor during a global shortage is a significant problem facing companies across all industries.

Apprenticeships can help fill these gaps by allowing employers to create bespoke talent pipelines for their most pressing talent needs, whether Chocolatiers or Software Engineers. 

It is clear that there are many paths to developing a career, but Apprenticeships provide a unique approach that is gaining significant traction in the United States, particularly in fields beyond the traditional trades that apprenticeships were previously associated with. Apprenticeships are paid, on-the-job training programs that offer advantages for both employers and apprentices. Companies benefit by gaining access to a reliable supply of highly qualified employees and apprentices benefit by securing full-time employment with a clear path for advancement, acquiring in-demand skills, and receiving transferable national credentials (and sometimes college credit and/or an associate's degree).

It is important to understand the costs and benefits before launching a Registered Apprenticeship Program. While this may seem daunting, it’s a simple step that will lead to a more successful program.

What is an Apprenticeship Program?

Registered Apprenticeship Programs are regulated, work-based learning programs that combine full-time employment, On-the-Job training, Supplemental Coursework, and a Progressive Wage Schedule to create industry-informed pathways into the workforce for apprentices, and reliable talent pipelines for in-demand roles for employers.

 But Apprenticeships are not internships. In fact, the two are quite different.

• Apprenticeships typically last two to four years, while internships usually the last one to three months.
• Apprenticeships deliver a structured training plan focused on specific skills, while internships train on entry-level general work experience.  
• Apprentices receive training from experienced mentors, while internships often lack mentorship.
• Apprentices get paid as they learn with full-time employment as their goal. Many internships are unpaid and do not lead to full-time employment.
  
  

What are the Benefits of Apprenticeships for Individuals?

Apprenticeship programs accelerate careers by providing hands-on practical experience in a chosen field.  

Apprentices get paid as they receive on-the-job learning and relevant experience under the direction of one or more dedicated mentors. Their skills are further enhanced by job-related classroom or technical instruction.  

Many Apprenticeships expose apprentices to multiple positions within a company, affording them the opportunity to diversify their skillset and enhance their value to their host organization.  

At the end of a program, apprentices receive nationally recognized credentials they can use to secure long-term employment opportunities throughout their working careers. Their specialized training and industry connections may lead to roles in other companies as well as the ones they apprenticed for.  

What are the Benefits of Apprenticeships for Employers?

An Apprenticeship program can benefit many employers and positions. The list of approved occupations is constantly expanding.

There are myriad reasons why companies start Apprenticeship programs. A lack of skilled labor is the main one. For example, an Apprenticeship program can benefit a Red Hat provider of cyber security. These positions are difficult to fill due to the lack of qualified candidates and the hyper-specific nature of the field.  

Beyond helping your company recruit and develop a skilled workforce, these programs deliver flexible training options that develop employee skills and increase worker retention after the program ends. Some states give tax credits, and the federal government subsidizes technical instruction up to 90% for these programs.  

In addition, specialized on-the-job training can produce employees with specific skill sets that minimize liability concerns. Well-trained workers will do their jobs the way they are supposed to. Should something happen, you can prove you trained workers to perform the work.  

The programs can also increase employee retention. Eighty percent of companies who invest in apprentices report increased staff retention, finds a report by the Skills Funding Agency.

What are the Costs of Apprenticeship Programs?

With a well-planned and well-executed Apprenticeship program, almost every employer will agree that the benefits far outweigh the costs. Even so, there is an upfront investment to launch a successful program. While this can vary widely, some companies report their costs at $25,000 to $250,000, finds the white paper “4 Apprenticeship Benefits and Costs. A Roadmap to Measurement.”

Although not an exhaustive list, here are the core costs associated with sponsoring a Registered Apprenticeships program.

• Related Technical Instruction fees (tuition, instructors, etc)
• On-the-Job Training expenses (wages, equipment, etc.)
• Supportive Services (consulting fees, marketing, etc.)
• Recruitment Services

While Program Sponsors typically cover the majority of these expenses, Federal, State, and Local workforce offices and community partners may choose to pitch in to help reduce these costs. Additionally, depending on eligibility and availability, your organization could leverage federal workforce development funds through the Workforce Innovation and Opportunity Act (WIOA) to offset these costs.

Who Manages All of This?

With all of these moving parts, you will want to assign members of your staff to own the project and equip them with the appropriate resources to operate the program to ensure it is successful long-term. Companies often overlook this step when starting Apprenticeship programs, which can lead to less-than-ideal outcomes. Remember, Registered Apprenticeship is a long-term workforce development strategy, not a short-term quick fix.

Your company needs to equip your staff with tools that will ensure your programs stay compliant. These tools should make it simple to track Recruitment, On-the-Job Training, Related Instruction, Wage Progressions, and Compliance Reports to ensure audits go smoothly. While tools like ApprentiScope don’t do all the work for you (Consultants, Intermediaries & Workforce Development Boards provide a ton of value as well), they can reduce administrative overhead and dramatically increase training outcomes by ensuring all program requirements are met.

 A Registered Apprenticeship Program launched properly can be more cost-effective than other hiring methods. But to ensure your program’s success, you must consider the short-term and long-term benefits. Apprenticeships have been spun as a quick-fix solution, which isn’t really accurate. When working with an apprentice, your company will not have a fully trained employee for two to four years.

You have to pay apprentices, but the pay they receive is less than that of a fully trained worker. Apprentices are paid about 50% of what a fully trained employee earns. You set a progressive wage schedule, and as apprentices prove competency in specific skills or with time on the job, their wages increase.  

Though every program will have upfront and ongoing costs, most companies with effective programs report a positive ROI in the end. Registered Apprenticeship Programs are shown to improve productivity, profitability, and the bottom line.  

Related Content: How to Start a Registered Apprenticeship Program

Open the Door to Opportunity

Opportunity knocks with Registered Apprenticeship Programs. Employers see an average return on investment of $1.47 for every dollar invested in a Registered Apprenticeship Program and every dollar invested in Apprenticeships leads to a public return of approximately $28 in benefits.

If you are struggling to find skilled employees, a Registered Apprenticeship could be your solution.