Like most worthy investments, Registered Apprenticeship Programs require organizations to plan well and budget accordingly. As you’ll discover in this post, there are startup and ongoing costs associated with Apprenticeship Programs, but if run well, will pale in comparison to the benefits.
A U.S. Department of Commerce study that examined the costs and benefits of Apprenticeships for businesses confirms this. The study examined a Registered Apprenticeship Program run by Dartmouth-Hitchcock, and found that it nearly paid for itself in one year and had an internal rate of return of at least 40%. The program cost of $59,700 per medical assistant (MA) apprentice was offset by a $48,000 per-apprentice reduction in overtime expenses and a $7,000 per-apprentice increase in revenue from medical appointment bookings. Reductions in long-term overtime also helped relieve staff burnout.
It’s clear that Apprenticeship Programs give companies a competitive edge. It can cost far more to hire skilled employees from the beginning and these hires are often less likely to stay on.
What is an Apprenticeship Program and How Does it Differ From an Internship?
Registered Apprenticeships are regulated, work-based learning programs that combine paid 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.
Apprentices train on the job and progress through a wage schedule that aligns with their technical competencies. After completing the Registered Apprentice Program, apprentices receive a nationally recognized credential, an offer for full-time employment, and even college credit for their work.
Registered Apprenticeship Programs and internships may seem similar, but they are actually very different.
While internships also offer workplace exposure, these programs are less defined and last just a few months. An intern has a wide range of responsibilities, from filing paperwork to assisting industry professionals with their work. And many internships only “pay” in course credits.
What are the Costs of an Apprenticeship Program to an Apprentice?
The host company typically absorbs the costs of training, education, and equipment for most Apprenticeship Programs.
Compare that to attending a university, an expense Forbes defines as $10,740 in tuition and fees for an in-state undergraduate student at a four-year public college. This figure doesn't include housing, books, or meals. The Forbes article also highlights how 55% of undergraduate students take out loans and graduate owing an average of $28,950.
There’s nothing wrong with a college education; a degree is required for many occupations. But an Apprenticeship is a terrific opportunity for people to expand their education and set themselves up for a long-term career. Sometimes they can even receive college credit through their Apprenticeship Program.
Besides saving money, Registered Apprenticeship Programs:
- Provide hands-on practical experience in a chosen field
- Pay apprentices for on-the-job learning
- Deliver direction from dedicated mentors
- Enhance skills with technical and classroom instruction
- Expose apprentices to multiple positions within a company
- Help apprentices develop a diversified skill set
What are the Costs of an Apprenticeship Program for an Organization?
Every Apprenticeship Program requires an investment in time and money. But the investment pays off for organizations that understand the true costs of recruiting and turnover.
Companies must recruit and pay higher wages for employees further along in their careers. Yet these hires often leave sooner than apprentices. In fact, a report by the Skills Funding Agency finds that 80% of companies who invest in apprentices report increased staff retention.
A well-run Apprenticeship Program is worth its weight in gold. Apprentices feel more connected to an organization because of the time the company spends ensuring their success. In contrast, many new hires want to leave soon after they start because they don't get enough direction and structure on the job.
Before launching a Registered Apprenticeship Program, consider:
What are the fixed costs of an Apprenticeship Program?
- Curriculum development
- Equipment purchases
- Staff time to set up program
- Overhead and management
- Classroom space
What are the variable costs of an Apprenticeship Program?
- Wages and benefits of apprentices
- Mentorship time
- Supplies and uniforms
- Tuition, books, and classroom materials
Launching an Apprenticeship Program can cost $25,000 to $250,000, depending on the program. Related expenses also include:
- Technical instruction (tuition, instructors, books, etc.)
- On-the-Job Training (wages, equipment, and training)
- Supportive Services (marketing, consultant fees, etc.)
- Recruitment (expenses related to recruiting apprentices)
Companies must consider these expenses upfront and cover them as the Apprenticeship Program evolves. It is possible to get help from federal, state, and local workforce offices and community partners to reduce costs. Organizations also may also be eligible for federal workforce development funds. None of these options are guaranteed, so sponsors should expect to cover most costs.
Employers and apprentices can benefit from Apprenticeships. But companies should not view them as a short-term fix to long-term problems. An apprentice may spend up to four years learning the ropes. But patience pays off when your Registered Apprenticeship Program fills your talent pipeline and addresses talent workflows in the long term.
Related Content: What are the Benefits and Costs of an Apprenticeship Program?
Takeaway: The Costs Outweigh the Benefits
A Registered Apprenticeship Program is an investment in company success. It provides a framework that helps companies build their talent pipelines. When done correctly, these programs can be more cost-effective than traditional hiring methods.
But to be successful, upper management must be fully on board and willing to allocate resources to the Apprenticeship Program. Partnering with a company that offers Apprenticeship software solutions also ensures success by helping organizations manage the logistics and expenses of their Apprenticeship Programs.
In today’s competitive talent landscape, organizations must develop new pathways to hiring that build needed skill sets internally. Instead of scouring the globe for already-qualified hires, more and more businesses realize that casting a wider net to find motivated apprentices with a basic skill set and a desire to learn is a surefire pathway to increased growth, team cohesion, and productivity.