The Apprentice(ship)
by Nino C. Monea, JD ’17
When the Great Recession hit, the economy was devastated. In early 2008, unemployment, previously hovering at around 5%, shot up to 10.0% by October 2009.[1] The number of job openings plummeted from 4.5 million in December 2007 to fewer than 2.5 million in July 2009.[2] Average consumer spending fell from $49,638 in 2007[3] to $48,109 in 2010.[4] The impacts were felt across a wide spectrum of industries, from manufacturing, to retail and finance, with construction taking the biggest hit of all.[5] Clearly, the damage was far reaching.
But few groups were as badly hit as the young. Young workers are those within the 16–24 age cohort, and they oftentimes face much tougher employment prospects than their older peers. Because they possess fewer skills and less experience, they are usually the first to go when hard times fall upon businesses. They also have a harder time getting their foot in the door in the first place. For these reasons, youth unemployment is higher than the national average, even years after the recession has ended.[6]
As of July 2015, while 5.3% of the workforce as a whole were unemployed,[7] 12.2% of young workers were.[8] In total, there are about three million young workers who are looking for work and cannot find it. Certain groups are hit even worse than the average. For young Hispanics, the unemployment rate is 12.7%, and for African American youth, it is an alarming high of 20.7%.[9] For those aged 16–19, the unemployment rate is 16.9%.[10] Although the economy continues to improve, job growth for young workers remains sluggish, particularly in certain communities.
There are a myriad of adverse effects of joblessness among young workers. Young, unemployed workers may become “scarred”, meaning they receive lower wages over the course of their career. [11] If they cannot find jobs, they may take positions below their qualifications, or accept lower wages. This scarring effect can have long term repercussions. A study from the U.K. found that workers who experienced unemployment before age 22 were making 12–15% less twenty years later than those who did not.[12]
There are also negative health effects. Those who experience unemployment are less happy, more stressed, and have a higher chance of heart attacks, hypertension, constant headaches, and even suicide.[13] Mental health suffers as well. Unemployed workers experience heightened rates of anxiety, loss of self-esteem, and depression. These effects are greater on younger workers than on older ones.[14]
Perhaps worst of all, the toll unemployment has on life expectancy. In the year immediately following a layoff, there is a 75% increase in the mortality rate of laid off workers. Over the years, this moderates to a 10–15% increase. This means that over the course of 25 years, life expectancy is shortened by 1–1.5 years for a person without a job. Once again, the impact is more profound among younger workers.[15] Unfortunately, it is also a vicious cycle, as the biggest predictor for a person’s future unemployment is past unemployment. A person who is out of a job before age 23 for only three months will, on average, experience longer spells of unemployment later in life.[16]
To try to forestall unemployment, many young people go to college with the hopes that a degree will ensure them a well-paying job. Sadly, for many, they also graduate with a mountain of debt. Two-thirds of college graduates bear student loan debt, with an average of more than $25,000. The total value of student loan debt now exceeds one trillion dollars.[17] However, if young people cannot get jobs, repaying these loans is a daunting challenge.
Though part of unemployment is cyclical, or due to fluctuations in the economy, much of the problem is structural, meaning that there is a mismatch between skills and jobs. More than half of employers had trouble finding qualified workers for technical positions.[18] Improving education can help bridge this gap, but education is a long-term solution. Improving early childhood programs would do little to help today’s jobless. They need something in the present.
Apprenticeships offer an attractive option. They are way to provide skills to young, inexperienced workers, which can help lead to higher earnings and employment. And there is already an agency that in charge of apprenticeships. The Department of Labor runs the Registered Apprenticeship program, first established in 1937 by the Fitzgerald Act, and works with states to administer the program.[19] Apprenticeships offer workers a salary while performing a remunerative job and receiving hands-on training with supplemental instruction and education. Eventually, the program leads to professional credentials.[20]
Current programs show a great deal of promise. A survey of ten states found that workers that participated in apprenticeships earned, on average, $6,000 more in the short term. Over the course of a career, benefits could range from $96,000 to $162,000. Those that completed the program saw an estimated career earnings increase of $240,000. The government cost of running the program is comparatively small, only about $700 per worker over the course of nine years, so there is a large net benefit for workers and taxpayers alike.[21] A separate study by the State of Washington found that over the course of a lifetime, earnings increased by more than $325,000, and total costs were only $22,000.[22]
Businesses that sponsored registered apprenticeships for the workers also reported favorably on the program. A survey of nearly 1,000 participating companies, consisting of firms in construction, utilities, and retail, found that 97% would recommend the program. They found it to include a wide array of benefits, including helping meet demand for skilled workers, raising productivity, and improving morale, safety, and retention. Costs of the program were not viewed to be a major problem.[23]
The success of the Registered Apprenticeship program sets it apart from other governmental efforts that failed to produce meaningful and broad based job growth. Hiring credits, which provide either tax incentives or subsidies to businesses that hire unemployed workers, have a spotty track record. While companies receive extra revenue, there is little evidence that the program improves job prospects for disadvantaged youths or raises incomes for low-income families.[24]
There are still significant areas for improvement in the Registered Apprenticeship program. Foremost among them, due to the fact that many apprentice jobs are in fields such as construction, the program consists of 90% men. As a result, benefits of participation are less pronounced for women. Their increase in short term earnings is only $2,000, less than half of men’s. Women in the program have voiced concerns about sexual harassment and the need for child care.[25] On the employer side, businesses have also had complaints. Employers in the Registered Apprenticeship program grumbled about the fact that it increased “poaching” from competitors, wanted a simpler registration process, and asked for more help finding and screening applicants.[26]
Problems notwithstanding, for young workers seeking an alternative to a four-year college degree, apprenticeships offer a path to stable, high paying careers. This could be a great program not only to boost youth employment, but offer a path to students whose career does not require a bachelor’s degree.
But for all of its benefits, the program is still relatively small. Total government spending is only a few hundred dollars per apprentice, on average, and less than $30 million to supervise and publicize the program. Many businesses do not even know about it. In 2011, 130,000 individuals nationwide became apprentices, and 55,000 graduated from a Registered Apprenticeship program.[27] These figures represent only 0.2% of the U.S. labor force.[28] Given that there are still 3.4 million unemployed youths,[29] to say nothing of all the older unemployed, the current size is far from adequate.
But how could it be expanded? Some methods for enlarging the program could be offering a tax credit to businesses that participate, supported by Senators Tim Scott (R-SC) and Cory Booker (D-NJ); increasing funding for the program, as President Obama has proposed in his 2015 budget; and offering wage subsidizes to incentivize students to sign up. Initiatives such as these are already in place in several states, and in some foreign countries.[30]
To make sure that young workers in particular benefit, high schools and community colleges should make a greater effort to connect employers with students. Currently, only 35% of sponsors got apprentices from high schools or post-secondary institutions, but they were cited as effective means of recruitment.[31] Increasing the role of schools in the program could help bring in more young workers.
Any effort to expand the program must also include diversifying it to reduce the heavy slant towards male-dominated industries and address the needs of female employees. For example, in 2013, the Department of Labor awarded a two million dollar grant to help train women in apprenticeships in high-skill occupations such as energy, IT, and transportation.[32] Bringing more women into the program would help highlight the issues of the gender pay gap, inadequate child care, and sexual harassment – and increase the impetus to solve them.
Democratic presidential candidate Senator Bernie Sanders (I-VT) has called for making public universities tuition free.[33] Former Secretary of State Hillary Clinton (D) has proposed increasing federal funding to make college more affordable.[34] Both of these ideas have their merits. They are an important piece of addressing youth unemployment and reducing the crushing burden of student loan debt.
But not everyone needs or desires a college degree. Apprenticeships offer a viable option for those seeking an alternative to a bachelor’s degree. The benefits far exceed the costs, and the program enjoys high levels of approval among both workers and employers. Although some policymakers are beginning to pay attention to this issue, it deserves a spot in the economic platform of any of the 2016 presidential hopefuls.
[1] Labor Force Statistics from the Current Population Survey, Bureau of Lab. Stats., http://data.bls.gov/timeseries/LNS14000000 [http://perma.cc/N9AJ-WGN6]
[2] Mark deWolf & Katherine Klemmer, Job Openings, Hires, and Separations Fall During the Recession, Monthly Labor Rev. 36, 38 (May 2010), http://www.bls.gov/opub/mlr/2010/05/art3full.pdf [http://perma.cc/WM6E-27KR].
[3] Consumer Expenditures in 2007, Bureau of Lab. Stats., (Apr. 2009), http://1.usa.gov/1Qg6Nyz [http://perma.cc/WV2H-989J].
[4] Consumer Expenditures in 2010: Lingering Effects of the Great Recession, Bureau of Lab. Stats. (2012), http://1.usa.gov/1JH8e4h [http://perma.cc/2SXF-NTLX].
[5] The Recession of 2007-2009, Bureau of Lab. Stats. (2012), http://1.usa.gov/1nrHeuy. [http://perma.cc/EUW3-G5HC].
[6] See Labor Force Statistics from the Current Population Survey, Bureau of Lab. Stats. (2015), http://1.usa.gov/L8BKrM [http://perma.cc/BFC3-B7U5]; Employment and Unemployment Among Youth Summary, Bureau of Lab. Stats (2015), http://1.usa.gov/1lUw15m [http://perma.cc/ZQY8-EDA9].
[7] Labor Force Statistics from the Current Population Survey, Bureau of Lab. Stats., supra note 6.
[8] Employment and Unemployment Among Youth Summary, Bureau of Lab. Stats., supra note 6.
[9] Id.
[10] Unemployment Rate – 16-19 yrs., Bureau of Lab. Stats. (2015), http://1.usa.gov/1IXgKL6 [http://perma.cc/C4F3-92TZ].
[11] See generally David Bell & David Blanchflower,Youth Unemployment in Europe and the United States (IZA, Discussion Paper No. 5673, 2011), http://bit.ly/1yGuHh9 [http://perma.cc/9ZRL-YJ7R].
[12] Reed Karaim, Youth Unemployment, 6 CQ Researcher 110 (2012), http://library.cqpress.com/cqresearcher/getpdf.php?id=cqrglobal2012030600 [http://perma.cc/3AD8-BQ6W].
[13] Susi Fidan Frauenfelder, The Cost of British Youth Unemployment, at 32 (Spring 2012) (unpublished Bachelor Thesis, Aarhus University), http://pure.au.dk/portal-asb-student/files/45263659/SK8397_The_Cost_of_British_Youth_Unemployment_with_focus_on_the_individual.pdf [http://perma.cc/NR6B-3DQM].
[14] Id.
[15] Daniel Sullivan & Till von Wacher, Job Displacement and Mortality: An Analysis using Administration Data 1 (Nat’l Bureau of Econ. Research, Working Paper No. 13626, 2009), http://www.columbia.edu/~vw2112/papers/sullivan_vonwachter_resubmission.pdf [http://perma.cc/Q3V8-VVG7]. The study did not examine workers in the 16–24 year old age cohort, but it did find that the younger the workers, the more profound the impact. Id.
[16] The jobless young: Left behind, The Economist (Sept. 10, 2011), http://www.economist.com/node/21528614 [http://perma.cc/PU8K-GVJD].
[17] Scott Gerber, 43 Troubling Facts about the Youth Unemployment Crisis, Business Insider (May 15, 2012, 1:51 PM), http://bit.ly/1Qg8FHx [http://perma.cc/F37D-VVAP].
[18] See Manpower Group, 2012 Talent Shortage Survey: Research Results 2 (2012), http://files.shareholder.com/downloads/MAN/2146490106x0x571882/ac2b52c1-55d8-4aaa-b99e-583bd8a82d0c/2012%20Talent%20Shortage%20Survey%20Res_US_FINAL%20(2).pdf [http://perma.cc/4UCG-KEV3].
[19] What is Registered Apprenticeship?, Dep’t of Lab., http://www.doleta.gov/oa/apprenticeship.cfm [http://perma.cc/K4WY-ABR4] (last updated Nov. 21, 2014).
[21] See Debbie Reed et al., Mathematica Policy Research, An Effectiveness Assessment and Cost-Benefit Analysis of Registered Apprenticeship in 10 States, at xvi–xvii (2012), http://wdr.doleta.gov/research/FullText_Documents/ETAOP_2012_10.pdf [http://perma.cc/N6FM-TMMW].
[22] See Workforce Training & Educ. Coordinating Bd., 2014 Workforce Training Results 21 (2014), http://wtb.wa.gov/Documents/2-Apprenticeship_2014.pdf [http://perma.cc/E9SS-NZ8S].
[23] See Robert Lerman et al., The Urban Inst. Ctr. on Labor, Human Servs., & Population, The Benefits and Challenges of Registered Apprenticeship: The Sponsors’ Perspective, at ii, 16 (2009), http://1.usa.gov/1ghBYKS [http://perma.cc/8RY4-DS94].
[24] See generally David Neumark, Spurring Job Creation in Response to Severe Recessions: Reconsidering Hiring Credits (Nat’l Bureau Econ. Research, Working Paper No. 16866, 2011), http://www.nber.org/papers/w16866.pdf [http://perma.cc/J7CV-KCKB].
[25] Reed et al., supra note 21.
[26] Lerman et al., supra note 23.
[27] What is Registered Apprenticeship?, supra note 19.
[28] Robert I. Lerman, Proposal 7: Expanding Apprenticeship Opportunities in the United States, The Hamilton Project, http://brook.gs/1AMv5tU [http://perma.cc/XUB3-KPRU].
[29] Employment and Unemployment Among Youth Summary, Bureau of Lab. Stats. (Aug. 18, 2015), http://1.usa.gov/1lUw15m [http://perma.cc/JP7G-B7GZ].
[30] Jobs for Youth, Org. for Econ. Cooperation & Dev. (2009), http://bit.ly/1AuISUD [http://www.oecd.org/els/emp/44161929.pdf].
[31] Lerman et al., supra note 23.
[32] Grants, Workforce Dev. Council, http://uscmwdc.net/page.asp?ID=28 [http://perma.cc/7EDS-HS68].
[33] Brent Budowsky, Bernie Sanders’s great idea: Free public college education, The Hill (June 09, 2015, 5:00 pm), http://bit.ly/1N4QzZo [http://perma.cc/5E8D-NVY8].
[34] Hannah Franser-Chanpong, Hillary Clinton avoids email controversy, fleshes out college affordability plan, CBS News (Aug. 14, 2015), http://cbsn.ws/1LurY0T [http://perma.cc/LNM2-DZED].
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