How we can use apprenticeships to fill jobs and boost the economy

May 04, 2017

When Americans hear the term “apprentice,” they probably don’t picture a young woman installing and configuring hardware and software, training end users in a new computer system, or conducting complex cost-benefit analyses of emerging technologies with an eye towards improving the company’s productively. They almost certainly don’t picture her doing all this at — of all places — a bank.

But this is exactly what JPMorgan Chase’s new class of technology apprentices is doing at the firm’s technology hub in Houston, Texas. While the concept of apprenticeship — paid work experience that incorporates both on-the-job and classroom-based learning — has been around for centuries, it is only in recent years that American companies have started to embrace the model in occupations and sectors outside of the traditional skilled trades.

 It makes sense. After all, at the same time that many Americans are struggling to gain a foothold in the job market, employers still need to hire workers. And some of the fastest-growing, most exciting occupations happen to be well suited to learning through an apprenticeship typically because they require a good amount of structured on-the-job training in addition to specialized technical education.

Think of skilled professionals like medical coders, database administrators, and computer numerical control (CNC) machinists. By hiring workers as apprentices, employers benefit by building a pipeline of workers with the right skills to grow the businesses and keep pace as their industry advances.

Companies are finding that apprenticeship pays off in other ways too. For example, Dartmouth-Hitchcock in Lebanon, New Hampshire, turned to apprenticeship several years ago as part of a major expansion and reorganization of its provision of medical services. An analysis of Dartmouth-Hitchcock’s resulting medical assistant apprenticeship program found that it nearly paid for itself within the first year, primarily through reduced overtime costs and increased revenue from medical appointment bookings.

Moreover, the hospital system was able to reduce staff burnout and turnover by decreasing long term reliance on overtime. For workers, the benefits of apprenticeship may be even clearer. At a time when young people and their parents are more cognizant than ever of the rising cost of higher education, apprenticeship offers the opportunity to get paid to gain in-demand skills and education.

The average starting salary for an apprentice in the United States is $50,000 — and apprentices have been shown to earn more than $300,000 over the course of their career than comparable workers. Moreover, because many apprenticeship programs now incorporate industry-recognized credentials and college credit, apprentices can go on to earn an associate’s degree, bachelor’s degree, or higher.

To be sure, the US still has a long way to go to establish the kind of robust system that works so well in a country like Germany — where the apprenticeship system is credited with producing one of the lowest youth unemployment rates in the world — or Switzerland — where 70 percent of high school students enter the labor market through an apprenticeship. In fact, we still have only around 500,000 apprentices, compared with Germany’s nearly 1.5 million.

While there is room to grow, there is also historic bipartisan support for apprenticeship. Congress recognized the potential of this public-private training partnership when it provided $90 million for apprenticeship, the first-ever programmatic funding, in its fiscal year 2016 spending bill. State and federal lawmakers from across the political spectrum are embracing policies to expand the use of apprenticeship — from incorporating apprenticeship into the high school experience to providing tax credits to employers that sponsor apprentices.

It is past time for a new model of education and training that meets the needs of our modern economy. As technology advances more quickly than ever, companies in all sectors rely on a pipeline of highly-skilled workers to drive the creation of innovative new products and services. That’s why businesses like JPMorgan Chase are investing in apprenticeship.

Policymakers should seize on this growing momentum and come together with business leaders to develop a set of policies that make it easier for companies of all stripes to offer apprenticeships. Working together, we can connect workers to good jobs, strengthen U.S. business competitiveness, and grow our economy.

Sarah Steinberg is vice president of global philanthropy at JPMorgan Chase & Co.