Welcome to Workforce3 One
U.S. Department of Labor
Employment and Training
Administration
Webinar Date: April 11, 2013
Presented by: Office of Apprenticeship
U.S. Department of Labor
Employment and Training Administration
Where are you?
Enter your location in the Chat window – lower left of screen
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Presenters
Moderator: John Ladd
Title: Administrator
Organization: Office of Apprenticeship,
Employment and Training Administration
Presenter: Bryan Wilson
Title: Deputy Director
Organization: Washington State Workforce
Board
Presenter: Robert Lerman
Title: Institute Fellow & Professor of Economics
Organization: Urban Institute & American University
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Here’s what you can expect in this webinar
1. Review Results of recent RA Cost-Benefit and
Earnings Study conducted by Mathematica
2. Overview of Apprenticeship Impact in
Washington State
3. Implications of Research and Practice for
Advancing RA
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Registered Apprenticeship (RA)
 RA provides
 On-the-job training and related technical instruction
 Incremental wage increases as skills grow
 Nationally recognized certification upon completion
 RA programs
 Are delivered by sponsors: employers, employer associations, and labor
management organizations
 Are offered in over 1,000 occupations with 2/3 of apprentices in construction
 Range from one to six years, most are four years
 Federal and state agencies
 Register programs and issue certificates of completion
 Monitor programs and provide technical assistance
 Conduct outreach and build partnerships
 In 2012, more than 145,000 people nationwide became apprentices
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Why Research in RA is Timely and Important
 RA Stakeholders looking to the future
 Secretary’s Advisory Committee on Apprenticeship developed “Vision for 21st
Century RA”
 Improving Economy
 Construction anticipating new demand combined with increased retirements
 Growth in Manufacturing (Make it in America!)
 Other Industries looking for skilled talent!
 Emerging Skills Gap
 Mismatches between skills needed & available skilled workforce
 Possible solutions being developed utilizing RA: Piedmont, NC; German
Skills Initiative, DRAPP, Others…
 Limited Budget Realities
 RA = low public costs and high industry engagement and investment! And
now we have research to show…
 Apprenticeship Works!
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Mathematica Study
 USDOL sought to replicate research
conducted in WA State
 Two primary research questions
 Was RA effective in increasing the annual
earnings of people who participated?
 Do the total social benefits of RA outweigh the
total social costs?
 Examined RA in 10 states chosen to
vary in program and labor market
features for which data was available
 Florida, Georgia, Iowa, Kentucky, Maryland,
Missouri, New Jersey, Ohio, Pennsylvania, and
Texas
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Overview

Effectiveness Assessment


Cost-benefit analysis
Conclusions
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Mathematica Study Methodology
 Analyzed employment and earnings
from 2000 to 2010:
 For RA participants who entered RA in 2000-01
 Compared apprentices to nonparticipants
with similar earnings and employment
histories and similar demographic
characteristics
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Example of Short-term Benefits
Earnings in sixth year after enrollment:
Florida
Average RA Completer Earned:
$25,108
Average RA participant earned:
$18,459
Nonparticipant earnings estimate:
$13,217
Gain associated w/ RA Participation:
$ 5,242
Gain associated w/RA Completion:
$11,891
Note: All dollar values are inflation-adjusted to year 2000,
the first year of RA enrollment for the study period
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Earnings Gains in Sixth Year After Enrollment
Participant Earnings Gain ($)
Completers Earnings Gain ($)
Florida
5,242
11,891
Georgia
6,508
16,448
Iowa
4,680
9,201
Kentucky
5,770
7,897
Maryland
14,977
29,907
Missouri
7,239
16,763
New Jersey
6,870
13,616
Ohio
6,914
13,969
Pennsylvania
8,304
N/A
Texas
5,504
15,246
$6,595*
$14,404*
AVERAGE
* Average does not include data from Maryland (Source: RAPIDS and UI wage records)
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Earnings Gains Over Time
Participants
Completers
AVERAGE AFTER 6 YEARS
6,595***
14,404***
AVERAGE AFTER 9 YEARS
5,839***
12,733***
*** Estimate is significantly different from zero at the .10/.05/.01 level.
Source: RAPIDS and UI wage records
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Calculating Earnings Gain Over Time
 Earnings Gain Significantly Different for Participants vs.
Completers
− Significant gains for all participants
− Gains are roughly 2X for completers
− Some Earnings Decay Over Time (Typical)
 Short Term Earnings Benefit
− Annual Net Earnings Gain X 6 and 9 Years
 Long Term Earnings Benefit
− Annual Net Earnings Gain Adjusted X 36 Years
− Calculated with and without benefits
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Average Gains Received by Apprentices
$350,000
$301,533
$300,000
$240,037
$250,000
Participants
$200,000
$150,000
$123,906
$114,029
$98,718
$100,000
$50,000
Participants who
Completed the Program
$47,586
$0
Earning over first 9 years
Earning over 36 year career Earnings plus benefits over
36 year career
Source: RAPIDS and UI wage records
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Overview
 Effectiveness assessment
 Cost-benefit Analysis

Conclusions
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Approach to Net Social Benefit
 Benefits ($124,775)
− Productivity Benefits
− Increased tax receipt
− Reduced use of UI compensation, food stamps, and welfare
 Costs ($718)
− Federal and state Registration agency costs ($131)
− Cost of community college for related technical instruction ($587)
 (Initial) Net Social Benefit = 124,057
− Net Social Benefit = Social Benefits – Social Costs
 Does not include employer/sponsor costs and benefits
− Not a ROI Study
− Evidence: Employers likely to have positive net benefits
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Alternative Assumptions
Net Social Benefits Per Participant: Average Over Five States
Per Participant ($)
Baseline assumptions
124,057
Productivity benefit estimate is 50% lower
61,596
Cost to government is 20% higher
123,913
Cost to apprentice is $500 (not zero)
123,557
Employers experience a net loss of $5,000
119,057
No effect on UI comp. and public assistance
123,188
Discount rate of future earnings is 20% higher
118,097
Rate of decay in earnings gains is 20% higher
116,910
All of the above
49,427
Source: OA and SAA budget experts, RAPIDS, and UI wage records.
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Overview
 Effectiveness assessment
 Cost-benefit analysis
 Conclusions
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Summary of Findings

RA participation and completion was
associated with significantly higher
compensation over the course of an
apprentice's career
- approximately $124,000 for all participants
- over $300,000 for participants who completed
their program (factoring in benefits)

Social benefits outweigh social costs by
$49,000 or more
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Economic Benefits of Registered Apprenticeship for
Apprentices and the Public Sector
Apprenticeship
in
Washington State
Bryan Wilson, Ph.D.
Deputy Director
Washington State
Workforce Training &
Education Coordinating
Board
Apprenticeship Performance Results
Performance Measures
All Apprentices
Completers
Employment Rate* (State Records)
65%
81%
Median Hourly Wage
$28.46
$34.03
Median Annualized Earnings
$47,637
$58,907
*These figures apply to those with employment reported to state employment agencies
six to nine months after leaving a program. Rate does not include self-employment,
employment outside the Northwest or military service and thus understates total
employment by approximately 10 percent.
Apprenticeship Relationship of Training to
Employment
Employer Satisfaction with Apprenticeship
Completers
Net Impact of Apprenticeship
Apprenticeship
All Apprentices
Short-Term^
Completers
Long-Term
Short-Term^
Long-Term
Net Employment Impact* 7.80
percentage
points
9.80
percentage
points
24.70
percentage
points
24.00
percentage
points
Net Hourly Wage
Impact**
$8.20
$9.12
$13.80
$15.15
Net Annualized Earnings
Impact**
$19,299
$18,397
$33,700
$31,393
^Short-term is 3 quarters after program exit. Long-term is average across 3 years since program exit.
*Percentages listed are employment percentage points above those of the control group of nonparticipants.
**Wage and earnings, expressed in first quarter 2011 dollars, represent the average difference
between Apprenticeship participants who got jobs and those in the control group who were
employed.
Participant and Public Benefits and Costs per
Apprentice
Benefit/Cost
First 2.5 years
To Age 65
Participant
Public
Participant Public
$36,770
$7,354
-$9,645
$0
$0
$9,645
$314,829
$62,966
-$82,580
$0
$0
$82,580
$859
-$849
$1,538
-$1,538
$22,629
-$1,791
$6,009
-$3,484
$22,649
-$1,791
$6,009
-$3,484
Benefits
Costs
$35,338
$20,837
$8,786
$2,526
$296,753
$20,837
$82,042
$2,526
Total (Net)
$56,176
$11,311
$317,591
$83,567
Benefits
Earnings
Fringe Benefits
Taxes
Transfers
UI
Costs
Foregone net comp.
Program Costs
Note: Benefits and costs are expressed in 2011 first quarter dollars.
Sum of Costs
and Benefits
$401,158.39
Apprenticeship in Washington State
Major Efforts to Expand Apprenticeships in WA
 2003: Governor allocated $1 million of WIA discretionary
dollars
 2005: Bill enacted to require 15% apprenticeship utilization
on state building projects
 2006: Utilization requirement extended to transportation
projects
 2007: Utilization requirement extended to public school
projects
Apprenticeship in Washington State
Major Efforts to Expand Apprenticeships in WA
(Continued)
 2006-2011: “Running Start for the Trades” School-toApprenticeship Grants to 40 School Districts and area Skill
Centers
 Non-traditional Apprenticeship Programs such as
Cosmetology, Health Unit Coordinator, Dispensing Opticians
 State standards for recognizing apprenticeship preparation
programs
 WIA State and Local Plan Requirements , Coordination with
One-Stop System, Eligible Provider List
Economic Benefits of Registered Apprenticeship
for Apprentices and the Public Sector
International, Employer, and Social
Perspectives on Apprenticeships
Robert I. Lerman
American University &
Urban Institute
Widening the Discussion
 Comments on, implications of the
Mathematica Policy Research (MPR) study
 Employer Perspectives
 International Developments in
Apprenticeship
 New Evidence on Worker Mobility
 Potential for Expansion
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Mathematica Policy Research (MPR) Study
 Reaffirms findings for Washington state on the gains
from apprenticeships
 Minimum social benefits are earnings gains less public &
private resources—if employers at least break even,
other costs, including government costs, are very low
 Benefits include added pride, satisfaction, and
occupational identity, and family formation
 Offers route to rewarding careers for those who choose
hands-on learning outside the pure academic framework
 Study does not deal with unregistered apprenticeships
and impacts on employers
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Employer Satisfaction
 97% of sponsors (97%) would recommend the
program - 86% would do so “strongly”
 Main benefits of program
- Helps meet their demand for skilled workers (80%)
- Reliably shows which workers have relevant skills (72%)
- Raises productivity, strengthens worker morale and pride,
and improves worker safety (about 70%)
- Improvements in worker recruitment and retention and in
meeting licensing requirements (56%)
- Saving on pay is a relatively minor benefit
 German, Swiss employers recoup most or all
costs within the apprenticeship period itself
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International Experience
 Apprenticeship is a mainstream route to career
success in European & other advanced economies
 Provides training for 50-70 percent of young people
in Switzerland, Austria, and Germany.
 Skills of manufacturing workers in these countries
part of their comparative advantage in that sector
 Apprenticeships are expanding rapidly in Ireland,
Australia, United Kingdom, covering many
occupations, including nursing, information
technology, finance, and advanced manufacturing
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England is especially interesting
 As of early 1990s, very few apprenticeships
 Major jump in recent years despite large decline in
unionization
 Over 500,000 entering apprenticeships, which
would be 2-2.5 million in the U.S.
 Both parties support expansion, about $2.5
billion/year
 Funding goes to training providers, often similar to
community colleges, who market and provide offsite training for apprentices
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The Immobility Myth
 Some argue apprenticeships are not worth it because
they lock workers in occupations and leave them few
options to move to other fields as markets change
 New evidence for Germany shows that while only 42%
stay in their initial occupation, nearly two-thirds remain
within the same occupational cluster; only 18% report
using few or no skills learned as apprentices
 Many apprentices subsequently enroll in universities
or become part of the management teams;
Switzerland has an especially permeable system
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Implications and Potential for Expansion
 Success of South Carolina in expanding their
program by six-fold or more is extremely impressive,
given that they started in 2008, as the job market
was collapsing
 Success of England demonstrates the ability to
expand apprenticeship dramatically into large
numbers of fields and with over 300,000 employers
now using apprenticeships; some concerns on
quality but the system has engaged employers
 Using existing apprenticeship occupations, we could
increase the numbers to over 2 million participants
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Discussion & Feedback
USING YOUR CHAT WINDOW
Please provide an example of
an industry in your State or
region where RA is growing
and why?
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Resources
“An Effectiveness Assessment and Cost-Benefit
Analysis of Registered Apprenticeship
in 10 States”
Study can be downloaded at:
https://21stcenturyapprenticeship.workforce3one.o
rg/view/2001222062738577473/info
Study Conducted by Mathematica Policy Research
http://www.mathematica-mpr.com/
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Please enter your questions in the Chat Room!
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Speakers’ Contact Information
Speaker:John V. Ladd
Title: Administrator
Organization: Office of Apprenticeship
Email: [email protected]
Telephone: 202-693-2796
Speaker: Bryan Wilson, Ph.D.
Title: Deputy Director
Organization: Washington State Workforce Training
and Education Coordination Board
Email: [email protected]
Telephone: 360-753-0891
Speaker: Robert Lerman
Title: Professor of Economics & Institute Fellow
Organization: American University and Urban Institute
Email: [email protected]
Telephone: 202-261-5676
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Thank You!
Find resources for workforce system success at:
www.workforce3one.org
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