Apprenticeships: a Brilliant Post-COVID Talent Strategy

Have you seen the current state of employment recently?  Most of the time we only hear about metrics like the unemployment rate and skills gap.  If we look just a bit deeper we find other, perhaps more compelling statistics that tell a story to which all employers need to pay careful attention.  

A Disturbing Trend: Unfilled Jobs & Unemployment

• Since 2015, in the midst of the Great Recession, through the recovery into the end of COVID mid-2021, each month there have been between 5.3 million and 7.5 million unfilled jobs in the United States.
  • In 2017 Glassdoor’s research indicated that the-then 5.1 million unfilled jobs carried an average compensation level of about $53,594, indicating that there were many high-paid openings for which the necessary talent could not be hired.
  • During that same period, 2015 to mid-2021 (and filtering out the 4-month COVID unemployment spike), unemployment has hovered between a low of 3.5% to a high of 7.0%. In real terms, that means between 5.7 million (at 3.5%) to 11.4 million (at 7%) unemployed Americans.

Part of the reason that all those unfilled jobs remain unfilled is because the specific skills needed to fill those jobs are missing from applicants applying to those employers. If the gap between an applicant and the desired skills is small, it is likely that the employer will have hired him or her and then trained to fill the gap.

There have been a multitude of publications listing the technical (“hard”) and soft skills most in demand by today’s employers. And guidance advising employees they must own their own talent gap.  Because the change rate of technology continues to increase, fewer and fewer fully-trained and skilled employees will be available to employers in the coming decade.

Another Disturbing Trend: Job Tenure & Turnover

In addition to the skills and talent gap, people are staying in jobs for less and less time:

• An analysis of job openings and job turnover rates from 2016-2021 compared to the total number of US jobs from 2016-2021 produces an increasing turnover percent in the workforce from 40.6% in 2016 to 44.8% in 2021 (after filtering out the COVID spike).
  • This means that the average tenure in a job was 29.6 months in 2016, falling to 26.8 months by 2021, and continuing to trend down. Put another way, employers can expect to replace employees about every 2 years or less because of turnover.
• Consider this data provided by com: Turnover seems to vary by wage and role of employee. For example, a CAP studyfound average costs to replace an employee are:
  • 16 percent of annual salary for high-turnover, low-paying jobs (earning under $30,000 a year). For example, the cost to replace a $10/hour retail employee would be $3,328.
  • 20 percent of annual salary for midrange positions (earning $30,000 to $50,000 a year). For example, the cost to replace a $40k manager would be $8,000.
  • Up to 213 percent of annual salary for highly-educated executive positions. For example, the cost to replace a $100k CEO is $213,000.

It typically takes a new employee four to six months to get up to full productivity.  While well-crafted onboarding programs may cut a month or two off that time, the productive life of an employee who stays in position is closer to an average of 18 months, against which all the costs of his or her hiring must be compared.

Apprenticeships to the Rescue!

Prior to 2000, it was rare to find apprenticeships outside of the unionized trades, such as electricians, carpenters, plumbers, and masons.  Today apprenticeships can be found in most sectors of the marketplace, including healthcare, STEM roles, and energy. Take a look at this list of hundreds of apprenticeship opportunities by industry sector from Apprenticeship.gov.   Formal apprenticeships typically last about four years (a range from one to six years) and tend to have very high retention rates for people who enter them. 

Here are some of the key features of many formal apprenticeship programs:

• Programs vary in length depending on employer or industry.
• In exchange for serving as an apprentice for a specific term, the apprentice receives a progressive education that covers technical and soft skill education and experience.
• Most programs are registered with the Bureau of Labor and are co-sponsored with trade or industry associations.
• Apprentices earn wages with an increasing compensation scale for achieving milestones in the program.
• Apprentices must be 18 years of age or older and have a high school diploma or equivalent.
• Applicants may need to qualify via testing and other employer-specified selection criteria.
• Typical programs require 100 to 300 hours of formal training and 2,000 to 5,000 hours of work experience.
• Paid on-the-job training work-based training, and classroom training (sometimes in conjunction with public higher ed).
• Apprentices who complete the program often receive credentials or certifications in their field.
• Some programs may be eligible to receive federal or state subsidies.

Both parties in an apprenticeship make a commitment to each other similar to the way the US military does with its enlistees.  Enlist for a certain term of service during which both parties do their part to make things work out well.

 

Apprenticeships offer significant value to both parties in terms of how each benefits:

• Job-seekers sign-on with an employer who is willing to invest in his or her education and development, with a clear path forward that includes up-skilling the apprentice. As apprentices advance in education and skills their compensation increases.  And apprentices receive the appropriate credentials as they successfully complete requirements in their area of credentialling.
• Employers get a commitment from an apprentice to serve for a minimum time period, enabling them to reduce the spiraling costs of the aforesaid hiring-and-turnover cycle. Employers also get a break on payroll expense since some of the apprentice’s compensation comes in the form of education.  Employers also gain productivity increases because as an apprentice becomes more skilled, he or she contributes at a higher level and over a longer time period.

Bottom Line

No wonder apprenticeships are being offered across so many industries and in so many roles that ever before.  They are a brilliant employer strategy for attracting, developing, and retaining talented people with a better economic structure than the traditional hire-and-turnover approach. Apprenticeships are an equally brilliant strategy for job seekers who can now see a clear path to joining an employer who will invest in their development and help them secure a better future for themselves and their families.

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