This study was conducted by staff from Abt Associates, which co-administers CLEAR. The review of this study was conducted by ICF, which co-administers CLEAR and is trained in applying the CLEAR quantitative descriptive study guidelines.
Highlights
- The study's objective was to examine the costs, benefits, and return on investment of registered apprenticeships among employers affiliated with the American Apprenticeship Initiative (AAI) grantees.
- Using a survey of employers affiliated with AAI grantees, the authors provided descriptive statistics and estimates of the costs, benefits, and return on investment of registered apprenticeships.
- The study found that median net benefits per apprentice varied depending on how productivity was valued and increased when indirect benefits were counted. Most employers recovered their apprenticeship costs, with an average return of $1.44 for every $1 invested (a 44.3% return on investment; ROI). Overall, the average gain over the five-year period for an employer was $17,800 for each apprentice, leading to an annualized ROI of 6.3%.
- The authors identified several limitations in the study: surveyed employers may not represent all AAI employers; few employers were in the same field; many post-program estimates relied on statistical models; and quantifying indirect benefits linked to apprentice productivity was challenging.
Intervention Examined
Features of the Intervention
Registered apprenticeships consist of classroom instruction, on-the-job training provided by mentors at employer sites, and progressive wage increases. These programs are registered with the U.S. Department of Labor's (DOL) Office of Apprenticeship or State Apprenticeship Agencies. In October 2015, DOL initiated the American Apprenticeship Initiative (AAI) to broaden registered apprenticeships in high-growth industries and increase opportunities for underrepresented groups. DOL awarded $175 million to 46 grantees nationwide.
Features of the Study
The study assessed the effectiveness of registered apprenticeships for employers associated with AAI grantees by analyzing the costs, benefits, and return on investment (ROI) of these programs for employers. The authors collected AAI employer surveys, which asked about employer characteristics; program characteristics; in-program and post-program data on wages, hours worked, productivity, tuition for related technical instruction (RTI), financial assistance provided to employer from grantee; and other costs and benefits. Each employer respondent selected an AAI “reference apprentice” who completed their program to report on the individual’s experience and information in the survey. The study sample included 68 employers, affiliated with 40 AAI grantees across the U.S., who responded to the survey from March through October 2020. The authors used descriptive statistics to summarize survey data and conducted estimations to obtain values for costs, benefits, and return on investment.
Findings
- Employers participating in registered apprenticeship programs incurred various costs, including total apprentice compensation ($87,369), related technical instruction tuition ($4,488), mentor productivity loss ($11,010), registration fees ($1,217), and supply/wastage costs ($731).
- During the program period, the net benefits for employers varied based on productivity estimates. For low productivity estimates, the median employer saw a net loss of $22,606 for direct benefits and $10,121 for both direct and indirect benefits. For medium estimates, the net loss was $16,839 for direct benefits and $5,740 for combined benefits. For high estimates, there was a net loss of $6,931 for direct benefits, but a net gain of $13,437 for combined benefits.
- The percentage of employers who recoup their investment in registered apprenticeships during the program, considering both direct and indirect benefits, was 25% for low productivity estimates, 38.2% for medium estimates, and 63.2% for high estimates.
- Median net benefits differed by employer and program traits. Employers with under 100 employees, information technology programs, group non-joint initiatives, and programs shorter than 12 months saw the highest net benefits. Conversely, employers with over 500 employees, healthcare programs, independent joint initiatives, and programs longer than 36 months experienced the lowest net benefits.
- Considering both the direct and indirect benefits during and after the program, employers had a positive net benefit. Over the five-year period, the median accumulated benefits were $33,224 (low productivity estimate), $35,728 (medium estimate), and $40,445 (high estimate).
- The percentage of employers who broke even five years after the program was 66.2% for low productivity estimates, 67.6% for medium estimates, and 77.9% for high estimates.
- The ROI for hiring an AAI apprentice ranged from 39.4% to 91.4%. The median ROI for employers was 44.3%, meaning that the employer gained $1.44 in benefits for every dollar spent on an apprentice.
- ROI varied by employer and program characteristics, with the highest returns seen in employers with 100-500 employees, advanced manufacturing programs, group non-joint programs, and programs lasting 12-36 months.
- Overall, the total net benefits over the five-year period surpassed $17,800 for each apprentice based on the medium productivity estimate, leading to an annualized ROI of 6.3%.
- In addition to direct financial returns, employers benefited indirectly through a stronger pipeline of skilled workers, increased employee engagement and loyalty, reduced turnover, and improved company culture.
Considerations for Interpreting the Findings
The authors highlighted several limitations of the study. First, the employers surveyed may not represent the entire group of apprentice employers. Second, only a small number of these employers have programs in the same field, which could affect the findings. Third, many estimates regarding the post-program period are based on statistical models. Lastly, it is challenging to assign a monetary value to indirect benefits and connect them to the productivity of apprentices. Also, the authors mentioned that survey responses were obtained from employers associated with only 40 of the 46 AAI grantees, and the nonresponses may have been affected by the COVID-19 pandemic during the survey period.
Research Guidelines
Review Protocol: Employment and Training Review Protocol
Review Guidelines: Quantitative Descriptive Guidelines