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Labor Department Proposes Industry-Led Apprenticeship Programs

November 10, 2019

Currently, the private sector is largely excluded from creating certified apprenticeship programs, which are led by unions and local and state government entities.

A proposed U.S. Department of Labor (DOL) regulation would amend registration standards for federally funded apprenticeship programs providing on-the-job training in skilled trades.

The draft rule would increase the role of businesses and nonprofit organizations in federal apprenticeship programs. Currently, the private sector is largely excluded from creating certified apprenticeship programs, which are led by unions and local and state government entities. The proposed rule would allow businesses and nonprofit groups to create “Industry-Recognized Apprenticeship Programs” in addition to the existing certified programs.

“The Department believes its industry-led, market-driven approach provides the flexibility necessary to scale the apprenticeship model where it is needed most and helps address America’s skills gap and expand the apprenticeship model to new industries,” stated the DOL’s notice of proposed rulemaking.

Nearly 45 Democrat Senators and 150 Democrat members of the U.S. House of Representatives signed two letters to DOL officials expressing opposition to expanding the role of businesses in apprenticeship programs.

Shortage of Skilled Workers

September marked the 19th consecutive month of American unemployment at or below 4 percent and brought a 50-year low in the unemployment rate.

The record-low unemployment is making it increasingly difficult to find skilled workers, says Edward Timmons, an associate professor of economics at Saint Francis University and a policy advisor to The Heartland Institute, which publishes Budget & Tax News.

“This proposal makes sense,” Timmons said. “Employers continue to face challenges finding skilled workers to fill vacancies in the labor market. This proposal is a smart way to fill in this gap and also make sure that the training aligns with industry needs.”

‘Disconnect’ Between School, Work

The proposed rule is a significant attempt to bridge the growing skills gap, says economist Edward Hudgins, research director at The Heartland Institute.

“The administration’s plan to allow Industry-Recognized Apprenticeship Programs set up by businesses and nonprofits is an important reform to address the disconnect between schools, higher education, and the very limited, government-approved apprenticeship programs, and the crucial needs of the labor markets,” Hudgins said.

There is plenty of room for growth of apprenticeships, which are used extensively in some European countries, Hudgins says.

“In the United States, there are some 1.6 million more job openings than there are unemployed individuals, because those individuals lack the requisite skills,” Hudgins said. “Only about one-half of one percent of Americans are in apprenticeship programs at any give time. In Switzerland, by contrast, some 70 percent of young people go through ‘learn-and-earn’ apprenticeship programs while in school, which could be a model for reforms here.”

Unions vs. Workers

Some labor unions have announced opposition to the proposed rule change, claiming the private-sector programs would provide lower-quality training. The industry-recognized programs would not replace existing programs but could lead to apprenticeships in new sectors, such as finance and technology, Hudgins says.

“Objections from unions are strange in one sense, because many unions employ and train apprentices,” Hudgins said. “Perhaps the real concern is that giving nonunion entities wider freedom to set up apprenticeship programs will mean more individuals go into careers that do not require union membership.”

Organized labor should embrace programs that would, in effect, train more potential members, Hudgins says.

“The apprenticeship reforms will serve employers, students seeking high-paying careers, and the economy overall,” Hudgins said. “Those reforms could even further serve unions if they would act as entrepreneurs, offering expanded apprenticeship opportunities for prospective workers rather than trying to keep markets restrained.”

Proposal Excludes Construction Industry

The business community generally supports the proposed rule, but some contractors have complained because the proposal does not allow industry-sponsored apprenticeship programs in the construction industry, where the majority of apprenticeships are.

Former Labor Department Secretary Alexander Acosta reportedly supported leaving out the construction industry. However, Acosta was replaced by Eugene Scalia on September 26. Contractors hope Scalia will amend the proposal to include apprenticeship programs for the construction trades.

The U.S. Department of Labor is reviewing 325,766 comments it received during the public comment period, which closed August 26. Later this fall, Scalia could amend or enact the rule as published in the Federal Register on June 25.

Ashley Bateman (bateman.ae@googlemail.com) writes from Alexandria, Virginia.

Internet Info:

Edward Hudgins, “Trump Administration Proposes More Flexible Apprenticeship Rules,” Budget & Tax News, The Heartland Institute, August 15: https://www.heartland.org/news-opinion/news/trump-administration-proposes-more-flexible-apprenticeship-rules

Author
Ashley Bateman writes from Alexandria, Virginia.
bateman.ae@googlemail.com