Apprenticeships Can Address America’s Talent Shortage

American businesses are rappling with a challenge that predates COVID-19, supply chain woes, and inflation: a dire shortage of workers. Our wildly expensive college system has failed to meet talent demand while inflating job qualifications and denying Americans a chance to advance their careers. To fix our broken talent market, we need more pathways for talent cultivation including upskilling programs and apprenticeships.

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The glaring mismatch between talent supply and demand comes down to skills. An April survey conducted by Goldman Sachs found that 74% of small businesses were hiring employees, but 90% of those hiring found it difficult to recruit “qualified candidates.” Meanwhile, the think tank Brookings has estimated that 53 million Americans are stuck in “low-wage” jobs with median annual earnings of $18,000. As of May, the Bureau of Labor Statistics reports two open jobs for every seeker.

In a functioning job market, many of those 53 million Americans would learn new skills to land those more lucrative, open roles, particularly in the burgeoning tech industry. That’s not happening. Our public college system, with average in-state tuition of $9,349, is inaccessible for someone making $10.22 per hour. Amidst historic inflation, that person is more likely to take a second or third job than go into substantial debt for a college program with dubious returns.

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This societal failure to cultivate talent has costs. The organizational consulting firm Korn Ferry estimates that the U.S. technology sector will suffer $162.2 billion in unrealized output by 2030 due to a shortage of workers. At the same time, consulting firm McKinsey estimates that 1 in 10 Americans need to change jobs by 2030 because their current roles will disappear. Around half will need new skills to transition successfully.

But where, specifically, will Americans find these future-proof jobs?

The World Economic Forum (WEF) Future of Jobs 2020 report bets on the digital industry. The most in-demand roles, says the WEF, will span cloud computing, content production, data and AI, product development, engineering, marketing, sales, and people and culture. While some roles in these spaces require a bachelor’s or more advanced degree, the majority don’t. Anyone with some innate ability and drive can complete an upskilling program or tech apprenticeship under the direction of a practicing expert—in a matter of months.

Unlike mid-career college degrees, apprenticeships enable people to work and learn full-time at an average starting wage of $15 per hour (a bargain for technical roles). Moreover, the average starting salary for someone who completes their apprenticeship is $60,000, or more than triple the median earnings in a low-wage role.

Apprentices simply outcompete entry-level recruits on cost, loyalty, and skill development. Recruitment costs an estimated 20% of an entry-level candidate’s salary, and the Department of Labor reports that over 70% of 2016 college graduates planned on leaving their job within the first three years. To get a decent ROI, employers have to rush the training period. Meanwhile, state and federal agencies often subsidize the custom training of registered apprentices, 89% of whom stick with their employer for three years or more.

HR teams can no longer depend on the college system alone to meet their talent needs. It is time to try upskilling programs and apprenticeships that can create the workforce of the future and ensure talent security.

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