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President Biden & Apprenticeships

Less than a month after becoming president, Joe Biden signed his first executive order pertaining to America’s apprenticeship programs. In a statement released by the White House, he endorsed a bipartisan piece of legislation that would potentially create up to 1 million apprenticeship opportunities in the U.S. The National Apprenticeship Act of 2021 would “create and expand registered apprenticeships, youth apprenticeships and pre-apprenticeship programs.” The release also noted that these programs would train workers for jobs across various sectors of the economy, including construction.

It wasn’t all good news for those who hope for and would benefit from a larger, better trained, more engaged construction workforce. Included in the announcement was an executive order that reversed one of the previous administration’s orders. That Trump-era executive order had created the Industry-Recognized Apprenticeship Program (IRAP). The program sought to leverage parties such as industry groups, corporations, educational institutions, and unions, among others, to develop their own programs using their own guidelines, customs, and practices without federal supervision.

These private-sector-led apprenticeship programs have been intended to co-exist with traditional apprenticeship programs that navigate federal approval processes. Predictably, not everyone was happy about this decentralized structural shift. In 2019, a coalition of labor groups published a letter citing concerns that “the creation of a parallel system … may further fragment our national apprenticeship system and introduce programs of widely varying quality.” There have also been concerns that “industry-recognized apprenticeship programs have fewer quality standards than registered apprenticeship programs . . .”

There have also been indications that unregistered programs are associated with less rapid wage progression and simply inferior training relative to those with federal stamps of approval. The Biden executive order would end funding for any programs developed through IRAP, effectively killing the program. Acceptance and review of any pending applications seeking approval through IRAP have already been suspended, though any programs already approved can still operate.

This episode neatly unearths one of the fundamental differences between the Biden and Trump administrations. The Trump administration was much more likely to rely upon the private sector to lead economic efforts, including workforce training. While the private sector will do the bulk of heavy lifting regarding workforce training irrespective of who is president through on-the-job training, there will be more federal participation and governmental standards applied to apprenticeship programs over the next four years. Those who have been concerned about fragmentation and the creation of programs lacking adequate standards likely have less reason for concern going forward. On the other hand, the lack of a dual track apprenticeship structure in America may end up resulting in fewer apprentices.

There’s more afoot. The same executive order that ended IRAP also reinstituted the National Advisory Committee on apprenticeships. The new Advisory Committee would consist of members from various groups, including unions, employers, and community colleges. The intent is to create apprenticeship programs that reach all communities, specifically stating that “Black and brown Americans, immigrants, and women [could] access the training and jobs of the future.”

Given dislocations resulting from the lingering pandemic, one might be tempted to think that the problem of insufficient supplies of skilled craftspeople is not presently a construction industry challenge. Indeed, during a recent 12-month period, the construction sector lost more than 200,000 jobs.

But if past is prologue, the lack of sufficient numbers of skilled construction workers will continue to plague the industry and drive costs higher. Construction workers are notorious for leaving the industry once they have suffered a workplace separation. Census Bureau research indicates that among construction workers who lost jobs during the Great Recession, 60 percent had left the industry altogether by 2013 either by finding a job in another industry or by retiring from the world of work altogether.

There are some other considerations regarding the supply-demand equilibrium that characterizes America’s construction workforce. If the Biden administration were to move forward with an infrastructure package, contractors would quickly feel the sting of inadequate numbers of young people entering construction trades.

The pandemic has also created urgency among many property owners who will need to reposition their properties competitively in order to attract enough tenants and visitors. That will spur aggressive hiring among specialty trade contractors at some point in the future, further straining the construction workforce. Already, there is evidence that many HVAC contractors are scrambling as property owners have sought to improve their air handling systems during the pandemic.

In the final analysis, whether or not the Biden administration’s reforms to America’s apprenticeship structure prove beneficial will depend heavily upon how much money the federal government invests in bulking up the nation’s capacity to produce apprentices. Given massive federal budget deficits, the accumulated national debt, and fears of rising inflation and interest rates if the federal government continues to expand outlays, supplying more money for federally approved apprenticeship programs may prove challenging. Only time will tell.

About the Author

Anirban Basu

Anirban Basu is Chairman & CEO of Sage Policy Group, Inc., an economic and policy consulting firm in Baltimore, MD. He is one of the Mid-Atlantic region’s most recognizable economists in part because of his consulting work on behalf of such clients as prominent developers, bankers, brokerage houses, energy suppliers, and law firms.

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