Jobs, Professions and Trump’s Apprenticeship Order
— June 28, 2017
By Ingo Walter and Heinz Riehl
So how come President Trump last week gave a speech on the need to take the modern “apprenticeship” pages from the German playbook and make the case for opening a new chapter on the US professional labor force - one that can compete more effectively with the best-trained and most productive workers around the world? Adapting the apprenticeship model to US conditions, currently pretty much limited to German companies manufacturing here, has a lot of potential but requires some new thinking. Nor is it confined to Germany or to manufacturing – there’s lots to be learned from the Old World.
How does apprenticeship work in the European heartland? Tracing their roots back to the medieval Guilds, apprenticeships continue to provide a path to professional success and a sustainable middle class lifestyle for young people, even in today’s high-tech world. German-type programs are tough to get into and challenging to complete. There’s little slack for fun and games and boozy frat parties, or taking six years to finish. The design combines practical training with classroom education that’s equivalent to two years of college-level work.
Classic apprenticeships — more recently renamed “dual education”— are available for hundreds of professions, ranging from crafts like auto mechanics, bakers, machine tool specialists, masons, electricians, and opticians to tax accountants, jewelers, insurance agents, restauranteurs and hoteliers. Apprentice-based careers range across the spectrum from telecommunications and business analytics-based agriculture to marketing, public relations, and medical care.
Following secondary education, around age 16, professional education and training occurs predominantly through this "dual" system — "dual" because the know-how and skills for each profession are conveyed in two distinct settings: (1) A company, business, or workplace for the practical component; and (2) A related professional trade school for the more academic education content. Dual education takes between two and three years, with the apprentice working three or four days every week for the employer and attending professional trade school for one or two days. Besides covering the cost of training, the employer pays a modest wage. There is no $100,000 student debt burden to be struggled with at the start of a young person’s career.
The professional trade schools, in turn, complement the practical training with a profession-specific yet comprehensive, college-style education. Bakers learn the chemical composition of yeast and flour, bankers learn the difference between a mortgage and a real estate-backed loan, and all apprentices learn how federal, state, and local governments are organized and how elections work – what we used to call “civics.” Employers and schools cooperate closely. Importantly, apprentices are exposed in their employer’s business to mature, skilled, and professional adults as successful role models.
The typical apprenticeship concludes with a rigorous government-supervised examination confirming the individual as a certified professional in his or her occupation. Certification almost always leads to successful placement in a permanent position. The system also provides additional full-time schooling in a "master class," which again ends with a state-supervised examination. So the more ambitious can go on to become “master craftspeople,” supervising others and educating future generations of apprentices. Only businesses employing one or more “masters” may hire apprentices, so there is always someone from whom young people can learn.
Of course the US model has its own strengths, encouraging thinking outside the box, providing second and third chances for late bloomers and for people to bounce back after career setbacks. And we already have home-made apprentice traditions in trades such as construction, with labor unions playing a key role.
But we know we can do better. Our challenges today include serious labor shortages in key high-skill vocations at a time when we also suffer from a large overhang of young people lacking marketable qualifications. True, the US is not producing enough technicians, programmers and engineers who understand “the hard stuff.” But we also have plenty of college grads still looking for meaningful work as well as functionally underemployed “educated floaters” who may not be particularly good candidates for the skilled and specialized jobs the country will need down the road.
This American reality contrasts not only with the usual suspects like China and India, whose young people have voracious appetites for applied education and training, but also countries in “Old Europe,” like Germany, competing well in global markets and absorbing the unemployed despite high prevailing wages. And there’s resilience: Germany bounced back faster and better from the Great Recession than most countries, and one reason may be a more effective and persistent approach to profession-oriented education and training.
We agree with President Trump that a German-type arrangement can be a successful model, adaptable to provide professional opportunities and well-paid careers for US high school grads — a time-tested system we could emulate to generate a skilled workforce that can compete with the best craftspeople in global markets and create goods and services that people want to buy. The model is technologically robust and adaptable to disruptive technologies. And it is a ready-made approach to promote a vibrant middle class and encourage entrepreneurship among small and medium-size businesses. Next time you call an electrician, see if the guy who shows up doesn’t start talking about going into business for himself in the electrical contracting trade.
As usual, the devil is in the details. In a world where we waste billions on sugar subsidies and ethanol production, spare a thought for some targeted incentives to kick-start a distinctly American apprenticeship initiative. We should learn from the masters of the Old World. With the right incentives and accountability, there are plenty of benefits to be harvested.
Ingo Walter is the Seymour Milstein Professor of Finance, Corporate Governance and Ethics. Heinz Riehl is a former Senior Vice President at Citigroup.