Read Ennis Electric CEO Kevin Cole’s thoughts on apprenticeships here!

I recently read an article comparing American apprenticeship programs with the German system. The piece argued that apprenticeship programs in the United States may be a useful alternative to a traditional college education, but one that is difficult to successfully implement.

I disagree and would like to present my counterargument, based on the Ennis Electric Model and the success it has experienced.

Whether a business competes locally or globally, every company deals with the daily reality of competition and the pressure to deliver higher quality products or services with shrinking margins and increasing costs. In a five-part series, I will discuss the importance of apprenticeship training in today’s modern economy. I hope to answer the question of whether training is an expense or an investment, with the ultimate goal of inspiring all companies to increase training, particularly within the apprenticeship model.

Part I will provide an overview of the apprenticeship model and how it is key to the efficient allocation of educational resources. I will also discuss the best method for implementing an apprenticeship program.

Part II will discuss training as an investment in employees and how apprenticeship programs contribute to the long-term success of the enterprise, as well as the career success of employees. I will also discuss how non-compete agreements, incentives and competition between companies have an impact on everything from employee retention to quality workmanship.

Part III examines the state’s role versus market-based responses to the need for hiring and training during both up and down business cycles.

Part IV will discuss the importance of mentorship in training and its relationship with business expansion as well as overall labor costs.

Part V will describe the philosophy underlying the Ennis Electric Model, the reasons for its success at all levels and how its success will be measured over an extended period of time.

Part One – Introducing American Apprenticeships

All skilled professions require at least some on-the-job training. Attending a four-year college and earning a degree in engineering or accounting merely prepares you to start learning on the job after graduation. Trades are similar, but offer the opportunity for applied learning during night school in peripheral areas (such as math). In addition, night school is concurrent with daytime hands-on learning, where the apprentice can apply those math lessons on the job. In this way, the successful apprentice has made himself or herself more valuable to the employer typically within four years, whereas the college graduate needs many more years to match their value to his or her employer.

More importantly, in the modern economy 30 percent of new jobs require an undergraduate or graduate degree, while 70 percent require only technical training, which is commonly accomplished on the job through casual or formal apprenticeships. This video—Success in the New Economy, by Kevin Fleming and Brian Marsh—does a great job of describing the relationships of one PhD to two Bachelor’s Degrees to seven Technical Certificate jobs.

If you want to improve the odds of finding a well-paying job in the new economy, would you rather spend eight years and $200,000 to get a PhD or get paid to spend four years as an apprentice learning to be an electrician?

What Happens if I Train My Employees and They Leave?

Charles Murray (@CharlesMurray), noted social scientist and author of the Bell Curve, examined these ideas closely in his book Real Education. Murray questions the logic of offering higher education in the form of the university experience to young people who are not suited to that type of learning or to the jobs supported by a college degree. In a globalized competitive marketplace with limited post-secondary classroom resources, why teach English Literature to a student in a classroom when he or she excels at learning in a hands-on environment? Proper allocation of our educational resources is imperative if we are to maximize the number of people who increase their standard of living through their own learning and labor.

The electrical trade offers an excellent example of how the modern apprenticeship is delivered. The trainee is hired typically with no more than a high school diploma and the desire to learn a vocation that will provide a life-long career. A formal agreement is established between the employer (the apprenticeship sponsor) and trainee, the terms of which establish what on-the-job training will be provided, what classroom training will be provided and over what time period. Most agreements also establish a process through which the apprentice’s progress will be monitored, assessed and with what frequency the student will receive pay raises.

A Case Against Apprenticeships

In her Cato Institute Policy Analysis on Apprenticeships (found here), Cato Institute contributor Gail Heriot (@GailHeriot) examines challenges and questions our country’s ability to increase emphasis on apprenticeships without government intervention. She discusses the need to give apprentices a strong incentive to stay with their employers long enough for them to realize a return on investment (ROI) in the education of the apprentice. She believes that the typical employer will view the risk of educating an apprentice and losing them upon graduation as too great to ever invest in their education. In her analysis, she poses the question, “What happens if I train my employees and they leave?” My response, “What happens if you don’t and they stay?”

Her view of the departing apprenticeship graduate presumes that the value of the apprentice’s work product won’t match their pay throughout the entire training period. In my experience, that is only true when the sponsor does a poor job of training the apprentice. If I am merely paying ‘lip service’ to the apprenticeship educational process and my real intention is not to teach, but to exploit the employee’s lack of knowledge and skills so that I can use cheap labor to accomplish the work, then she is correct.

However, if the goal is to make the apprentice more valuable through training, then a positive ROI tipping point can be reached prior to graduation. Not only is my training investment paid back, but I can actually increase my profits during the apprenticeship period. To retain the graduate, I only need to provide pay and benefits that align with the employee’s value, which in our model produces a superior electrician who deserves (and receives) top pay and benefits. When the overarching goal is to have the smartest, most valuable workforce in the marketplace, we also foster other positive impacts like innovation, increased efficiency and a safer work environment for all employees.

Professor Heriot questions what the proper role of high schools, community colleges and universities should be in a system of vocational training. In the context of highly specialized jobs, she asks the question, “Where does one go to learn to be an artisan cheesemaker?”. The principal difficulty she notes is that the faculty of schools in all cases are “undisciplined by the full force of the market.” Of course, the answer is to go to the person who actually produces cheese for the marketplace to obtain the best possible training. However, it is not just because the cheesemaker knows how – truly many could know how to train. The key difference is that the cheesemaker who participates in the market and must compete to survive knows better what to teach as the market evolves. Furthermore, Adam Smith’s invisible hand instructs when to expand the operation with trainees and when to concentrate on improving the efficiency of the current workforce.

Universities, for example, would establish a consistent curriculum, hire a set number of professors and hope to fill the classroom for every section of the class offered. The curriculum may not change at all, but if it changes, will certainly lag the evolving market. Even worse, the number of graduates that enter the marketplace will vary widely between too many and not enough to satisfy the current job market. Meanwhile, the job creator knows in real time whether to hire and train or stand pat based on the current marketplace for the goods.

Technical Education in Virginia

A number of years ago, the Virginia Community College system lobbied for and received responsibility from the commonwealth for trade education. Fourteen years ago, I personally worked on the team that cross referenced electrical apprenticeship classroom requirements to community college classes offered within the system or that needed to be added. The focus of the team was always to provide a path to a college degree. While the Virginia Community College system may have granted many two-year degrees, they failed to be a force in the market for training. They never got the point that it isn’t about a piece of paper. It’s about training for competency on the job.

The industry perspective from this employer is clear on all counts. The proper role of a high school or community college is to introduce students to many possible career choices, helping the student make an informed decision about the educational path to follow after graduation. No place of learning that is completely dissociated from the actual execution of the trade’s work will ever be able to keep up with the education that the industry itself can offer.

In Prince William County, Virginia, Patriot High School devotes an entire wing to career and technical education that includes traditional construction trades, computer aided drafting and engineering (Project Lead The Way).

While I applaud the enthusiasm exhibited by county school systems, community colleges and state level efforts to support pre-apprenticeship programs at the high school level, I know that it is just as important for them to understand the context in which they make these efforts. Please don’t try to provide a complete training regimen – you will fail. Instead, your goal should be to expose more career opportunities than just those supported by a traditional four-year undergraduate degree. A complete training program for a technical certificate must include real world hands-on training and, in the best circumstances, offer the hands-on training concurrent with classroom learning. After all, 70 percent of tomorrow’s jobs need different training, training that private industry can do a better job of providing than you will ever do.

Next up, I will describe training and investment, employee retention and other factors.