Why Apprenticeships Deliver the Best ROI

459135441While employers are being pushed by governments, schools and the unemployed to invest in job training, these mandates typically are not tied to a blueprint for a skills program’s implementation process or a cost-value analysis of scaling such a program.

A customized, progressive apprenticeship program is a proven method for quickly upskilling and retaining top talent for the long-term.

Here’s why:

Employers earn a 36 percent return on their investments in apprentice training — higher than just about any investment a company can earn on its capital and far higher than the 10 percent typical among S&P 500 firms.

PREMIUM CONTENT: The biggest missed opportunities in the staffing industry

Middle-skilled employees who come out of apprenticeship programs are invaluable in terms of a firm’s human capital — as productive employees, teachers to newer workers, and as future supervisors and managers. Some will go on to earn university degrees and step into executive positions, bringing with them a critical understanding of internal operations. In the big picture, it’s clear that apprenticeships stack up economically for businesses as well as for individuals.

On average: apprenticeships provide a higher return than a four-year college degree.

An apprentice earns a respectable income during their training period with progressive increases over a working lifetime. In present value terms, someone who completes an apprenticeship earns some $250,000 more over their lifetime than do non-apprenticed peers with high school degrees.

University students, on the other hand, make substantial cash outlays over four years of schooling and take on debt while earning little or nothing during those years. In perhaps two-thirds of all cases, the college graduate receives higher lifetime earnings than the apprentice, but income variability is high. For the other one-third of college grads, their huge investment of time and money does not deliver on its promise.

As the cost of college soars, leaving the consumer price index and middle-class household incomes in the dust, the financial value of a four-year degree is under well-deserved scrutiny.

Meanwhile, skilled professionals whose trade does not require a university degree are desperately needed in many areas.

Policy makers in particular need to understand the economics of skill building, since they determine where millions in educational resources are spent. Each dollar spent should be an investment in income-producing human capital.

Human capital has become a scarce resource and the big differentiator in competition. Thus, recruit and train wisely. Astute employers recruit good people and invest in their development, making their human capital grow.

MORE: Build it and they will come: Training apps in staffing

Nicholas Wyman

Nicholas Wyman
Nicholas Wyman is the CEO of IWSI America, the Institute for Workplace Skills & Innovation, which authored the report, Ready, Willing & Able: Why It Pays to Hire People with Disabilities

Nicholas Wyman

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