Reconnecting opportunity youth through work-based learning

As of last Friday, Barack Obama can claim the longest streak of job growth of any president and more total job growth than his predecessor, even on the heels of a debilitating recession. But the picture is not all rosy. With interest rates set to rise and America approaching “full employment”, the slowing job growth of the last two months will likely continue into Donald Trump’s presidency. If it does, young people with little career experience will feel the pinch, and those without the resources to pursue further education and training will have it even worse.

An OECD report released at New America on December 9th 2016 explores different models for empowering at-risk youth with work-based learning. Of about 1.25 billion people in the 35 OECD member states, there are about 40 million aged 16-29 not in education, employment, or training. “Opportunity youth” is another name for the group, though such young people generally do not feel flush with opportunities. The name comes rather from the value they would contribute - about $560 billion to OECD economies, according to the report - if only the opportunities were there.

Beating youth unemployment with work-based learning

The goal of the report is to identify effective strategies for implementing and scaling up high quality work-based learning opportunities like apprenticeship for opportunity youth. As with most worthwhile things, apprenticeship programs cost money and involve risks. Even when publicly subsidized, firms hiring an apprentice are mostly responsible for an apprentice’s wages and for the time senior workers spend training them. Despite the cost and risk, a recent Department of Commerce report shows that apprenticeship can be a solid investment - and often less expensive than hiring workers straight from the labor market. But in the United States, where apprenticeship participation has been underwhelming in the last half-century, employers are still wary of the approach.

Getting employers to consider apprenticing “opportunity youth” is even harder. Employers might fear that a young person who has left school will have difficulty learning on the job, or lack the “soft” workplace skills like punctuality, grit, and communication that are indispensable for anyone's workplace success. But despite the challenges facing opportunity youth in terms of academic and soft skills, the OECD’s report still found that businesses do well by investing in these workers, and that both employer and employee can benefit from well-built programs. Given that there are more than 5.5 million opportunity youth in the U.S. today - a number we should expect to swell if job growth continues to slow - helping employers get over their doubts about apprenticeship for disconnected young people is good economic policy. But how do we do it?

Making it work

The report presents different countries’ approaches to the problem-within-a-problem of work-based learning for disconnected youth. There’s little consensus on the best learning model for youth at risk, precisely because each regional context will have its own best solution. Only a few OECD countries have formal national training programs for disconnected youth, but regional and even local initiatives can still give youth at risk a leg up and provide important evidence for future innovations. Policymakers can’t force employers to take on apprentices, though, which is why a clear picture of the business benefits of apprenticeship is needed in the near-term to stimulate investment in new training plans for at-risk youth.

The report presents cost-benefit balances for apprenticeships and shows how these change with different policy interventions. Apprenticeships on their own (top left, below) start with higher business costs than benefits, gradually reversing as apprentices gain skill. Direct subsidies to employers (bottom left) reduce employer costs and cause employer benefits to overtake costs sooner; the same goes for providing better preparation for youth at-risk before they get into work-based learning (e.g. with a pre-apprenticeship, top right), which allows apprentices to start their training from a better footing. External supports to at-risk apprentices through their training, in the form of work-based learning assistants, resources for instructor development, and apprentice supervisors, all improve apprentices’ learning curves (bottom right), reduce employers’ early-on costs, and provide better business rewards through quicker gains in productivity.

Finding that universal direct subsidies for apprenticeships only marginally help at-risk youth, the report’s author, Viktória Kis, also warns against “deadweight” subsidies that support workers who are already comparatively well served. Targeted subsidies can help, but Kis concludes that non-financial measures like support services and pre-apprenticeship can do the most to achieve the goals of providing opportunities for disconnected youth and an attractive cost-benefit balance for businesses. Adjusting the parameters of apprenticeships - varying their length, wage, and format - can help here as well.

The challenge ahead: Work-learning readiness in the US

Employers know that at-risk youth can be harder and riskier to train, and even businesses that provide work-based learning programs can be less willing to take them on. In the United States, where apprenticeship participation is low to begin with, opportunities geared to young, at-risk trainees are practically nil. Recent initiatives such as President Obama’s #FirstJob Compact are a good start, but will need to ramp up quickly if opportunity youth are to live up to their moniker through the innovative apprenticeships we hope to see more of.

To that end, the biggest takeaway from the report for American readers is the need for pre-apprenticeship preparation. Reams of regulations govern Registered Apprenticeships; only a short quality framework defines pre-apprenticeship. Sector-aligned orientation sessions, as pre-apprenticeships tend to be in this country, likely won’t suffice to build the core skills necessary for at-risk youth to succeed in modern apprenticeships.

The report optimistically concludes that “each state, municipality, and sometimes institution can become a test-bed for new ideas”, and as the shine of President Obama’s job market successes seems set to fade, there’s no better time for those. Without targeted funding and adequate preparation for work-based learning, a narrow cost-benefit balance will continue to discourage employers from giving the country’s opportunity youth a chance. As the business case for apprenticeship grows with each successful project, studies such as these can provide valuable insights to firms ready to use work-based learning to unlock the potential of the nation’s opportunity youth.