One of the age-old challenges with mentorship is it can be hard to quantify a ROI (return on investment). While it may not be completely necessary to quantify such investments, an interesting study crossed my desk recently that shows apprenticeships do in fact lead to a positive ROI. And here’s a case in point.
The six-year study—by Abt Associates—of the U.S. DOL’s (Dept. of Labor’s) American Apprenticeship Initiative found apprentices’ wages increased and employers experienced a positive return on investment.
The $175 million, five-year grants program, which the DOL launched in 2015, promoted equity by expanding apprenticeships to populations underrepresented in apprenticeships. It also extended such programs to nontraditional occupations—in addition to construction—such as manufacturing, information technology, healthcare, finance, transportation, and logistics.
The study found almost 70% of the 29,553 apprentices were from underrepresented populations including women, people of color, veterans, and people with disabilities and most programs lasted less than two years.
Did Apprentices Earn More?
According to results from this study, apprentices initially earn less than comparable workers but caught up early in the apprenticeship and ultimately earned more by the end. Black and Hispanic apprentices’ earnings increased by 38% and 54%, respectively, far more than comparable Black (15%) and Hispanic (18%) workers. Earnings growth for white AAI apprentices was similar to that of Black AAI apprentices. Annual earnings grew by about 65% for women and 43% for men.
Was There an ROI?
During the program, the typical employer didn’t recoup all its costs, but after the program, employer benefits were estimated between $33,000 and $40,000 for each apprenticeship when counting both direct benefits (the apprentice’s productivity) and indirect benefits, such as reduced turnover and improved talent pipeline, worker loyalty, and company culture. The study projected estimated five-year direct and indirect benefits based on the first year after the program. Nearly all surveyed employers (99%) reported one or more indirect benefits, and 94% experienced at least five. More than a quarter reported experiencing all 10 indirect benefits the survey asked about.
All in all, AAI apprentices’ annual earnings grew by 49%, on average, from the year prior to starting the apprenticeship to the year after, rising from $35,408 in the year before the program to about $52,876 one year after program exit. Five years after the end of the apprentice’s time in the program, the typical employer experienced an estimated 44.3% return on investment—that is, for every dollar invested in the apprentice, the employer ultimately earned $1.44 in benefits.
While this isn’t necessarily a study of mentorship, apprentice programs are a form of mentorship. It is encouraging to see the time and effort spent teaching and educating on a specific skillset does in fact pay off. Perhaps we need more programs for all ages to encourage people to consider a career in construction and manufacturing. There is more to be done with these programs and that is how we change the dynamic of inspiring and retaining the workers of the future, today.
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