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The brief discusses costs to the American Apprenticeship Initiative (AAI) grantees of supporting employers and sponsors in their efforts to create apprenticeships. The brief also explores how grantees progressed in setting up apprenticeship programs and how costs varied over time. Practitioners and policymakers, including state and local workforce agencies, can use these findings to plan future public investments in apprenticeship expansion through intermediary organizations like the AAI grantees or direct subsidies to employers. The AAI grantees began operations in October 2015. Although awarded grants were five years in duration, the U.S. Department of Labor (DOL) allowed grantees to apply for an extension to their grants for up to 12 months, through September 30, 2021. Of the 45 grantees in the evaluation, 36 requested and received an extension of 3 to 12 months.

Key Takeaways

• AAI grantees varied in their projected costs and target number of apprentices. One group of 25 smaller grantees each receiving $4 million or less had targets ranging from 300 to 600 apprentices, while a second group of 20 larger grantees each receiving more than $4 million had targets of over 1,000 apprentices.
• Larger and smaller grantees increased the number of apprentices registered throughout the grant period. However, larger grantees increased apprenticeships at a faster rate than the smaller grantees so that by the end of the grant period (September 2021), the 20 larger AAI grantees generated an average of 1,105 apprentices, while the 25 smaller AAI grantees generated an average of 315 apprentices.
• Most smaller grantees did not meet their apprenticeship targets by the end of the grant period (14 of 25, or 56 percent). Fewer large grantees failed to do so (7 of 20, or 35 percent).
• Grantees’ actual average cost per apprentice was lower than their estimated cost per apprentice ($5,171 and $5,981, respectively). Cost per apprentice declined over time during the grant period, leveling off about two and a half years after the program started. The more apprentices registered by a grantee, the lower the cost was for each apprentice.
• Average weighted cost per apprentice was lower for larger grantees than smaller ones. By the end of the grant period, larger grantees had spent about $3,876 per apprentice versus $8,802 per apprentice by smaller grantees.
• The median cost per apprentice for grantees with prior apprenticeship experience ($4,867) was lower than for grantees without experience ($8,702).
• Funding grantees based on the targets they propose is likely to yield a wide variation in the cost per added apprentice.
• Paying only for the apprenticeships generated could increase the number of apprentices for a given budget.

Citation

Lerman, R., Shakesprere, J., Kuehn, D., Katz, B. (2022). Abt Associates. What Are the Costs of Generating Apprenticeships? Findings from the American Apprenticeship Initiative Evaluation. Employment and Training Administration, U.S. Department of Labor.

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This study was sponsored by the Employment and Training Administration, Office of Policy Development and Research, Division of Research and Evaluation, and was produced outside of CEO’s standard research development process.