Transcript PowerPoint

THE ECONOMIC AND
SOCIAL IMPACT OF
APPRENTICESHIP PROGRAMS
Allied Social Science Associations & American Economic Association 2017 Meeting
Presentation by:
Frank Manzo IV, MPP
Illinois Economic Policy Institute
[email protected]
www.illinoisepi.org
Robert Bruno, PhD
Project for Middle Class Renewal
Labor Education Program
University of Illinois at Urbana-Champaign
illinoislabored.org
Our Research
 The Impact of Apprenticeship Programs
in Illinois: An Analysis of Economic and
Social Effects

Available at this link.
 Research Approach
 FY2015 data on 12,123 apprentices in Illinois
(FOIA Request to USDOL)
 Cross-reference with Form 990 reports
submitted to IRS
 IMPLAN economic impact analysis
 Some regression analysis
Background
 Nearly all registered apprenticeship programs are funded & operated by
private entities (joint & non-joint)



Apprentice benefit: “Earn while you learn”
Employer benefit: Access to pool of skilled, productive workers
Public benefit: Better quality work, increased tax revenue, lower social insurance taxes
 Countries with widespread usage are more successful at transitioning
young workers into labor market (e.g., Denmark & Germany)
 Apprenticeships boost earnings of workers with low levels of education by
+5% to +18%
 Mathematica Policy Research (2012): Participants earn $123,906 more in
wages & benefits over careers than similar nonparticipants, and have
reduced probability of suffering long-term unemployment
Apprenticeships & the Construction Industry
 Work of Peter Philips
 Apprenticeships result in safer, more productive, middle-class construction workers
 “Construction operates the largest privately-finances system of higher education in the
country”
 Construction projected as the fastest-growing industry in Illinois
 Within sector, fastest-growing trades require 3-5 year apprenticeship
2015 Associated General Contractors (AGC) Survey
Expect to hire craft workers in next 12 months
Have trouble filling hourly craft positions
Firm employs union workers on most or all of its projects
Illinois
United States
93%
64%
92%
89%
86%
30%
Overview Data on Apprenticeships in Illinois
FY2015 Breakdown

70% white male

30% women and people of color

89% construction

11% non-construction
Sponsorship
Type
Joint Labor-Management
Non-Joint
Joint Share
Construction
Apprentices
10,646
165
98%
Construction RA Program Financials in IL, FY15
Sponsorship
Type
Joint Labor-Management
Non-Joint
Total from All Programs
Joint Share
Total
Active
Apprentices
Total
Revenues
(Millions)
10,646
165
10,811
98%
$155.1
$0.9
$156.0
99%
Total
Land, Building,
Expenditures Equipment Assets
(Millions)
(Millions)
$135.4
$1.1
$136.4
99%
$263.0
About $1K
$263.0
100%
Construction RA Program Metrics in IL, FY15
Operational Metric
Joint
Revenues Per Apprentice
Expenditures Per Apprentice
Total Employees
Apprentices Per Program Employee
$14,570
$12,715
2,860
3.7
Non-Joint Difference
$5,154
$6,586
11
14.7
3x
2x
+2,849
-11.0
Apprenticeship Revenues in Context (Estimates)
 $6,227 Per Construction Establishment
 $0.56 Per Hour Worked by Blue-Collar Construction Workers
 1% of Total Blue-Collar Construction Worker Wages & Benefits
Annual Impact of Construction RA Programs
Economic Impact Analysis Inputs
 Total annual functional expenditures: $136.4 million
 Total estimated net earnings by apprentices: $228.4 million
 The average construction worker age 18-24 earns $21,000 more in annual
wages per year than comparable worker
Economic Impact Analysis Outputs
Economic Effect
(IMPLAN)
Direct Effect of Apprentices
Indirect Effect on Local Industries
Net Consumer Demand Effect
Total Effects of Registered Apprenticeships
Employment
(Jobs)
Value Added
(Millions)
2,700*
900
1,400
5,000
$184.2
$105.0
$119.4
$408.7
*Form 990s: Actually 2,871 jobs at RA Programs in Illinois, so the model is relatively accurate.
Long-Run Impact of Construction RA Programs
Impact
Long-Run Benefit
Illinois Gross Domestic Product (GDP)
State and Local Tax Revenues
Federal Tax Revenues
Unemployment Insurance Compensation Savings
Food Stamp Value Savings
Welfare Cost Savings
Annual GDP Return Per Private Dollar Invested
Long-Run GDP Return Per Private Dollar Invested
Long-Run GDP and Government Revenue Return on Investment
$1.25 billion
$98.7 million
$101.4 million
$27.1 million
$17.7 million
$5.5 million
$3.00
$9.14
$10.98
 Directly attributable to privately-funded apprenticeship programs
 Those who claim that unions have negative impact should at least
consider these economic & social benefits
Educational Importance of Apprenticeships
Rank
1
2
3
4
5
6
7
8
9
10
Construction Registered Apprenticeships
Total
vs. Universities in Illinois
Enrollment
Tuition
Cost
DePaul University
Northwestern University
DeVry University-Illinois
Loyola University Chicago
University of Chicago
Columbia College Chicago
Construction Apprenticeship Programs
Roosevelt University
Illinois Institute of Technology
National-Louis University
$39,000
$53,000
$31,000
$43,000
$53,000
$37,000
$0
$34,000
$41,000
$32,000
22,554
20,128
19,417
15,670
14,620
12,464
10,811
7,708
7,404
6,874
 If we combine all RA construction programs, they are 7th-largest private post-
secondary institution in Illinois (16th with public universities)
Is Apprenticeship Better than Attending College?
Rank
 Personal costs:
$4,000 out-of-pocket
over four years for RAs
 $36,000 average student
debt for graduates of 4year universities (Illinois)

1
2
3
7
15
16
17
18
19
20
-
Bachelor’s Degree (or Other
Educational Attainment)
Biology and Life Sciences
Engineering
Business
Social Sciences
Architecture
Registered Apprenticeship
Family and Consumer Sciences
Psychology
Social Work
English Language and Literature
Less than High School
High School (Baseline)
Associate's Degree
Benefit – Cost
(Over 36 Years)
$740,000
$700,000
$556,000
$461,000
$156,000
$120,000
$84,000
$81,000
$66,000
$44,000
-$16,000
$0
$7,000
Does this Apply to Other States?
Share of active registered apprentices in
joint labor-management programs
(Construction):
 Yes, recent studies across Midwest
find that joint programs provide
the vast majority of human capital
investment in construction


95%



98% 94%
82%
79%
IL: Bruno & Manzo (2016)
WI: Philips (2015)
IN: Philips (2015)
KY: Duncan & Manzo (2016)
OH: Onsarigo, Atalah, Manzo & Duncan (2017)
 Bilginsoy (2007): RAs in joint
programs more likely to complete
training & receive certification
Relationship of Prevailing Wage to RA Programs
 Prevailing wage laws promote long-term apprenticeship training
 Economic research:
 In 2012, states with prevailing wage had 65% more enrolled apprentices & 60% more
graduating apprentices per hour of construction work
 After Colorado repealed prevailing wage, apprenticeship training fell 42%
 After Kansas repealed prevailing wage, apprenticeship training fell 38%
 Injuries case rates (14%) & workdays lost to injury (12%) both increased in nine states
that repealed prevailing wage between 1978 and 1991
 Construction workers report 12% more disabilities in states without prevailing wage
 Higher investment in worker training translates into higher productivity,
reduced injuries, & fewer skills shortages
Our Policy Recommendations
1.
Improve marketing and outreach to businesses & disadvantaged workers
2.
Expand access to child care programs
3.
Provide tax credits to businesses that offer apprenticeship programs
4.
Expand pre-apprenticeship programs in public high schools
5.
Incentivize workers to enter the trades by creating pathways at public
universities
6.
Support policies that increase unionization & strengthen prevailing wage
The Big Takeaways
•
For many young workers, an apprenticeship is a better option than college
•
Registered apprenticeship programs would be the 7th-largest private postsecondary institution in Illinois
•
Joint labor-management programs account for vast majority of human
capital investment in construction
•
Apprenticeship programs have positive social and economic impacts: $11
in total benefits per dollar invested over long run in Illinois
•
Prevailing wage and labor unions support apprenticeship programs
•
States can take steps to promote apprenticeship programs in construction
and other industries
Thank You!
www.illinoisepi.org
www.illinoislabored.org
[email protected]
[email protected]
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Twitter: @IL_Labor_Edu
Twitter: @IllinoisEPI
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