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How much is the U.S. investing in apprenticeship programs?

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Students work in a manufacturing class.

While the U.S. invests a lot of money in public higher education, investments in employment training are comparatively slim. andresr via Getty Images

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These days, the competition to gain and retain talent is fierce. Some businesses are turning to pay increases to attract and keep workers. Goldman Sachs, Morgan Stanley and other banks are hiking the pay of young associates. Many top law firms are doing the same for junior lawyers.

But as Marketplace’s senior economics contributor, Chris Farrell, explains, the $1 trillion infrastructure bill highlights a long-neglected talent shortage. One he says, higher wages alone won’t solve.

Farrell spoke with “Marketplace Morning Report” host David Brancaccio, about the factors behind this shortage and where we might go from here. The following is an edited transcript of their conversation.

David Brancaccio: All right, so the infrastructure bill will throw money at some things that need fixing, but we need the people to be able to do that. To plan. To build.

Chris Farrell: That’s right. You know, David, there’s been this long-term lack of investment in the training of young workers in what used to be called “Smokestack America.” Remember that phrase, “Smokestack America”? These are mostly blue-collar professions like construction, steel, cement, infrastructure. And demand for young talent in these industries, you know, was outstripping supply before the pandemic. But now the economy’s snapping back, and you have this infrastructure spending on the rise, and the dearth of talent is really worrisome. And here’s the thing that’s most upsetting: there are good opportunities for employment, better pay and advancement that aren’t happening because of this lack of investment and lack of training.

Brancaccio: Yeah, I was talking to a contractor on the air the other day, and yes, he’s talking about the pandemic distortions. But he also said his current workforce is “graying out.” They’re retiring and not enough younger people who have the training to jump back in.

Farrell: Yes. And part of this reflects the decline of unions. Unions are not doing as much training or forcing companies to do training. Companies have adopted this perspective that they’re worried if we train somebody, they’re going to go off and get higher pay elsewhere. And I remember, David, I was in the Merchant Marines after I graduated from college. And I was a member of the Seafarers International Union, and entry-level seafarers, they could get the training they needed to get a job in a U.S. flag ship by going to Piney Point, Maryland. And there was a school supported by industry, union members, you could go there and upgrade your skills and, therefore, pay. But with the decline of unions, that kind of arrangement — I mean — it’s less common now. And we’re really paying the price for that.

Brancaccio: And what about the government? I mean, they spend some on various training programs, but not a lot in the grand scheme of things?

Farrell: Well, I pick up on the word “some.” So the government actually spends a fortune on people [who] go to college. I mean, that has become the main avenue for nurturing young talent. But, you know, the classroom and that kind of learning is only for some people. And there’s a report from the Brookings Institution, funding for public higher education $385 billion, years 2017, 2018. That compares to about $14 billion for employment services and training across 43 government programs. And that’s just one measure. But there’s another statistic in this report that I think captures what is our problem. The U.S. had roughly 238,000 new registered apprentices in 2018. However, if the U.S. had the same share of new apprentices per capita as United Kingdom or Switzerland, that number would be 3 million. I mean, think about that.

Brancaccio: So in essence, the U.S. needs more apprenticeship programs, is what you might argue.

Farrell: I would argue and it — we’re talking broadly defined. You know, look, and there are a number of really good work-based educational programs around the country, but they need more support. They need more funding, greater scale and government incentives to encourage all kinds of businesses to embrace this model of “learn by doing.” So you get paid to go to work, but you also advance your skills. Because here’s the thing, David, the current boost in infrastructure spending provides us with a real opportunity. It creates an opportunity for these programs to embrace greater diversity in terms of the apprenticeship programs, in terms of worker training. And we know that if you get more training and you get more skill, you’re going to get higher wages and your career is going to advance.

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