Workplace

Tech has a labor shortage. Apprenticeships could be the answer.

Because a four-year college isn't for everyone.

Two people looking at a computer screen in an office.

A growing number of organizations are turning to apprenticeship programs.

Photo: Charday Penn via Getty

Blame it on the pandemic or on the confluence of this year's other headline-rattling trends: Unfilled jobs in both small and big businesses are still a bleeding wound. Businesses need skilled, diverse workers. But where are people getting the skills? College enrollment is down, student debt is still staggeringly high and figuring out the value of "nondegree credentials" is a work in progress.

That's why a growing number of organizations are turning to a time-honored remedy with a digital spin: apprenticeship programs.

Apprenticeships, which emphasize learning in context, go way, way back, even warranting a spot in Babylon's Code of Hammurabi. Legislators are still backing apprenticeships in regs: This past February, the U.S. House of Representatives passed the National Apprenticeship Act of 2021, aimed at putting $3.5 billion over five years into apprenticeships. "A 4-year college degree isn't the only path to success," tweeted Vice President Kamala Harris in May. "For some it's a technical college or a training program, and for some it's an apprenticeship. That's why the American Jobs Plan invests in workforce development, including creating 1-2 million new registered apprenticeships."

Past U.S. apprenticeship programs have focused squarely on traditional trades such as electricians, plumbers and machine workers. But the House bill also pledges to support what it delicately calls "non-traditional apprenticeship occupations" — such as IT support services and other fast-growing sectors.

Also different is the rise of a fresh class of apprenticeship creators and organizations that connect a golden triad: employers, education programs (along with coaches and data platforms) and of course, apprentices. London-based Multiverse, which has raised $64 million in venture funding, specializes exclusively in apprenticeship programs. Guild Education, a six-year-old Colorado-based company whose market value has skyrocketed beyond $3.75 billion, helps companies run "up-skilling" and apprenticeship-like programs. Just this week, retailer Target announced it has partnered with Guild to cover the costs of undergraduate and associate degrees (along with books) for its 340,000 frontline workers. There's also a host of smaller organizations, some for profit, others nonprofit, offering to recruit and train nontraditional workers.

And, oh, yes, investors are also fueling the boom. In late June, long-time venture investors Ryan Craig and Daniel Pianko said their team had raised $180 million, tossed their former moniker (University Ventures) and turned into a private equity firm, Achieve Partners. They want to own up to 10 apprenticeship-like programs, notably in IT and healthcare. "It's exciting because our investment thesis is that education provides a strong bridge to career opportunities," says Maia Sharpley, managing director at Juvo Ventures. "We're slowly realizing that the way we used to do training doesn't work. Apprenticeships are a real tangible model."

Fans are counting on apprenticeships to solve a pile of problems, from helping companies attract and retain a diverse workforce to opening doors to tantalizing careers that have been out of reach for many workers in the past. And better than "boot camps," apprenticeships pay candidates from day one rather than saddling them with debt.

"The beauty of apprenticeships is there's no friction for the candidate," says Ryan Craig, managing director of Achieve Partners. "They get a job. Clients love purpose-trained entry-level talent. It's less expensive and incredibly diverse because these are great jobs. I'm betting my career that apprentices will win."

The big unknown, of course, is how apprentices will fare not just in their first job but longer term.

"We've learned that apprenticeships are one layer in the stack," says Rachel Carlson, co-founder and chief executive of Guild. She worries that using apprenticeships as a substitute for college could short-change the people who might reap the biggest gains from affordable schooling.

The good news: There's already a chocolate box of options.

Apprenticeship with a UK flair

Annabel May wasn't sure what she wanted to do after finishing England's equivalent of high school but she knew it wouldn't be college. "It's quite costly and I didn't have a subject I was keen to do," she says. She headed to culinary school, hoping to become a chef. Two years later when she landed her first restaurant job, she felt unprepared for the grueling 18-hour shifts. Furloughed in the wake of COVID, May began scouting for alternatives. She spotted an advertisement for an apprenticeship with a London-based education nonprofit, orchestrated by a company then called WhiteHat, now renamed Multiverse.

Euan Blair, son of Britain's former Prime Minister Tony Blair, co-founded Multiverse in 2016. After stints in investment banking and helping long-time unemployed people find work, Blair began fretting that all the plum jobs went to university grads like him — even if they had to learn how to do the job on the job. "I became obsessed with: 'What would the world look like if universities or colleges didn't exist?'" he recalls.

Apprenticeship programs were already on the rise in the UK. By 2017, the UK government had enacted an "apprenticeship levy" on most employers. (Results have been mixed.) Multiverse created 12- to 18-month programs in areas such as digital marketing, people leadership and project management. Multiverse recruits candidates, sets up apprentice cohorts, establishes coaching programs and curriculums; the companies pay on average $15K per apprentice and get to decide if they'll turn apprentices into hires. Most have. Of the more than 5,000 apprentices who have gone through Multiverse's program, 88% stay with their employer and 52% have since received a pay raise. In June, Multiverse announced its beachhead US customer will be Verizon.

"From the American perspective, the idea that you have to go to college is more deeply entrenched than it is in the U.K.," Blair says. "It's a damaging perspective." Not only do too many students take on crippling debt; the process is biased against people who lack a college degree, many of whom are Black or Latinx. "There's no correlation between college and job performance," Blair says. What employers should seek out are people who have a strong intention to work, he says.

"The challenge has been that there hasn't been a clear and credible alternative. We're saying: You can do this. Without going into debt. And there's a great job attached," Blair says.

May, for one, agrees: She started her apprenticeship in July 2020 and was offered a full-time office administrator job before the program ended. "It's so different from the hospitality experience," she says. "I may have less experience but it's not hindered me. I really do feel valued at the place I work."

Upskilling: An 'American' apprenticeship?

Even before the pandemic, Chipotle Mexican Grill, like many restaurant businesses, was battling rapid turnover — as much as 145% for hourly workers within the first six months of getting a job. The company also wanted to live up to its mantra of encouraging employees "to thrive and pursue their passion," says Daniel Banks, a senior manager of benefits at Chipotle in Newport Beach, California. In 2016, the company partnered with Guild to underwrite employees' learning — whether they signed up for art history, coding or other areas. (Chipotle employees get up to $5,250 a year in reimbursement.)

Since then, between 15,000 to 20,000 Chipotle employees have taken courses, the overwhelming majority of whom are crew members on the restaurant's front lines. By Chipotle's calculations, the program is working. Employees who are involved with what Guild and Chipotle dubbed the "Cultivate Education" program are 3.5 times more likely to stay and, Banks notes, 7.5 times more likely to move into a management role than those who aren't. Even so, neither Chipotle nor Guild shared how many people have completed degrees since the program began.

Along with connecting employers to universities and other degree offering programs, Guild offers learners and their employers their own dashboard to manage their progress, as well as coaches and other tools to help keep them on track. About 4 million employees of companies including Walmart, Disney and Target are eligible for Guild-structured education benefits.

Each employer constructs its programs slightly differently. (Walmart, for instance, recently sweetened its plan by pledging to cover all college tuition and book fees for its employees.) None pay Guild directly. Instead, Guild takes a slice of the revenue earned by its education partners.

"I think reskilling is the American version of apprenticeship," says Guild's Carlson. Apprenticeships historically have trained people to get better at one specific type of job, she says. Upskilling, she says, like the promise of education itself, promises to cover a broad swath of career skills.

"The American dream is tied to climbing ladders," Carlson says. "We crave step functions. I want to be an expert and jump ahead," like rocketing up a ladder in the vintage board game Chutes and Ladders.

In late 2019, Chipotle and Guild started ramping up a new offering more tightly aligned to the company's business. Chipotle will pick up the full education tab for employees who work on two- or four-year degrees relevant to Chipotle, including in areas such as agriculture, hospitality and culinary studies.

"The data still says that the gap between additional income you earn from a bachelor's degree and a high school degree is the widest it's ever been in American history," Carlson says. But she agrees that accumulating hefty loan debt is a treacherous option. "Of our 7,500 institutions of higher ed, only about 300 have high enough outcomes with low enough costs to be a worthwhile outcome for a working adult learner," she asserts.

"College needs to be a choice available for everyone, not just a choice for the few."

Scale, scale, scale.

Investors thrive on big numbers, on finding leverage.

With 8 million jobs in the US unfilled because employers can't find qualified help, "there's a massive shift going on in how our economy will run," points out Achieve managing partner, Daniel Pianko. "Huge numbers of people are leaving the workforce because they don't have the skills. How do we scale quicker than traditional apprenticeship programs?"

"The hardest part of the education-employment gap is to make the connection to the employer," says his partner, Ryan Craig, who wrote "A New U: Faster and Cheaper Alternatives to College." The more established the companies, the harder it is to get in the door.

Craig and his comrades spotted what they think could be an express lane for getting trained people into those as-yet-unfilled jobs: so-called "service" companies, particularly those providing technical support to organizations that aren't themselves techies, such as health care organizations. Here's how it works: Because technical talent is so scarce, most hospitals wind up hiring "business service" companies to help them manage the IT underpinnings of the hospital. For instance, Optimum Healthcare IT provides staff and consultants to more than 150 hospitals and health care clinics nationwide. Organizations like Optimum, in turn, partner with universities to hire their graduates — then put these recruits through 12-week apprentice training programs. The apprentices staff Optimum's existing business, learning hospital IT services even more deeply. Eventually, many will likely get hired by hospitals directly, enabling Optimum to build a new revenue line providing what Craig dubs "talent-as-a-service."

In late July, Achieve bought Optimum. This week, Achieve bought the second of what it hopes will be a portfolio of 10 comparable platforms — the Freedom Learning Group, which trains military spouses and veterans to develop online courses for colleges and large companies.

"We're creating a system," Pianko says. Bootcamps and income-share agreements were a step but still dumped the cost of learning on students. "We think this is the next phase," he says. "If you enter a program where the employer isn't willing to pay, it's not the right program."

Will it work?

The ultimate test for apprenticeships is competency: Do the apprentices get good jobs? Do they rise up the ranks? Is their experience valued when they seek their next job? And from the companies' perspective: Are apprentices delivering? Is the workforce stronger? And are these answers the same for large apprenticeship organizations as well as small ones?

The Strada Education Network has chronicled the work of nine apprenticeship programs including both for- and nonprofit ventures. Craig's book about alternatives to college lists about 50. Most are far smaller than the Multiverse and Guild programs, and work hard to learn the needs and capabilities of all their participants.

One promising example is Oakland-based Onramp, started in 2018 by Lateesha Thomas to widen the pipeline of diverse candidates in tech companies. 70% of the Onramp apprentices are women or nonbinary people; more than 40% are Black or Latinx; about half have nontechnical degrees from four-year colleges; all of them have strong, albeit unrelated work experience. Before doing their apprenticeship with Onramp, "most candidates had applied to hundreds of roles but gotten filtered out," Thomas says.

Companies hire Onramp to recruit a cohort of four to a dozen apprentices. Thomas' team then creates a "sandbox" or mirror of the client's technology stack. Cohorts spend a month working in the sandbox with engineer-coaches, followed by four to six months working alongside the client's existing team. Onramp provides both technical and professional mentors and coaches to support the apprentices along the way.

Fewer than 100 people have gone through Onramp's program but every one has been offered a full-time job, Thomas says, at clients that include Pandora, Twitch and Blend.

"At first, I thought our success would be based on our ability to assess talent," Thomas muses. "Now I realize it's the training. We're doubling down on building out the apprentice experience," including helping them understand daily life in a particular company.

And that may be the best definition of a true "apprenticeship" program.

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