Apprenticeships: Education Meets Employment 👩🎨 Transcend Newsletter #44
How apprenticeships are making a comeback.
Hola! Alberto here. Welcome to the Transcend Newsletter.
The Transcend Newsletter explores the intersection of the future of education and the future work, and the founders building it around the world.
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This week’s newsletter is all about apprenticeships, and I thought we’d bring in an expert to co-write it with me: who else but the one and only Gordon MacRae, who’s the head of Learning Products at Multiverse (they are hiring in London & New York). Read on to learn more about:
What apprenticeships are and how they work
Why apprenticeships are making a comeback in the 2020s
What the apprenticeship market map looks like
We hope you enjoy it – and thank you Gordon for jamming with me! 🙌
The forgetting curve and apprenticeships
Learning is easier when you already have a basic understanding of a topic.
For example, children who have been taught how to draw at home, have an easier time in art class when they start school. While their peers are still figuring out how to hold a pencil, young Charlie is able to draw a house and a horse.
His parents might think he’s an art prodigy but what’s really happening is a phenomenon called “the forgetting curve.” Our memories weaken over time, and if we don’t use the information we learn, we forget it.
First identified by the late 19th-century German psychologist, Hermann Ebbinghaus, the forgetting curve is the reason why we forget so much of what we learn at school and university when we enter the workforce. The biggest drop in retention happens soon after we learn something new.
But applying a newly learned skill is hard to do in most higher education models, which tend to favor a short, sharp shock of learning at the start of your career, and then nothing.
Apprenticeships represent a viable alternative to this shortfall.
Apprenticeships are programs where a junior person (“junior” in skill, not necessarily in age) with little to no industry knowledge learns the practical application of a skill from a more experienced mentor. Crucially, they also get paid while they learn.
There are three stakeholders involved in running an apprenticeship.
the apprentice, or the individual learning the job
the employer, the company that hires and pays the apprentice, providing them with professional responsibilities.
the apprenticeship provider (or intermediary), the organization that coordinates employer and apprentice, and provides additional training outside of the workplace for a cohort of apprentices.
Creating > Attracting candidates
Learning & development expert Josh Bersin identified apprenticeships as starting to shift the focus to a world of “creating candidates” not “attracting candidates.”
If you’re hiring from the same group of universities, your teams start to look alike: too often, privileged and white. According to Opportunity at Work, when US employers screen out applicants without a four-year degree, they exclude 68% of African-Americans, 79% Latinx, and 73% of rural Americans. By focusing on skills over where a candidate went to university, apprenticeships allow companies to hire from a wider and more diverse pool of candidates.
Secondly, the cost of recruiting a mid-career software engineer (who earns $150,000-200,000 a year) can be north of £30,000 including recruitment fees, advertising, and recruiting technology expenses. By contrast, the cost to train and reskill an internal employee may be $20,000 or less, saving as much as $116,000 per person over three years. This is great for the apprentices too – Multiverse recently reported over 90% of their apprentices receive a promotion or pay-rise whilst on the program.
In this world, employers “create” their talent workforce by investing in their employees early on and throughout their careers. The model only works if companies view hiring apprentices as a long-term plan for creating candidates, rather than as a short-term fix for hiring gaps. Too often, companies compete in a zero-sum game for mid-level and senior talent, with technical talent regularly rotating through positions very frequently. This focus on finding an ever-smaller pool of people and hiring them into hard-to-fill roles is costly to companies.
A quick history of Apprenticeships
Apprenticeships pre-date modern, industrialized public schools, and most higher education models.
In the Middle Ages, merchant guilds employed apprentices who spent long periods of time learning under the guidance of a more experienced worker, and this model has remained largely unchanged.
In the modern world, apprenticeships have long been the standard route into engineering and construction roles. In the last decades, apprenticeships saw a drop in demand as students enrolled in university programs and other vocational programs.
But favoring university programs didn’t improve employment outcomes. In the UK, graduate unemployment has risen since 1990, and underemployment among US university graduates has reached 43% this year.
Apprenticeships are making a comeback
In the last few years, however, a new model of apprenticeships emerged to address this gap: apprenticeships focused on the professional services, digital and technology arenas, where the biggest growth in the last few years has been. The apprenticeship model always excelled at teaching high-demand skills while “on the job,” and now it has an opportunity to train millions for the new jobs that technology is creating.
The market for “new collar” apprenticeships is still nascent in most countries, as less than 1% of registered apprenticeships in the US are for technology roles. But employers are starting to embrace the model – Verizon and Multiverse recently announced a partnership to fill software engineering roles through a year-long apprenticeship.
Apprenticeships are hot these days for three reasons:
First, skills shortages in the economy are rampant. With millions of unfilled technology and highly skilled manual jobs, the existing vocational and higher education institutions are not adapting their offerings quickly enough to prepare students. Employers know what skills they need, and the apprenticeship model allows them to have a voice in that training to get candidates working faster.
Second, how apprenticeships are funded has changed. Funding, employing, and teaching an apprenticeship as an employer is taxing, and some governments are stepping up with financial incentives to invest in apprentices as an employer. The UK government leads the way with the apprenticeship levy that incentivizes employers to fund apprenticeships in partnership with registered apprenticeship providers.
Third, technology is emerging as a “glue” to bring back all stakeholders involved in the apprenticeship model. What previously depended on effective local institutions, can now be run on marketplaces.
Apprenticeships Market Map
Below is our market map of apprenticeship providers across the US and UK, the two markets we’ll look at today.
⌨️ Technology apprenticeships (IT, data, software): these are growing fast given the demand for technical talent.
💼 Marketing and sales apprenticeships: many tech apprenticeship providers are now adding marketing, sales, and business apprenticeships programs, like Multiverse or Corndel.
Other business apprenticeship programs include Praxis (focused on startup roles), Kaplan (UK-based, accountancy and tax, banking, technology), Fastport (supply chain apprenticeships for Army veterans), or Freedom Learning Group (instructional design).
🚧 Manufacturing & Construction: these apprenticeships have existed for decades, and are often provided through local institutions like community colleges in the US, or universities in the UK (Leeds College of Building, Kirklees College, Manchester Metropolitan University). The AED Foundation in the US does manufacturing apprenticeships.
Across these segments, there are two main business models that can be applied to any segment.
In the UK, the predominant model is the direct employment model: apprentices are hired full-time by the employer, and the apprenticeship provider complements their work with additional training with a cohort of apprentices.
In the US, the staffing model is also popular, where the training provider hires the apprentice and provides a managed service for the employer.
The next decade in apprenticeships
The apprenticeship space is growing fast as new disciplines are taught through this model, and this creates exciting opportunities for startups. These are some of the areas of opportunity:
New funding vehicles from governments: Governments are still early in the adoption of schemes such as the levy tax, and we expect millions in funding to open for apprenticeship providers and employers in the coming decade.
Apprenticeships for (even more) high-demand skills: apprenticeships can be applied to emerging skills in technology (tech sales, customer success, UI/UX design, data analysis, product management) or healthcare (nursing, healthcare IT). Many of these are currently run as in-house apprenticeships today, but as their demand grows, they can be spun out to external programs.
Community experience of the apprenticeship: the social experience of a university degree is something apprenticeships can’t offer for now and comes with an important social and emotional learning associated with it. Companies like Multiverse are focusing their attention on building a stronger community side to the apprenticeships, including sports, social clubs or community events.
Hybrid learning: a remote-first approach to apprenticeships means employees will spend less time traveling to and from training centers, which can open up access. This also allows providers to test local demand for their programming, adjust to market demands before building out classroom space and scale quickly in new geographies.
In that shift towards a world where we create talent, rather than attracting it, apprenticeships can play a central role in placing employees. Apprenticeships are here to stay, and their new focus on high-demand skills in technology, healthcare, retail, and business is a very positive transformation for how we learn and work.
If you are building a startup in the apprenticeship space, reply to this email and let’s chat!
news roundup around the future of learning and work
📮 edX was acquired by 2U in a transaction valued at $800M – they will create a nonprofit that receives the funds, and edX will grow 2U’s top of the funnel reach.
🚀 Duolingo just filed to go public, valued at over $2B, and with fast-growing subscription revenues.
🙌 The Ayo! Festival will gather kids age 7-14 on July 3rd with free challenges and workshops from some of the leading startups in the K-12 space like Saturday Kids, Ender, Galileo XP, or The Thinkers.
exciting job opportunities we want to share with you!
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Huge thank you to Gordon Macrae for collaborating with me on this fun newsletter. Many thanks to Kamrin Klauschie from apprenticeship.io for the thorough feedback (check out her awesome work mapping and supporting local apprenticeships in the US), Cassidy Levanthal (who just announced a $180M fund for apprenticeships) and Elizabeth Mendes from the Foster community!