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March 2018

Building a Tech-Savvy Workforce With Apprenticeships

Two scholars work in the machine shop at BMW’s Training and Development Center.

A common concern among employers is that finding skilled labor is increasingly difficult. Here in the Fifth District, some firms are taking the matter into their own hands by offering training, combined with school, to build up a skilled workforce. One of the best known cases is BMW, which has been operating its plant in Spartanburg, South Carolina, since the mid-1990s.

Since 2011, the German automaker has been recruiting young people through its BMW Scholars Program, which applies a European-type apprenticeship model to train workers for high-tech manufacturing jobs. Upon high school graduation, trainees combine relevant coursework at one of four partnering community colleges while working at the plant part-time. After they complete the program, they secure not just an associate’s degree but, in most cases, a full-time job offer. In our latest edition of Econ Focus, we explain how this model works, and why BMW plans to expand this effort.

BMW Manufacturing Co.

Scholars practice robot programming at the BMW Training and Development Center.

Apprenticeships are still relatively uncommon in the United States, but they’ve been getting more attention as a way to bring young people into the workforce who might otherwise not consider college. They have particular appeal, say some economists, for training such workers in technical and digital jobs that used to be blue-collar. In South Carolina, for example, a state-wide apprenticeship program has trained more than 27,000 workers in the past decade. More broadly in the Fifth District, numerous firms — including multinationals like Rolls-Royce and Bosch — are looking at these traineeships as an option.

Economists have noted that countries that have adopted apprenticeships widely tend to have lower youth unemployment than countries that do not. Others argue that certain features of the U.S. labor market and educational system might make apprenticeships more difficult to implement on a broad scale. In a 2014 Economic Brief, Richmond Fed researchers provided a closer look at these questions. But for now, it looks like researchers will have a growing number of real-life examples to study in the years to come.

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