Training new employees can be costly, but many funding resources are available to support apprenticeships in manufacturing.
The federal government, for one, continues to dole out millions in grant money designed to expand apprenticeships. In fact, earlier this month the U.S. Department of Labor awarded $80 million to 42 states and territories.
When it comes to funding, you just need to know who to ask.
A couple of people who know a thing or two: David Swanson, Business Relations Specialist at Chicago Cook Workforce Partnership, and Micki Vandeloo, President of Lakeview Consulting, Inc. Both are friends of RADD Training.
How Much Does It Cost to Train an Apprentice?
The answer to this question is not simple, but to give you an idea:
Companies with Registered and Industry-Recognized Apprenticeship Programs are expected to pay their apprentices a progressing wage as they achieve learning milestones on the job and in the classroom. According to the Department of Labor, the average starting wage for an apprentice is $15 per hour. So, there’s that.
Additionally, employer sponsors must cover the cost of the Related Training Instruction requirements. This amount varies based on the program’s needs and the chosen educational institution.
Other expenses might include paying a stipend to mentors as well as a stipend to the apprentice to help cover travel expenses for classroom instruction.
A manager also might recognize indirect costs associated with taking on an apprentice. For instance, the time dedicated toward on-the-job training might negatively affect output until the apprentice attains journeyworker status.
It pays to call your area Workforce Center, grant experts like Lakeview Consulting, Inc., or an apprenticeship expert like RADD Training to discover funding and reimbursement opportunities. Essentially, an employer could pay zero dollars toward hiring and training an apprentice.
Funding Apprenticeships Through Workforce Center Assistance
Workforce Centers exist in part to assist area employers with costs associated with training new or incumbent workers. These experts have access to public resources and knowledge about how to make apprenticeship programs sustainable year after year.
David Swanson of the Chicago Cook Workforce Partnership serves Cook County, which includes a system of 10 American Job Centers. During a guest appearance on a RADD Training webinar about Registered Apprenticeship Programs, he explained at least two options available through his agency:
Training New Employees: “We have funding that can support individuals that you can take on that you haven’t had working at your company before,” Swanson said. “If you let us know before they’re hired … we can work out an on-the-job training arrangement where we’re actually paying for half of that person’s wage for the first six months. We can even pay up to 75 percent of that person’s wage for the first six months in some cases. It just depends on the details.”
Training Existing Employees: “Incumbent worker training is more popular in manufacturing,” Swanson said. “If you have some employees that you’re looking at putting through apprenticeship … we can fully reimburse the cost of related technical instruction for the first year when you’re trying out one apprentice or five apprentices — whatever the scale is for you.”
The Chicago Cook Workforce Partnership accepts applications on a rolling basis all year long. If you are a manufacturing company in Cook County, Illinois, contact David Swanson at email@example.com for more information. If you are not in Cook County, contact RADD Training at firstname.lastname@example.org and we will connect you with resources.
Working with Grant Experts to Locate Funding Opportunities
Lakeview Consulting, Inc. is a team of grant experts that serves manufacturers. Their work expands the United States, so they are familiar with states’ differing opportunities related to tax credits and public funding assistance for apprenticeship programs. Their mission is to connect manufacturers with those dollars.
Micki Vandeloo, President, said her team is having many conversations with manufacturers about apprenticeships. Moreover, she expects apprenticeship programs will continue to grow as talk about reshoring, or bringing manufacturing work back into the country, increases.
“Right now the funding landscape for everything is changing daily, and as federal and state priorities change — a push for apprenticeships, for example — the federal government tends to create programs that will stimulate those priorities,” Vandeloo said. “I think you’re going to see more and more opportunities particularly related to workforce development and filling that skills gap that exists.”
Vandeloo has seen grant opportunities cross her desk that support women in apprenticeships. Additionally, she has seen some designed to support educational institutions, such as community colleges, intending to build or expand their apprenticeship programs. In many cases, the recipient of the educational grants must specify industry partners. And this is why manufacturers need to pay attention, she said.
“Typically under that arrangement, the industry partner would receive money to offset the cost of hiring a person and the cost of developing a mentoring program,” she said. “They also might receive funding for promoting the program or growing people within their own organization.”
Vandeloo sees even more hope for manufacturing on the horizon: a proposal to create a National Institute of Manufacturing. The institute would serve as a “hub for various federal manufacturing programs currently spread across multiple agencies,” according to a story in IndustryWeek.com. Furthermore, it would improve efficiency in funding programs, among other benefits.
“This is a truly revolutionary move to focus on American manufacturing!” Vandeloo posted on her LinkedIn profile. “I hope it comes to fruition, as I and my team at Lakeview Consulting will support it wholeheartedly!”
Funding Apprenticeships with Tax Credits and Other Ideas
Tax incentives vary from state to state, but here’s how they work with Registered and Industry-Recognized Apprenticeship Programs in Illinois.
As of the beginning of 2020, “lllinois provides a non-refundable credit against Illinois income tax for 100% of the qualified education expenses of a qualifying apprentice. The credit allowed is up to $3,500, per apprentice per tax year, for tuition, book fees, and lab fees at the school or community college in which the apprentice is enrolled. A taxpayer may be eligible for an additional $1,500 credit if the principal place of business is located in an underserved area or if the apprentice resides in an underserved area.”
David Swanson of Chicago Cook Workforce Partnership called these tax credits a “major benefit of actually going the distance and registering the [apprenticeship] program with the Department of Labor.”
However, Swanson emphasized that apprenticeship sponsors cannot double-dip by earning both public funding from his Workforce Center and a tax credit — at least not in the same year.
“A good way to think about funding if you want to use the public resources: Get the first year reimbursed through my organization. You won’t be able to claim the tax credit for those dollars we’re actually reimbursing, but then in the future when you are paying for the training, you’ll be able to get that back as a tax credit,” he said.
According to the Department of Labor, other federal resources that might help fund apprenticeship training include Pell Grants, Federal Work-Study Funds, the GI Bill for veteran customers, and more. Review the Federal Resources Playbook for details and additional sources.
For more information about how to fund and/or reimburse your Registered or Industry-Recognized Apprenticeship Program, contact RADD Training at email@example.com.