Editor’s Note: As Ohioans prepare to elect a new governor this November, and as state leaders look to build upon past education successes, we at the Fordham Institute are developing a set of policy proposals that we believe can lead to increased achievement and greater opportunities for Ohio students. This is the fifth in our series, under the umbrella of ensuring seamless transitions to college or career. You can access all of the entries in the series to date here.
Proposal: Create a tax-credit program that allows employers to reduce their state tax liabilities based on the number of students who complete a state-registered apprenticeship at their worksite.
Background: In contrast to traditional career and technical programs, where training is delivered entirely by K–12 schools, apprenticeships include paid on-the-job training provided by employers or professional associations in addition to formal education. American high school students rarely participate in apprenticeships, though their counterparts in countries like Germany and Switzerland are far more likely to do so. Apprenticeships are slowly gaining traction in other states, including Georgia, Maryland, and Wisconsin, which have devised apprenticeship programs geared toward high school students. In Ohio, students aged sixteen or older can participate in one of the state’s registered apprenticeships (though some programs set eighteen as the minimum age). Although no state data exist on how many high school students participate in apprenticeships—the state should begin tracking this—the number is not likely to be high. One possible barrier is employers’ capacity to provide meaningful training opportunities: though apprenticeships may be a key part of some companies’ HR strategy, others may not see them as a cost-effective way of building their workforce. Employers bear costs that include training and supervision, along with paying wages—all for benefits that may not materialize if apprentices later take positions at another company.
Proposal rationale: Apprenticeships allow students to gain on-the-job training and can improve the fit between employee skills and business needs. However, this training model has long been neglected in the U.S. as a way to build high school students’ work-ready skills. By covering a portion of employers’ apprenticeship costs, a tax-credit program would encourage more Ohio employers to provide on-site training for students seeking apprenticeships.
Cost: This proposal would not require a direct appropriation of state funds; however, it would reduce state revenue. The amount would depend on the nature and value of the tax credit as well as the resulting rate of student completions of apprenticeships. Any credit given should start at a relatively modest amount so that employers still have skin in the game and to ascertain how the market responds.
Resources: For an overview of apprenticeships from an international and economic perspective, see the chapter titled “Apprenticeships” in Handbook of the Economics of Education, Volume 3 (2011), written by Stefan Wolter and Paul Ryan; for discussion on apprenticeships from an employers’ view, see the 2016 report The Benefits and Costs of Apprenticeships: A Business Perspective by Susan Helper, et al., published by Case Western Reserve University/the U.S. Department of Commerce; for more on Wisconsin’s apprenticeship program, see the Wisconsin Department of Education’s “Wisconsin Youth Apprenticeship”; and for a list of registered apprenticeships in Ohio, see the Ohio Department of Job and Family Services’ “Apprenticeship.”
