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Job skills legislation

New legislation helps make employee investments less taxing for business

The skills gap among California’s workers continues to stall employment and economic growth. It concerns business and political leaders at all levels.

Many employers explain the reason for their unfilled jobs as a lack of available trained workers. By 2020, the United States is expected to experience a shortage of three million workers with associate degrees or higher and five million workers with technical certificates and credentials.

Meanwhile, 16 percent of people between 16 and 24 years old in the United States are unemployed. This situation is far worse for minority groups and individuals who don’t have post-secondary education.

Legislators are beginning to recognize a solution with a proven track record: apprenticeships. Apprenticeships can help people develop in-demand skills while also meeting the needs of employers with skilled job openings.

New legislation proposed both in California and in Congress aim at expanding work-based training programs including apprenticeship.

California State Assemblyman Freddie Rodriguez (D-52, Inland Empire) has introduced two bills this year designed to help address these challenges, AB 1797 and AB 1569.

AB 1797, “California Workforce Investment Board,” would require the Division of Apprenticeship Standards to identify opportunities to establish “earn and learn” job training opportunities through apprenticeship programs in health care. It would also require the board to identify, assess and prepare a pool of qualified candidates.

The Division would also establish standards for pre-apprenticeship programs and for entry into health care apprenticeship programs. With the need for trained healthcare workers expected to grow due to our aging population, this meets needs on several levels.

AB 1569, the “Youth Apprenticeship Tax Credit Program,” would provide employers with a tax credit of $2,000 for each employee between the ages of 16 and 25 who is a registered apprentice. The bill’s goal is to encourage job creation by those employers participating.

Earlier this month on the federal level, U.S. Sen. Tim Scott (R-SC) and U.S. Sen. Cory Booker (D-NJ) introduced The Leveraging and Energizing America’s Apprenticeship Programs (LEAP) Act, which provides a tax credit to employers to help increase the number of registered apprenticeships in the United States.

The LEAP Act is based on a similar program in South Carolina, using public-private partnerships with incentives for business and industry. Companies such as Boeing and BMW along with smaller businesses are using the program and providing employment opportunities for individuals. Wisconsin, Kentucky, and Iowa also offer support for strong youth apprenticeship incentive and expansion programs.

While these state and federal bills may not be perfect in their current form, efforts to expand apprenticeship programs deserves widespread support.

This type of legislation can also benefit the construction industry in a significant way with tax relief. According to U.S. Treasury figures, construction contractors who survived the recession already pay the highest effective tax rate of any business sector at 31 percent. Now they face even higher taxes thanks to rising marginal rates, reinstated limits on deductions, and new surtaxes on wages and income stemming from the health care law.

Tax reform is crucial for small business. While ABC works on a national level for comprehensive tax reform to provide fair taxation, aiding businesses with tax breaks for apprenticeship training programs is a step in the right direction.

The U.S had just 358,000 active, registered apprenticeships in 2012. They compose just 0.2 percent of the nation’s workforce. Adjusted for population, this is only seven percent of what England offers. In Germany, nearly half of all young people go through apprenticeship programs.

Studies show that apprenticeships are a wise investment for both participants and governments. Individuals who complete registered apprenticeship programs earn over $240,000 more during their careers than people who did not participate in such programs. The tax return on every federal dollar invested in registered apprenticeship programs is $27.

Governors, state legislators, and even political candidates are turning to one of the oldest and best models of training in order to build the skills pipeline for tomorrow.


William Smyth is chief financial officer of Sherwood Mechanical and chairman of the Associated Builders and Contractors San Diego Apprenticeship Training Trust board of trustees. For more information visit www.abcsd.org

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User Response
1 UserComments
Robert C Leif, PhD. 11:01pm April 27, 2014

This is an excellent article. Strong apprentice training programs that are part of community college (2 year) curiculums would greatly help our economy and should be supported.

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Comments are moderated by SDDT, in accordance with the SDDT Comment Policy, and may not appear on this commentary until they have been reviewed and deemed appropriate for posting. Also, due to the volume of comments we receive, not all comments will be posted.

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