The Dream (and Reality) of Tech Apprenticeships

By Camden Robinson, Pathway Ventures Fellow

Jay Gatsby, titular character of The Great Gatsby, is obsessed with a dream. As a young man he falls in love with a beautiful heiress, Daisy Fay, but returns home from war to discover she has married another man.

Determined to get her back, he amasses a fortune and buys a mansion on Long Island from which he can look out and see Daisy’s home across the bay, marked by a green light hanging at the end of her dock. Each night, the green light reminds Jay of the blissful love that constantly eludes him — always within sight, but just out of reach.

Those who work in workforce development in the US may empathize with Jay’s enduring yet elusive infatuation.

We have long dreamed of a highly touted training model that promises a utopia of upward economic mobility, lower student debt, and a tighter fit between employer needs and workers’ skills. Of course, we’re speaking about apprenticeships. Like Jay’s green light, apprenticeships hold our dreams of a better future, nevertheless one that has yet to materialize.

The most recent resurgence of interest in apprenticeships was prompted in part by President Biden’s American Jobs Plan, which initially called for $38 billion of investment in workforce development infrastructure and apprenticeships. The National Apprenticeship Act of 2021 is currently being reviewed by the Senate.

With all the buzz, you might be forgiven for thinking the year was 2017. Or 2014. Or even 1992.

One area of increasing interest is in ‘new collar’ apprenticeships, which focus on digital roles like software engineering, data science, and cybersecurity. On the surface, such programs sound like a compelling solution to the ever-widening technical skills gap. Multiverse sent waves through the startup ecosystem when it announced a $44 million round and plans to expand operations in the US.

Might we finally be nearing the ‘green light’ of apprenticeships?

Our team at Pathway Ventures examined ‘new collar’ apprenticeships to separate the dream from the reality. We were surprised to learn that many people are using the same terminology to describe a wide range of training models without appreciating their differences. As we evaluated each model, we identified several barriers that suggest we’re further away from a tech apprenticeship utopia than you might surmise from headlines — even as some barriers are beginning to fall. In this article, we discuss what it will take to get there, and why we think one specific model holds the most promise.

One word; three prevailing models

Apprenticeships are commonly defined as a combination of some form of free programmatic education with paid work experience and a guaranteed job. However, there are important differences in the delivery of combined training and employment.

There are three main categories of apprenticeship programs:

1. Integrated work-and-learn

The integrated model delivers technical training and on-the-job experience at the same time. Candidates typically interview with employers before the program begins in order to be placed. Apprentices are considered employees from day one, splitting their time between formal learning and application with their employer.

Advantages

• Apprentices are paid employees throughout the entire program, lowering the barrier to entry for prospective learners.
• A tight loop between classroom learning and applied learning on the job allows apprentices to quickly master skills and concepts in a real-world context.

Disadvantages

• The integrated approach only works well when the employer — more specifically, the apprentice’s manager — is hyper-involved in the apprentice’s development, since it’s crucial that employers pace an apprentice’s work projects with their technical curriculum.

Companies to Watch

• Multiverse has 100+ full-time coaches who work 1-on-1 with apprentices and their apprentice manager to ensure alignment between what the apprentice is learning and what they’re doing on the job.
• Acadium provides students with free, hands-on marketing experience by pairing them with an external Business Mentor who coaches the student in exchange for marketing support with their business.

2. Sequenced train-then-trial

With the train-then-trial model, the technical training program and work experience happen sequentially. Candidates interview with employers only after completing a full 10–20 week training program, at which point they’re hired into a temporary role so employers can “trial” the apprentice before deciding whether or not to hire them full-time. By default, no formal training is delivered during this time.

While still referred to as apprenticeships, this model feels a lot like a free coding bootcamp followed by a paid internship. In fact, companies like Lambda School and SV Academy actually are bootcamps who have developed ‘train-then-trial’ models to help place graduates.

Advantages

• Employers receive a job-ready employee without having to train or commit long-term.

Disadvantages

• Apprentices need to commit to at least a 3+ month full-time unpaid program.
• Employers may experience significant operational complexity in onboarding a temporary employee.

Companies to Watch

• LaunchCode has resolved the operational complexity by becoming the employer of record for the apprentice and invoicing the employer.
• Lambda School has launched Lambda Pods, through which employers can trial Lambda alumni as entry-level engineers for 3+ months. Lambda assigns one of their own engineering managers to oversee the intern’s development.

3. Contract staffing model

With the contract staffing model, the apprenticeship provider trains and employs their own apprentices to perform paid contract work for clients for 9–24 months. These companies are in many ways staffing agencies or contract software development shops first, and apprenticeship trainers second. Clients usually have the option to hire the apprentice contractor at the conclusion of a project.

Advantages

• Apprentices are typically paid from day one of training.
• Less operational complexity since the training provider and employer are the same.
• Tailored training program that covers exactly what’s needed for the job and reduces uncertainty for the student around what their full-time job will be like.

Disadvantages

• The supply of talent is often greater than demand for contract staffing projects, and there are typically limited engagements available for entry-level apprentices.
• Retention can be a challenge, since apprentices can leverage their newfound skillset to find more attractive employment. Apprentices are usually paid below market because the provider has to compensate apprentices while they receive training and then has to cover their own operational overhead.

Companies to Watch

• Revature and Talent Path have developed channel partnerships with universities to source recent graduates as apprentices.
• Bitwise Industries has built their campuses in neglected metro areas like Fresno, Bakersfield, and Merced to more directly tap underserved populations.

Small market, big aspirations

Yet despite the availability of distinct models — and the excitement around tech apprenticeships in general — the actual number of apprentices in such programs is still quite small.

Pathway estimates that in 2020, only about 1 percent of apprentices (about 6,000 total) were in ‘new collar’ digital fields. For comparison, the ten largest coding bootcamps alone enrolled between 27,000 and 40,000 students in 2020, around 5x the number of registered apprentices in tech (note that not all tech apprenticeship providers are registered with the Department of Labor). The number is growing, though, with tech apprenticeships comprising 3% of all new apprentices.

Why aren’t tech apprenticeships wildly popular?

On paper, tech apprenticeship models make a lot of sense: non-traditional job seekers receive free technical training and a de-risked first job on the path to a lucrative and stable career. And they seem to work, too — typically 80 to 90 percent of employers go on to hire their apprentices.

So why aren’t tech apprenticeships more common?

First, it’s helpful to understand what employers are really solving for with apprenticeships. Some are motivated by a mission- and business-driven desire to build diversity within their technical teams. Others are trying to solve a business-driven talent gap. Both objectives face meaningful, but different, barriers to widespread adoption across models.

Closing the DEI gap

Supply-side: Lack of program readiness

For apprenticeships to succeed in sourcing from diverse or disadvantaged populations, providers will have to engage more with potential candidates earlier on to ensure they have the support needed to succeed in an intense, highly technical apprentice program.

This presents an opportunity for startups. Multiverse, for example, sources apprentices through partnerships with community colleges, non-profits, and community organizations like Code Nation and Generation USA, who help evaluate talent from non-traditional backgrounds and arrange for pre-program training programs to help candidates reach a baseline where they’ll qualify for an apprenticeship.

Demand-side: Say-do gap

The largest employers have become increasingly vocal about DEI initiatives and their commitment to strip away historical barriers like college-degree requirements for entry-level technical jobs. In December 2020, CEOs from more than 80 member companies of the Business Roundtable committed to a multiyear project to reform companies’ hiring and talent management practices to emphasize skills over degrees. So far, however, such programs have remained small. For example, Aon has promised to create 10,000 apprenticeships by 2030. Yet from 2012 to 2020, its apprenticeship program trained just 290 apprentices globally.

Demand-side: Durability of DEI

Staffing more diverse technical teams is a compelling business objective, since diverse teams perform better on average. But efforts to build diverse teams appear to be more localized, with the biggest strides being made by a few of the largest employers. Companies like Facebook and Amazon grew their DEI positions by 28% and 44% respectively in 2020, but it’s worth questioning whether these efforts will stay concentrated in companies who both have the resources to make DEI a business priority and face the greatest public pressure to do so.

Nick Johnson, former COO of LaunchCode, shared that their expansion to Seattle and Portland was stymied by a hyper-competitive market for entry-level tech that failed to appreciate diversity:

“Companies wouldn’t return our calls. Even after training diverse talent, they still were not hiring them.”

Closing the talent gap

Supply-side: Lack of awareness

For companies hoping to use apprenticeships to solve a business-driven talent need, one of the barriers they face is limited awareness of apprenticeships as a viable employment pathway into technical roles. This is especially true of recent college graduates who often associate apprenticeships with blue-collar jobs and trade schools.

Tej Mehta, who has been helping Multiverse expand in the US, noted:

“The first step in the US is still educating people about what apprenticeships are, as opposed to the UK where the model is more widely understood and prevalent.”

Demand-side: Burden of responsibility

Work-and-learn apprenticeships can cost employers $15K — $20K, not including the cost of the manager’s time. Given the expenses, many employers aren’t willing to invest in such programs.

Former Galvanize CEO Harsh Patel summed it up:

“Many employers don’t give a damn about doing additional work to get better talent. Only the great ones do.”

Employers also worry they’ll invest in training an employee who will end up leaving to work for another company — even when existing data show if you spend money on training somebody they will stay longer.

Demand-side: Mismatch between talent needed vs. talent offered

The roles with the most acute talent gaps don’t always overlap with the roles that can be filled by apprentices. Commonly cited statistics — like the “one million programming jobs” that went unfilled in the US last year — gloss over the fact that many such jobs aren’t for entry-level front-end developers or data analysts, but rather for L4 and L5 engineers or higher, or for roles that require unique combinations of skillsets in niche fields like autonomous vehicles or blockchain.

Of the 200,000 job postings related to cloud engineering last year, nearly 90% required 2 or more years of experience, and over half required 4 years or more. These aren’t the kind of jobs where you can take someone who doesn’t know how to code, put them through a 14-week web development course, and then staff them on a 12-month apprenticeship. It’s a trickier problem to solve.

From challenge to opportunity

Many of these barriers present opportunities for innovation; others are more challenging for startups to overcome unilaterally. The prohibitive cost for many employers was what convinced Melanie Dunn, the State Director for Apprenti in New Jersey, that

“Until the US makes this a matter of federal tax law [like they have in Europe], it will never be as effective.”

In the wake of COVID-19, though, employer reticence may be changing. The pandemic has accelerated digitization across industries — in some cases by as much as seven years — resulting in a greater need than ever for skilled professionals in ‘new collar’ fields. Employers’ pain points around skills and DEI have become so acute that they are more willing than ever to invest in new talent pipelines, especially as the existing higher education system is failing to fill their need.

Tej Mehta of Multiverse shared that:

“The needs around skills and DEI are very real for employers right now, and we’ve seen many get excited about the prospect of apprenticeships. We thought we were going to have a harder time convincing employers, but many are looking to move quickly.”

Of the three models we evaluated, integrated work-and-learn apprenticeships appear best designed to capture the opportunity as barriers to adoption continue to fall. A few of the reasons this model stands out include:

DEI-driven Solution

• The sponsoring company is the employer of record for apprentices, helping the employer achieve their DEI objectives.
• Since apprentices are paid from day one, it opens up the pathway to populations who would not be able to afford the program otherwise. Mehta notes that Multiverse’s size and model allow them to “actually deliver the scale that organizations need to be able to fully adopt apprentice programs.”

Skills-driven Solution

• Lack of awareness is being tackled by companies across models, but work-and-learn models may have an inherent marketing advantage given that apprentices don’t have to complete a full training program before being placed with an employer.
• An integrated training model delivers the best of applied learning, allowing apprentice providers to tailor the program to the needs of the company and quickly ramp up their apprentices to be fully contributing employees.
• Work-and-learn programs can also be used to reskill existing employees for more advanced roles, which would better address the most acute skills gaps.

So, what’s the verdict?

Have we finally reached an inflection point for apprenticeships? Recent signals like heightened employer demand demonstrate real momentum for new collar apprenticeships, but we believe there’s still a ways to go. We foresee apprenticeships continuing to grow over time as more employers change hiring requirements, with work-and-learn models best positioned to meet the needs of companies seeking mission-driven and skills-driven solutions. However, the growth trajectory of apprenticeships will continue to be limited until one or more of the following barriers is overcome:

• Corporate investment in diverse hires becomes more widespread
• Apprentice costs for employers are lowered (e.g., through a major federal initiative)
• Apprenticeships evolve to deliver the roles employers more dearly need (e.g., through internal reskilling programs)

Jay Gatsby never did realize his dream of a blissful future with Daisy. Whether or not we manage to develop apprenticeships into a major employment pathway remains to be seen. But for now, the hopeful promise of apprenticeships endures, a green light forever beckoning in the distance.

Pathway Ventures invests in the Human Side of the Future of Work — companies enabling economic mobility through innovative models of earning, learning, and community building.

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