The Department of Labor plans to allot $145M in apprenticeship funding to a new pay-for-performance initiative, targeting key industries like AI and semiconductor infrastructure, shipbuilding, IT, and healthcare. The administration hailed it as a step toward reaching its goal of 1M new apprentices a year.
The Labor Department studied the approach in 2024 at the behest of Congress, and several states—most prominently California—have recently started using pay-for-performance models for apprenticeship. Such models typically make incentive awards when an apprentice is hired and retained for a certain time period, and again when they complete their program. It’s a common approach in European countries, which have much higher rates of apprenticeship participation than the U.S.
“We’ve always said that pay for performance is almost a precondition for growing apprenticeship in the United States,” says John Colborn, executive director of Apprenticeships for America. “This is the right path for scaling.”
The Labor Department’s announcement was a preview of the initiative, and exact details of the incentive structure are likely to be hammered out in coming months. (The department hadn’t responded to an interview request by press time.) But the department said in an announcement that it will make up to five awards as “cooperative agreements” that will run for four years. That should be a useful pilot for future pay-for-performance investments, Colborn says.
Ultimately, he says, reaching 1M apprentices will require much larger, predictable funding streams. “This doesn’t create that long time horizon that will encourage a lot more people to invest, but it’s a step in the right direction.”