Apprenticeships in the United States are typically footed by employers or government grants—a funding structure that makes it hard for programs to plan and grow. Grants are a notoriously fickle beast.
So four years ago, California decided to try a new pay-for-performance model that aimed to bring stability. Apprenticeship intermediaries or other sponsors are awarded $3,500 per active apprentice per year to cover much of the cost of running programs, with an additional $1K payment when the apprentice completes. A second and much smaller form of funding is earmarked for training, with reimbursement per training hour for institutions like community colleges.
“We’re looking to create that sustainability and growth pathway for program sponsors that are meeting the needs of employers, supporting apprentices through their journey, and ultimately really scaling this apprenticeship system,” says Adele Burnes, chief of the California Division of Apprenticeship Standards and the primary architect of the new model.
The Big Idea: California is not the only state that has tried the pay-for-performance approach—Iowa has been doing it for longer and other states including Maryland are trying it now, too. But California’s program is by far the largest, and it holds some possible lessons for the Department of Labor following its announcement that it will be allotting $145M in federal apprenticeship funds for its own pay-for-performance program.
The new federal program is part of the Trump administration’s push to reach 1M apprentices a year nationwide. Details on the program remain sparse, but the Labor Department announced in January that it will target key industries like AI and semiconductor infrastructure, shipbuilding, IT, and healthcare. A call for applications is expected soon.
The California model, called Apprenticeship Innovation Funding (AIF), has overall been a success. From 2021 to 2024, the number of apprentices in the industries targeted by the funding—all but the traditional building and fire trades—grew by 76%, and nearly 30K apprentices have been served through AIF to date, Burnes says. But the approach hasn’t necessarily fixed the sustainability problem, with funding for the initiative now threatened by a lean budget year.
How It Works: AIF funding is available for all apprenticeships associated with the Interagency Advisory Committee on Apprenticeships, which is focused on apprenticeships in non-traditional industries like education, healthcare, and technology. In order to qualify, however, apprenticeships must meet a wage requirement. For the latest round of funding, which opened this month, apprentices must make between $20 and $23 per hour, depending on the county. Those making less may still meet the requirement if they receive benefits that, combined with the hourly wage, add up to the minimum.
The wage floor excludes many apprenticeships in some occupations, most notably cosmetology, and may stymie some growth, but Burnes says that’s in line with other investments the state is making.
“There’s been a real movement in California over the past decade around high-road careers and trying to make sure that as we do workforce development, we’re really focused on high-road principles, including wages, worker voice, economic justice, and social justice,” Burnes says. “In the case of AIF, we really focused on wages.”
Taking the Politics Out of Apprenticeship Funding
One of the largest recipients of AIF funding is early childhood education, perhaps surprisingly given its reputation for relatively low wages. In the first three rounds of funding, the early childhood education apprenticeship intermediary Early Care & Education Pathways to Success trained more than 1,100 apprentices, with the number more than doubling each year. Of the apprentices served, 80% were women of color. So far, the organization has received nearly $2.5M in funding from AIF.
Other industries that have received substantial funding from AIF include energy and natural resources, transportation, healthcare, advanced manufacturing, and IT.
Zoom In: While not all early childhood education apprentices can meet the wage requirements, Randi Wolfe, executive director of ECEPTS, says the innovation funding allows them to redirect other grant money toward apprenticeships in rural counties, where wages are lower. Once an apprentice has completed training through ECEPTS, they are placed on career pathways that allow them to earn more credentials and grow, but their initial jobs are often low-paying—a systemic issue that apprenticeships alone do not solve for.
The discretionary nature of the AIF funds—and the fact that ECEPTS doesn’t have to compete with other organizations for it and fill out tons of paperwork—is what makes the model “genius,” Wolfe says. This has been especially important in growing apprenticeships in a nontraditional and woman-dominated field.
“If you have 500 apprentices, you’re getting 500 times $3,500, and if you have three apprentices you’re getting three times $3,500,” Wolfe says. “Power and influence and the ‘old boys club’ will not have any bearing. It takes out the politics.”
Training Snag: While Wolfe says AIF has largely worked well for ECEPTS, the training funds she hoped the organizations’ college partners would get did not materialize, meaning ECEPTS continues to pay for the college courses itself. Wolfe got feedback from those partners that the reimbursements would arrive too late and they could not front the cost.
Gary Adams, dean of workforce and economic development in the chancellor’s office for California Community Colleges, says the pay-for-performance model is the most efficient distribution of apprenticeship funding for the colleges and one they’d like to continue to move toward. But in order for it to be successful, colleges need some prerequisites.
“You need enough money to fund a director or dean of apprenticeship, somebody who’s thinking about apprenticeships,” Adams says. “And you need enough money to get programs off the ground. The benefit of this model is that it does provide a level of long-term program sustainability.”
A Necessary Component in a Larger Ecosystem
Perhaps the biggest lesson the Department of Labor can learn from California is that pay-for-performance is just one necessary component in a whole ecosystem that supports apprenticeship. In 2018, Gov. Gavin Newsom set a goal to expand apprenticeship in the state to serve 500K learners over the course of the decade.
“One of the things that makes AIF successful is that it’s one of a series of things that the state has done,” says John Colborn, executive director of Apprenticeships for America. “In addition to these pay-for-performance funds, the state has also put out a lot of grants to support building up organizations, creating new apprenticeship programs and infrastructure in the state, and leveraging community colleges. When you are able to add this as a piece of a much larger set of investments around apprenticeship, you really do get an outsized impact.”
The federal government has increased its investment in apprenticeship since the Obama administration, but pay-for-performance introduces a shift in thinking around funding, according to John Ladd, the longtime leader of the Labor Department’s Office of Apprenticeship and now a senior advisor at Jobs for the Future.
If the new Labor Department program invests the same $3,500 per apprentice as in California, only about 40,000 apprentices will be served by the initial investment. That’s a “drop in the bucket compared to the 1M apprentice goal,” Ladd said during a Craft Education event about the federal program. But it signifies an important shift toward directly incentivizing employers instead of just building out the ecosystem.
A Cautionary Tale, Too: While pay-for-performance could create more predictability for apprenticeship programs and moves the country closer to the long-lasting apprenticeship programs of Europe, the promise is only good so long as the funding lasts. The federal funding is currently slated to run for four years.
And in California, with a tight budget year ahead, AIF funding may be cut altogether or at least see a big decrease.
“Federal government spending reductions and the need for the state to step in to make sure that our health and education systems are sound is certainly a factor in this broader equation,” Burnes says. “I think apprenticeship expansion remains a priority here in California, but we’ll see what happens with AIF.”
ECEPTS and other apprenticeship sponsors that have gotten AIF funds are keeping an eye on the state budget, as well as the forthcoming federal program. In the meantime, many are also redoubling their efforts to win grants.
“It’s been a wonderful gift,” Wolfe says. “If it turns out to only have been a four-year gift, I’m grateful for the four years.”