Paying the Apprentice

I have a post on my personal blog about reviving the apprenticeship. There is a lot in there about what needs to be done to burst the educational bubble, so I won’t repeat that content here. But I do want to write about one aspect of this debate that is more relevant to businesses. And it’s bad news, I’m afraid: You are going to have to pay more the talent that you need.

I meet with many savvy business people who fully understand the laws of supply and demand, and who passionately believe in the open market. If they find themselves in a situation where demand for their products outstrips supply, they know that they can raise their prices. And they typically expect the government to stay out of their way and let them get on with running their business.

But when the supply of welders or machinists or apprentices dries up, some are all too ready to bemoan the fact that they cannot obtain talent for the prices they are used to paying, and to exclaim that “something must be done” by the government.

Now, I am aware that raising entry-level wages is not easy. It increases costs, and causes disruption as other staff want to maintain pay differentials. But no matter how good a job we do selling young people on careers in manufacturing, nothing will change if they can earn the same wage walking into a gas station.

American manufacturing is on the brink of a renaissance. With structural issues undermining overseas competitors, we have a chance to put American companies back on top. Certainly, a lot needs to change with the image of manufacturing and the scandal of the higher education degree mills, but unless we as employers respond to the realities of the market, we shall disappoint those young people who make the right choice and decide to commit to a life in manufacturing industry.

 

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