Apprenticeships and internships both give young people experience that can serve as the basis for future employment.
Speaking at the White House on Monday, Assistant to the President Ivanka Trump emphasized the importance of apprenticeships and the need to break down regulatory barriers that prevent companies for putting these programs in place.
Germany and Switzerland both have active apprenticeship programs and American workers could benefit from some of these programs also. Although German and Swiss apprenticeships cannot be imported wholesale into the United States, as has shown Hoover Fellow Eric Hanushek, removing obstacles to apprenticeships is a worthy goal.
Under President Trump’s Executive Order 13771, the Labor Department is reviewing regulations that pose barriers to apprenticeships and internships.
Urban Institute scholar Robert Lerman has proposed extending current postsecondary and training subsidies to apprenticeships. For example, employers should be able to use Trade Adjustment Act training subsidies for apprenticeships, just as they can use these subsidies for full-time training.
Pell Grants are now available for college, including community college, but not for apprenticeships, even though apprenticeship programs have higher returns than some four-year degrees. Expanding Pell Grants to apprenticeships would make it easier for young people to sign up.
Since 2010 Labor Department regulations have been making it harder for young people to get unpaid internships at “for-profit” private-sector institutions. Companies such as Fox Searchlight and Condé Nast were sued for violations.
The Labor Department’s six criteria for an internship in a “for-profit” business are:
· The internship has to be “similar to training which would be given in an educational environment.”
· “The internship experience is for the benefit of the intern.”
· “The intern does not displace regular employees.”
· “The employer derives no immediate advantage from the activities of the intern and on occasion its operations may actually be impeded.”
· The intern is not entitled to a permanent job at the end of the internship.
· The employer and the intern understand that the internship is unpaid.
These regulations are practically unworkable and should be repealed. They lead companies either to pay, thus employing fewer people, or to ask for course credit to avoid lawsuits.
Why should interns have similar training to classroom training? Students want internships for practical experience that they cannot get on campus. What if the students benefit from internships at the beginning of the summer, and then get bored? Must they quit? What if they gain skills during the summer, so that by August they benefit the employer?
Of course, like many rules, the Obama Administration exempted itself and its supporters. These rules only apply to the “for-profit” sector. Unpaid internships at the White House and Capitol Hill, and with unions, community organizers, and environmental groups are fine, since these are non-profits. But interning for a publishing company or a bank without pay is not permitted.
When the regulations were issued, the Labor Department admitted that it will discriminate against business in their enforcement. Then-Deputy Administrator of the Wage and Hour Division Nancy J. Leppink was quoted in The New York Times on April 2, 2010 saying, "If you're a for-profit employer or you want to pursue an internship with a for-profit employer, there aren't going to be many circumstances where you can have an internship and not be paid and still be in compliance with the law."
Economics professors John Nunley and Adam Pugh at the University of Wisconsin-La Crosse, Nicholas Romero of the University of Pennsylvania and Richard Seals of Auburn University in Alabama found that internships have a greater effect on hiring than academic major. A student is more likely to get a job in banking if he interned at a bank than if he majored in a related field, such as finance. This is because the employer sees the internship as a measure of interest and experience.
Practical experience is especially useful for young people who find academics a challenge. Removing needless barriers to apprenticeships and internships will benefit workers, employers, and the economy.
Diana Furchtgott-Roth (@FurchtgottRoth) is a senior fellow at the Manhattan Institute and an adjunct professor of economics at George Washington University.
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