Federal-Level Trolling

As 2024 comes to a close, what have I learned? A few tidbits about college admissions, college majors and the importance of internships. I’ve learned about digital transformation, AI, and how both higher education and the U.S. Department of Education have fallen behind. Also a depressing number of ways our current education system is failing. Closer to home, I’ve realized that when my kids start talking to me in a language I don’t understand, the best defense is a good offense.

I’ve been living with obnoxious Gen Z slang for years. When Leo was a newly minted teen, I could set my watch by his exclamations of “sus” (suspicious) and “yeet" (exuberance). Hal is currently all about “rizz” (charisma), “oof” (sympathetic exclamation), and “salty” (upset). So when “whole snack” somehow became Gen-Z-speak for a very attractive person, I immediately spied an opportunity to intentionally misuse it. Now, whenever Hal comes home from school and fixes himself a bagel with cream cheese + bowl of strawberries, I drop by the kitchen with a casual comment: “Hal, that looks like a whole snack!” And when Zev starts munching his way through a bag of dill pickle potato chips, I don’t stop him mid-munch, but he’s still forced to hear: “That’s only half a snack, you should have a whole snack” – each offense meeting with plaintive cries of “I think you’re using that wrong, dad!”

As Gen Z has never known a world without trolling, my kids know very well that dad-level trolling is but a shadow on the cave wall of the Gen Z ideal: God-level trolling. So – student loan forgiveness travails notwithstanding – it’s surprising the outgoing administration isn’t more popular with Gen Z. Because the U.S. Department of Labor (DOL) just tried to get away with the next best thing: federal-level trolling.

Yes, DOL just trolled us, and it’s not even as funny as my dumb “whole snack” schtick. As I noted a few months ago, on March 23 the federal “minibus” package of spending bills directed DOL “to assess the feasibility of supporting a pay-for-success initiative to increase and expand registered apprenticeship programs through the Apprenticeship Program and to share its findings with the Committees within 180 days of enactment of this Act.”

Everyone knows Congress’s “pay for success” language signaled a different model for funding apprenticeships: incentivizing employers and intermediaries to invest in apprenticeships and hire apprentices via predictable, reliable, investable formula-based funding – in stark contrast to current DOL grantmaking rewarding organizations good at applying for one-time government grants but typically failing to lead to the hiring of a single apprentice. That’s certainly what the people who wrote the Congressional directive intended. And as I pointed out in Apprentice Nation, it’s how every other developed country funds apprenticeships. But rather than report back on the feasibility of doing so, DOL took every one of the allotted 180 days to produce a report that interpreted “pay for success” literally and incorrectly.

Specifically, DOL spends the first five pages of its Congressionally-mandated response reaching for an obscure Treasury Department definition of pay for success. According to this definition, pay for success means “structured interventions [that] occur over a specified period of time and [where] private or philanthropic investors fund ongoing operating costs during the intervention period. If the program achieves specific, measurable, and agreed-upon outcomes, the government reimburses the investors’ upfront costs.”

The trolling really gets rolling as the DOL report wastes time diving into a history of pay for success, starting with a UK program “to provide rehabilitation services and reduce recidivism for formerly-incarcerated individuals at Perborough Prison” and then two U.S. examples: (1) a New York and Massachusetts program, also for former prisoners; and (2) a New York program to provide training for energy jobs. Naturally, the cited cases were not successful. But these social impact bond pilots from years ago don’t reflect the evolution of the field. In the past decade, there are virtually no examples of government funding of outcomes requiring upfront financing from the private sector. Instead, the norm is routine, ongoing payments to providers based on clearly defined outputs (such as hiring an apprentice).

Of course, these examples are red herrings, as is the subsequent laundry list of “implementation challenges” and “operational challenges.” Because no one – certainly not Congress – has ever suggested to DOL that the key to turning America’s apprenticeship frown upside down lies in finding private or philanthropic investors to fund apprenticeship programs (which the federal government would then reimburse if successful – pay for success, get it?). That’s a level of complexity only a bureaucrat could dream of.

Inevitably, due to “significant hurdles,” DOL does not recommend moving forward with a PFS [pay for success] effort.” But after undermining the notion of changing the way they fund apprenticeships, it’s now safe for DOL to turn to the question it was asked to answer in the first place, which the report distinguishes as “pay for performance.”

DOL’s definition of pay for performance is much simpler, requiring only (1) meaningful financial incentives that can entice new players to engage in the targeted activity; (2) clear, objective milestones that can be documented and verified to warrant payment; and (3) a schedule of payments tied to the achievement of milestones. But after providing a few examples of such programs, the report raises objections. The first is legitimate: we don’t know how to do this. DOL “does not have the capacity, expertise, financial systems” or data systems to execute pay for performance funding. Fair enough, and I’ll circle back to this. But objections #2 and #3 are more federal-level trolling.

• By funding based on performance, the report claims we would be limiting apprenticeship growth “by not considering the impact of funding longer-term capacity.” DOL extols its uncanny ability to “efficiently respond to shifting labor market needs” and “develop appropriate strategies.” Because government apparently knows better than the market, a “rigid” performance-based approach “would limit the flexibility provided by these other grants and could limit the development of innovative approaches or investments in high-need areas.”
  
  In support of this government word-fruit-salad, the report compares apples and oranges. DOL claims that if the $500M the Biden administration has doled out in apprenticeship grants had been allocated based on performance at a modest $5,000 per apprentice, it would have only supported the hiring of 100,000 new apprentices. “By contrast,” DOL writes – presumably with a straight face – “the current [grantmaking] investment strategy, designed to support all aspects of the system, has resulted in over 900,000 new apprentices since the start of the Biden Administration.” What the report neglects to mention is that very few of these 900,000 new apprentices have any connection with federal grants, where – as I’ve pointed out – only 20 cents of every dollar go to intermediaries, industry associations, and employers likely to start new apprenticeship programs or hire apprentices. Demonstrating the unmet potential of apprenticeships in America, 900,000 apprentices were hired over four years not due to federal funding, but rather despite the lack of it. So a fairer comparison would be 1,000,000 with pay for performance vs. 900,000 with DOL’s grant funding. And by the way (as Dana Carvey might say, imitating President Biden), 900,000 is nothing to be proud of: on a per capita basis, 900,000 new apprentices in the past four years likely puts us last among developed economies.
  
  
• Scaling pay for performance would require a lot more funding, which DOL does not currently have. DOL cites outside organizations calling for billions of dollars. But ( again President Biden) guess what, and by the way: even if we continue to underfund apprenticeships, shouldn’t the government have an obligation to spend the money somewhat effectively, ensuring current limited funding actually leads to new apprenticeship programs and hiring apprentices? And what the report neglects to mention is that leveraging pay for performance to produce performance could attract the billions we need.

In addition to trolling Congress and the Gen-Z-ers in greatest need of earn-and-learn pathways, the DOL report not only omits that pay for performance is how every other developed country funds apprenticeships, it also fails to recognize the burgeoning number of states launching apprenticeship pay for performance funding, as documented in a new report from Apprenticeships for America. Finally, when the DOL report uses the phrase “enrolling an apprentice,” it smacks of a lack of understanding that apprenticeships aren’t training programs, they’re jobs; apprentices aren’t “enrolled,” they’re hired by employers and intermediaries that have decided to invest in them.

The result is predictable: “DOL does not recommend a significant shift to utilizing PFP [pay for performance] approaches as part of its overall investment strategy.” Instead, the report advises exploring “a limited pilot PFP program” before – troll alert – reciting a litany of complications and risks to doing so.

***

When Congress asks an agency to look at a different way of doing things, we shouldn’t expect miracles. But we deserve better than this. The idea of four more years of the status quo – a year to design and launch a pay for performance pilot, a year or two to run it, and a year to evaluate results – before starting to see meaningful changes to our backward system of apprenticeship funding is unacceptable.

Based on hundreds of conversations over the past few years, I’m confident that both progressive Democrats and conservative Republicans subscribe to this proposition: every time an employer hires an apprentice – every time an employer invests in training an unemployed, underemployed, or brand-new worker to become productive in a job that leads to attractive (and increasingly otherwise unattainable) careers – America is better off. As a result, we should be willing to invest in that apprentice the same way we invest in college students – with funding that follows the individual. And the funding should be predictable so employers and intermediaries in every economic sector can justify investments in apprenticeship programs. Because unlike grants, starting an apprenticeship program is not a one-time expense. As Apprenticeships for America notes in its report, “grants are normally short term and so do not sustainably fund programs.”

Let’s hope we can get started in 2025. Federal pay for performance funding is the key to allowing apprenticeships to escape the vortex of ineffective workforce development train-and-pray programs, demonstrate that funding apprenticeships has a near 1:1 correlation with successful career launch, and establish a viable earn-and-learn competitor to college. And at a fraction of the $42K-per-job price the federal government just celebrated, let alone what the average student spends on a degree program. The fact that DOL, as presently constituted, doesn’t know how to do this is insufficient reason not to move quickly, although it’s a very good reason to identify and appoint a third-party administrator to operate a pay for performance program.

The good news is that there are three reasons to be hopeful:

1. Public opposition to prior DOL decision making has just proven successful. After everyone and his brother responded negatively to 779 pages of new consumer-protection-oriented rules for apprenticeships that would have thrown up 10 additional obstacles to hiring apprentices – “system enhancements” per the DOL – DOL called it quits and withdrew the rules earlier this month.
2. In January we’ll have a new Congress and new political appointees who could read DOL’s report and – in the spirit of the new administration – decide to do the exact opposite. And why not? As Republicans are eager to continue their momentum with non-college voters, what could be more appealing than counterbalancing America’s dramatic overinvestment in tuition-based/debt-based career launch with earn-and-learn alternatives? Even if Republicans weren’t predisposed to market-based solutions – and if they read DOL’s report, they’ll be underwhelmed by its salutary command-and-control language – investment in the billions could only be supported by formula-based funding i.e., beyond the capability of even the goodliest and greatest government grantmaker.
3. It’s the holiday season. So enough with the trolling. This time of year, we should be thinking about elves, not trolls. That said, I hope you enjoy your holidays, especially your celebratory meals. I hope they’re a whole snack.