Punching In: White House Redoubles Efforts for Apprenticeships

Monday morning musings for workplace watchers.

Training Workers|Pensions and ESG Investing

Rebecca Rainey: The Biden administration wants to create 460 new registered apprenticeship programs, and get more than 10,000 of those trained workers hired over the next year, as part of its latest effort to expand the US Department of Labor’s job training model.

The White House announced Sept. 1 that a network of more than 200 unions, businesses, and organizations it’s dubbed “Apprenticeship Ambassadors” have committed to invest in programs that would fulfill the administration’s new training goal. Those include The North American Building Trades Union, which said it plans to train 250,000 new apprentices over the next five years, and IBM Corp., which says it’s set aside $250 million to spend on registered apprenticeship programs and other training by 2025.

This new effort comes after the Biden administration has touted job training programs as a pathway to the middle class and a solution to ease the tight labor market in multiple industries, particularly the skilled construction trades where demand is expected to increase under the infrastructure law enacted last year.

Just last week, the administration said it would also expand its registered apprenticeship model to help tackle the national teacher shortage by prioritizing over $100 million funding from the registered apprenticeship program for teaching positions.

While the White House has fought to bolster job training programs as a key piece of its policy agenda, the DOL is also in the process of rescinding the Industry-Recognized Apprenticeship Program or IRAP, finalized by the Trump administration in 2020. A final rule to officially nix the program has been under review at the Office of Management and Budget since June, the last step before the regulation is published and goes into effect.

The Trump-era program allowed companies to create their own training programs that could be monitored by third parties, which the Trump DOL said would expand apprenticeships in under-represented fields. But unions and the Biden administration concluded the program’s standards were too lax and didn’t have the full, complete safety and skills training or guaranteed wages provided by registered programs.

So far, the Biden administration’s efforts to expand the registered apprenticeship model have created over 4,000 new registered programs and resulted in more than 1 million apprentices being hired, according to the White House. In FY 2021, there were around 600,000 workers participating in apprenticeship programs across the country, according to DOL data. Of those, 96,000 apprentices completed their program in FY 2021, although many apprenticeships can span multiple years.

READ MORE

• Trump Apprenticeship Model Marked for Death Under New Proposal
• Biden’s Diversity Push in Trades Sparks Union, Industry Tension
• Plan to Bolster Infrastructure Workforce Unveiled by Biden Team

Electrician apprentices practice working on a programmable logic controller at the Kentuckiana Electrical Apprenticeship and Training (LEJATC) trade school in Louisville, Ky., on Aug. 16, 2022.

Photographer: Luke Sharrett/Bloomberg

Austin R. Ramsey: A recent surge in state anti-ESG policies is putting pressure on public pension plans and their money managers to abandon popular and widely accepted Wall Street investment strategies.

At least 17 states have passed or proposed laws and regulations this year that blacklist financial institutions for environmental, social, and corporate governance investing, or prohibit state agencies from social conscious investing themselves. Federal regulators, meanwhile, are poised to ease regulations on private-sector ESG retirement funding.

Those two, disparate approaches are setting the stage for a retirement industry deeply divided on how best to, or even whether, to account for climate change, social reckoning, and workers’ rights movements in their investment decision making, while the accounts of millions of US workers and retirees hang in the balance.

“The role of state pension funds is to provide resources adequate to fund retirees’ benefits,” said Investment Company Institute General Counsel Susan Olson in a letter to Texas state lawmakers last year. “Pension fund managers should be able to pursue investments and investment strategies that most appropriately and effectively support that objective and should have the ability to consider a broad range of investment opportunities.”

Texas is one of seven states that have enacted “boycott bills” prohibiting agencies from doing business with certain companies, usually because they have divested from fossil fuel energy or firearm manufacturing sectors. Ten other state legislatures are considering similar bills, some of which target mining and agriculture divestiture, too.

The public pension sector has historically been a leader on ESG, adopting investment selection and monitoring processes that accounted for environmental criteria more than a decade ago. Private-sector pensions and 401(k)s aren’t nearly as malleable as their public-sector counterparts, and so have lagged.

When the DOL proposed a rule last year that would reverse a set of perceived Trump-era restrictions on ESG investing, they were met with a political firestorm in Congress that has since spilled over into states, imperiling public pension plans, over which the department has no regulatory authority.

Read more: Expanded ESG Looms Over 401(k) Funds Already Mired in Red Tape

“Unfortunately, these investments have become collateral damage in a broader political battle,” said Brad Campbell, a former assistant secretary for employee benefits at the DOL and now a partner at Faegre Drinker Biddle & Reath LLP in Washington.

“Regardless of the merits of a particular investment that may have E, S, or G features, you’ve now got a situation where one side is suspicious of it because of that and the other side is putting a thumb on the scale in favor of it because of that, when neither of those political positions really has anything to do with analyzing the merit of the investments,” he said.

Private-sector plan sponsors are held to a strict fiduciary investment management standard that only permits the consideration of financial materiality. Political administrations have differed on their interpretations of whether ESG was financially material, but a case could be made either way.

Public pensions, on the other hand, are regulated by a web of state and local rules and laws that still often add up to a version of a fiduciary standard, but local lawmakers are able to exert more direct control over whether certain investments are permissible.

A number of states have already divested from Russian assets due to the ongoing war in eastern Europe. Big tobacco, gun manufacturers, and even pharmaceutical companies have met local political ire, forcing public pension plans to shift their assets in response to political whims.

“I think, personally, in an ideal investment world, there wouldn’t be any politicization of investment types,” said Erin Cho, a partner at Mayer Brown LLP in Washington. “There has been a deeper polarization more recently, but I think that’s just reflective of the state of the country right now.”

We’re punching out. Daily Labor Report subscribers, please check in for updates during the week, and feel free to reach out to us.