Building the Builders: A Workforce Development Strategy for the AI Economy

Call it reindustrialization, reshoring, or rebuilding U.S. manufacturing. Whatever the name, the objective is the same, and it is increasingly a national priority. Leaders across the ideological spectrum are backing the movement with diverse but interrelated aims in mind: strengthening supply chains, outcompeting China, reviving blue-collar jobs, and accelerating advanced technology at home.

This is not just another Washington fad. It is now a society-wide consensus that extends beyond parties, uniting defense hawks, labor advocates, energy strategists, community organizers, and tech investors.¹ Today, as broad support drives reindustrialization, policymakers are taking action through taxes, tariffs, and investment in capital-intensive projects. It is now time to turn to people: the defining question for tomorrow’s industries and investors is not whether a dynamic domestic manufacturing workforce will be needed—but rather where this workforce will come from. And central to answering this question is the emergent role of artificial intelligence (AI) and its potential impact on American workers.

While public concern over AI and its impacts is real across swaths of the labor market, the application of these technologies in manufacturing is central for how U.S. workers and firms will compete on the global stage. A new national workforce strategy—centered on the time-tested model of apprenticeship—is needed to connect a rising generation of American workers to the good jobs that a thriving AI-enabled domestic manufacturing sector can create.

Zeal for reinvigorating manufacturing, coupled with fears that AI can leave workers behind, are generating a rare moment of political and policy unity where such a new workforce development strategy and an American apprenticeship renaissance could finally gain traction.

Silicon Valley’s history offers important lessons for the industrial future U.S. policymakers are looking to realize. The innovators working on advanced technologies and the workers with good secure jobs in manufacturing were once neighbors. It may not be an obvious or well-known fact nowadays, but Silicon Valley has always had firm industrial roots. From Palo Alto to Mountain View, a thriving middle class emerged as young returning GIs formed the manufacturing workforce at leading local firms such as Ampex (founded in 1944), Hewlett-Packard (incorporated in 1947), Varian (founded in 1948), and Fairchild Semiconductor (incorporated in 1957).

These firms thrived because they coupled scientific rigor with garage-built ingenuity. They were supported by public-private partnerships that funded research and development, and they kept production local, that is, in close proximity to where the innovation happened (the days of “designed in California, made in China” were still far in the future).

While supported by sophisticated Cold War–era policy and investments, these firms celebrated the creative collision of high theory and hands-on innovation. People were always at its center. This included the dropout visionaries, scientists, and engineers who today are venerated in the tech sector’s founding lore. Physicists like William Shockley and Robert Noyce, and tinkerers like Lee Felsenstein and Ed Roberts powered the Valley’s rise, coupled with skilled technicians and tradesmen working side by side to design, prototype and build the cutting-edge products of their time. Their output included: the first commercial silicon transistors; integrated circuits; and early personal computer models, such as the Altair 8800 and the Osborne 1.

By the 1980s and the end of the Cold War, Silicon Valley began to change as its focus shifted toward software and production moved overseas in search of cheaper labor.² This migration of production consequently also led to investment in capital equipment and training flowing overseas.³ In popular perception, Silicon Valley may now be synonymous with coastal elite culture, a high cost of living, and being the headwater of a coming wave of job-displacing AI—a technology that now stands as a symbol of both anxiety and opportunity for American workers.⁴ Some of Big Tech’s entanglements with foreign adversaries like China may also make the Valley’s loyalties suspect in the eyes of ordinary citizens. Yet the region also once exemplified the best of how U.S. tech and industry could operate at the cutting edge, while delivering broad benefits for workers, increased productivity and safety, and support for national security.

The tight collaboration between inventors and builders may have since frayed, but the blueprint still exists. We, therefore, propose to put a revitalized concept of apprenticeship back at the center of workforce development strategy, by aligning workforce investments with the needs of start-up manufacturing firms across the United States. In imagining what a new apprenticeship paradigm should look like in twenty-first century America, we can turn to both history and the contemporary examples offered by peer economies in other parts of the world.

A Mittelstand Model for America

In Germany, the engine of industrial resilience is the Mittelstand, a dense network of specialized, often family-run firms that anchor communities, train their workers, and supply high-value components to global manufacturers. Similar models exist elsewhere. In Switzerland and Austria, these firms are also known as Mittelstand. In Japan, small- and medium-sized enterprises (SMEs) known as chūshō kigyō play a comparable role, combining technical excellence with deep local roots and long-term commitment. They may not be household names, but they are essential to domestic competitiveness.

America has its own version of the Mittelstand in its vast landscape of small manufacturers and start-ups. They are drivers of innovation and the application of AI and automation. Clusters of new “hard tech, “deeptech,” and “frontier tech” start-ups are forming new ecosystems in key regions across the United States, from Silicon Valley to Texas and from Detroit to El Segundo. These firms will set the pace for the future of the reindustrialization effort, but our policies rarely treat them that way.

In particular, workforce development efforts in the United States still tend to support large employers. Programs or partnerships with local colleges are often only built at scale when they are built around the needs of major firms like Boeing, Caterpillar, or GE. That means training programs or workforce certifications are often built with the big players in mind, if not for them directly. That too often leaves out the needs of start-ups and smaller manufacturers building automation technologies, novel materials, cutting-edge power systems, and precision components. These firms are too small and often move too fast to influence the slower pace of colleges and their programs, but their workforce needs are too important to ignore.

Small and medium-sized manufacturing firms employ nearly half of all manufacturing workers in the United States. Over 90 percent of American manufacturers employ less than one hundred employees, but small- and medium-sized manufacturers (under five hundred employees) collectively account for nearly 40 percent of total employment in the sector.⁵ Beyond employment, these firms turn ideas into prototypes and pilot new production methods, often creating the early jobs that later scale into full industries. Yet these SMEs and start-ups are often invisible in national workforce strategy.

It is time to bring such firms to the forefront of policy design. It also means taking one more lesson from the German, Swiss, and Austrian Mittelstand experience: restoring the practical, hands-on and youth-focused approach to workforce education that once defined American industrial training. Apprenticeships are the tool to do it.

A scaled-up start-up-oriented apprenticeship system would embed training inside the workplace of building real products at the speed of innovation, not at the speed of how long it takes to build a new classroom-based training program. Apprenticeship is also the right strategy to mobilize a generation of new skilled workers, offering young Americans a clear entry point and an attractive earn-and-learn pathway out of high school and straight into industry. And it works. Apprenticeships amount to a proven model for companies to develop and access the skilled workforce they need to grow, from CNC machinists and CAD drafters to mechanical and mechatronic technicians. Adopting this approach would bring back the immensely fertile and synergistic foundations that Silicon Valley had once been built on, which saw innovators and builders in the same room, solving hard problems together.

From “Train-and-Pray” to “Earn-and-Learn”

Apprenticeship is not the typical “train-and-pray” workforce model dominant in the United States today. Quite simply, apprenticeships are built around an occupation, and apprentices are employees from day one. This means that apprentices earn while they learn through a blend of employer-led and on-the-job training, while also taking related coursework often delivered by a third-party training partner, such as a community college or online learning. Critically, the apprenticeship model puts industry itself in charge of shaping training content, not educational institutions. This situation ensures that what apprentice workers learn from their training meets the needs of their employers and that both can adjust at the speed of innovation.

A proven workforce development strategy with a storied pedigree, apprenticeships are not new or foreign to the American economy. For example, apprenticeship remains the predominant training model for occupations across the building and construction trades, from electricians to pipe fitters and carpenters. But apprenticeship had been a far more common and accessible feature of U.S. vocational education, before the rise of globalization, automation, and a cultural shift toward the “college-for-all” narrative eroded its prevalence.

In the latter half of the twentieth century, there was a steady expansion of access to higher education, subsidized in large part through federal loan and grant assistance. Not only did going to college become a precondition of the new American dream, it also steadily positioned higher education as the de facto pathway to economic security and status. Against a rapidly changing economic context, the college-first paradigm may have once made sense, as communities and families watched factories close and jobs move overseas. From 1992 to 2017, manufacturing’s share of employment fell by nearly 10 percent, while in the same timeframe college enrollment for high school graduates steadily increased.⁶

It also worked well for employers. For the first part of the twenty-first century, the college-first consensus meant industry relied on schools, community colleges, and universities to understand and meet their skills needs, while many firms dismantled legacy training programs for entry-level talent. If students were willing to take out loans to finance college degrees oriented toward jobs in fields such as engineering, business, accounting, and health care, then employers themselves did not have to make as much of a front-end investment.

In recent decades, there have been periodic efforts to challenge the idea that a college degree is the only path to a good job. Starting around 2012, coding bootcamps emerged as a venture capital-backed response to the growing demand for tech talent. They promised a faster pathway into high-paying jobs and carried the broader hope that Silicon Valley’s model could be replicated elsewhere. From “Silicon Holler” in Kentucky to a plethora of coding hubs in America’s inner cities, many communities bought into the idea that teaching people to code could create local tech jobs and fuel economic growth.

Beyond tech, the manufacturing sector has seen the proliferation of a vast landscape of “industry-recognized credentials” and short-term training programs. But the limitation of these solutions is that they are often built to benefit the training provider rather than workers or industries. Today, customized training programs at community colleges are key revenue centers that employers have to pay in order to secure training for their employees, which is a real constraint for SMEs to do this without assurance of a return.

As U.S. government data show, apprenticeships have been able to demonstrate consistent and sound return-on-investment for employers (yielding a $144 return for every $100), which makes it primed to deliver in this critical moment for reindustrialization.⁷ Apprenticeship lessens recruitment costs and time to hire, reduces turnover, and eventually increases productivity as apprentices skill up on-the-job.

These results help to explain why apprenticeships are beginning to reemerge again as a mainstream strategy across a range of industries, including cybersecurity, finance, health care, and teaching. And as AI technologies advance, employers are increasingly seeking human-centered training models to ensure their workforce remains productive, adaptable, and aligned with rapid technical change. Apprenticeship, as an employer-based workforce training strategy, has the unique capability to keep with innovations and new technologies, including AI. From Accenture in New York City to Pinnacol Assurance in Denver, Colorado, we are seeing a generation of firms developing and evolving their apprenticeship programs to integrate and manipulate AI in work processes.⁸ Far from just trying to keep up, apprenticeship is growing and innovating in the U.S. alongside AI at the speed of industry.

Since 2014, the number of active apprentices in the United States has more than doubled to nearly 680,000 active apprentices today.⁹ While the largest apprenticeship programs are still in the construction trades, continued federal investment across multiple administrations is accel­erating apprenticeship growth in strategically vital sectors, such as manufacturing. This was also accomplished in part through a growing cluster of apprenticeship intermediaries modeled after German Chambers of Commerce or Swiss Industry Associations that play a key role in supporting employers to start and run apprenticeship programs.¹⁰

Encouragingly, the choice of entering an apprenticeship as a new post‑high-school pathway is steadily growing, but progress—along with the financial support needed to sustain it—remains incomplete. While employers pay apprentice wages and support training on-the-job, expanded public investment is critical to offset and de-risk those investments from the private sector, especially for smaller and medium-sized employers. Public funding for apprenticeships only started in earnest in 2016 and has steadily increased, but the $300–400 million per year the federal government spends on apprenticeship still pales in comparison to traditional higher education, which, for instance, receives $30 billion annually in Pell Grants alone.

Thus, while steadily growing, the apprenticeship model still remains on the backburners of federal and state education and workforce development budgets. And there are indications that Americans want change. Campaigns for skills-based hiring and efforts to “tear the paper ceiling” suggest that even major employers are rethinking how they approach entry-level roles. At the same time, public trust and enrollment in higher education is on the decline.¹¹ For the first time in recent memory, nearly half of American families want alternatives to the college path to building skills and pursuing a career after high school.¹² And the prevailing trends indicate that the apprenticeship model is the right and proven option to take its place.¹³

Rather than taking best guesses on what skills are most important to the job market today and the near future, apprenticeships put employers in the driver’s seat and workers in the game. American apprenticeship is primed to grow at levels not seen in a half century, but it can only grow if employers are ready to hire apprentices and if the incentives required to support them at scale are in place. Therefore, a national commitment to apprenticeship is needed to meet the challenges of the moment.

The Coming Age of Apprenticeship Expansion

Skilled worker contrasts in the manufacturing sector are well understood. Even before experiencing strong tailwinds due to reshoring initiatives, America’s manufacturing workforce needed to get larger and younger, with the average manufacturing worker today being closer to age fifty than twenty.¹⁴ Name brand companies, from SpaceX to Intel, all need skilled tradesmen and technicians, as do the lesser-known but critical companies up and down their supply chains.

Reindustrialization represents a generational moment to train young workers through a renewed national apprenticeship system. Once again, foreign peer economies can help show the way.¹⁵

Stateside, many may think apprenticeship is only viable for large legacy firms. Yet a significant share of American apprenticeships today in manufacturing are in SMEs. Foreign direct investment in the United States by manufacturing companies from Austria, Germany, and Switzerland have played a vital role in enhancing the American understanding of apprenticeships: they have imported their ecosystem approach to apprenticeships by binding together the knowledge and resources of local SMEs in a region in order to run a shared apprenticeship and training infrastructure, one that can diffuse the most in-demand skill sets.

For example, to meet the talent needs of its North American plant, Swiss-based Stadler Rail in Salt Lake City pulled together local school districts and the community college to set up a first-of-its-kind apprenticeship program in Utah with the intention of creating a playbook for other manufacturers across the state to use.¹⁶ Serving multiple regions and employers across Illinois and the Midwest, the German-American Chamber of Commerce and the Illinois Manufacturers Association runs the shared icatt apprenticeship program, which includes U.S. companies with no apprenticeship experience.¹⁷

North Carolina has long been the hotbed of active support for regional apprenticeship consortia. A collection of foreign manufacturers outside Charlotte set up “Apprenticeship 2000.” The groundbreaking partnership brought together multiple manufacturers to design and implement a shared four-year advanced manufacturing apprenticeship for mechatronics, tool and die, machinists, and more, and uniquely focused on recruiting youth to start the program even before graduating high school, with apprentices starting their training, earning, and learn­ing during junior and senior year. The collaborative’s success has been replicated statewide as part of the state government’s youth apprenticeship strategy, including most recently with Austria-based Egger, which began training apprentices with local high schools and college partners even before construction of their plant was completed.¹⁸

These examples show how apprenticeship systems can be adapted from abroad to work for manufacturing in the United States. But scaling up these successes will call for even broader and more supportive ecosystems than what these very promising but still formative and prototypical experiences have achieved. Across different localities and industries, it will have to become common practice for multiple employers with similar needs to start working together in order to aggregate demand, share costs and risks, and articulate what they need from education and training partners. Apprenticeship intermediaries can help firms pull these pieces together and manage these processes in order to produce the most able and effective apprentices that a given sector could ask for.

Domestic manufacturing start-ups can certainly learn from these systems overseas. But without the long-standing tradition of industrial apprenticeship, the U.S. start-up community needs its own scalable frameworks to help them design and operate apprenticeship programs tailored to their unique needs. This would not only call for designing programs that fit the unique stage and size of manufacturing start-up firms, but also programs that best align with the rapidly evolving technologies, including AI, that skilled workers in these settings will work closely with. Start-ups still also need to protect sensitive proprietary technologies and processes from competitors and third-party training organizations—as the bulk of training will be customized to the employer and happens in house—and such risks must be incorporated into the eventual design of any sector-wide apprenticeship network.

One can imagine a system where clusters of start-ups in robotics, AI, or manufacturing co-invest in regional training hubs, leveraging apprenticeship intermediaries that build their own dynamic and responsive talent pipelines. Students across the country will have had the chance to tinker with robotics, software, or simulate running a factory in class—and all before their high school graduation. They could then be offered a realistic debt-free, earn-and-learn path to take those passions and skills to the next level and be a part of the technological growth and innovation happening in their backyards. It is an exciting and hopeful vision for the future of workforce development in America and one that is entirely achievable if citizens are ready to support it.

An Apprenticeship Plan for America’s Start-ups

The private sector alone cannot shoulder the burden of rebuilding America’s workforce. For one, many small- and medium-sized start-ups lack the resources to establish robust apprenticeship programs on their own. Moreover, venture capital, which is essential for scaling start-ups, is not the ideal vehicle for financing long-term workforce development. Venture capital firms prioritize rapid returns and easily scalable growth, making it difficult for them to fund initiatives like apprenticeships, which often require years to yield results.

The federal government has already demonstrated its ability to address market failures through targeted intervention. Beyond the chips Science Act, a recent example is the Department of Defense’s (DoD) Office of Strategic Capital (OSC), which launched a $984 million credit program to finance capital-heavy industrial projects. This initiative recognizes that private capital often avoids areas requiring long-term investment horizons or lower-than-market returns, even when those areas are critical to national security and economic resilience. Through loans and loan guarantees, OSC is filling the gap by supporting companies working on technologies like advanced manufacturing, microelectronics, and autonomous mobile robots.

The OSC program exemplifies how government leadership can de-risk investments in strategically vital areas. The same principle applies to apprenticeships. By providing funding, policy support, and a unified strategy, the federal government can enable the private sector to implement apprenticeship programs at scale, ensuring that America has the workforce it needs to compete in a rapidly changing global economy.

Government workforce efforts to date have centered on large incumbent firms and their existing employees. This means that industrial policy in the United States is overwhelmingly geared toward reshoring large-scale manufacturing capacity in critical sub-sectors, from semiconductors to batteries, and from steel to solar panels. How the United States invests its limited public dollars in workforce training is little different.

Where workforce dollars have been targeted in recent federal reindustrializing efforts, they have been insufficiently focused on start-ups and the skilled workforces need to support and grow such firms. Instead, federal workforce investments such as those supported by the chips program, have put significant resources into universities and higher education institutions to research and develop workforce strategies. These college-focused investments have effectively overlooked apprenticeships. In Arizona, a community-college-led “Quick Start” ten-day semiconductor training program for TSMC and Intel did not materialize into many real jobs,¹⁹ which may have informed TSMC’s new direction in pursuing an apprenticeship model.²⁰ This approach does not factor in the agility and innovation of smaller firms or their shared workforce needs.

To position apprenticeship as the win-win solution for employers and workers, policymakers should broaden the horizons of industrial policy to encompass the development of a national apprenticeship infrastructure, one that harnesses both public and private sector resources to spur the workforce growth of start-ups and medium-sized firms. Specifically, the apprenticeship complements of a “start-up industrial policy” would include four steps:

(1) Support the formation of apprenticeship consortia across start-ups. This first step would call for firms to leverage existing industry groups or build new talent associations that can work with member businesses to establish shared technical skill requirements across clusters of start-ups: these firms can then tailor apprenticeship strategies and programs accordingly. These coalitions across employers can share the costs and risks of supporting sector-wide apprenticeship schemes.

In Indiana, there is an effort to set up statewide “Talent Associations” to identify common skills needs across employers by sector, act as a collective to shape foundational training content, and help members deliver on-the-job training at scale.²¹ At a regional level, Guilford Apprenticeship Partners in Greensboro, North Carolina, is a leading consortium of manufacturers that agreed to implement an aligned apprenticeship strategy to develop a local talent pool of apprentices across mechatronics, machining, automation systems, technicians, and more.²² Blending public and private investment to fund efforts like these in the start-up community is a way to aggregate the demand for apprentices and build a shared pool of local talent to support growth.

(2) Incentivize apprenticeship uptake by offsetting some costs for employers. Federal and state governments should offer tax credits or subsidies for companies that hire locally trained talent, ensuring invest­ments benefit the surrounding community. These authorities could also encourage the formation of skills funds supported through contributions by employers to guard against freeloading. States such as Michigan to South Carolina offer tax incentives for employers who hire and train apprentices.²³ The Inflation Reduction Act additionally introduced the first-ever federal tax credit for employers that use apprentice labor to support clean energy projects. Such tax incentives could help offset some of the costs of providing on-the-job training but would need to be attuned to the financial realities of the start-up community.

Compared to its international peers, the United States does not cover the costs of the classroom training component of apprenticeships. This has led to states—Texas, California, North Carolina and Florida, among others—to offer employers grants or public dollars to fill the gap. Start-ups and small to medium-sized firms with tight margins need a more systematic and predictable way to cover the classroom instruction costs of an apprenticeship. Redirecting existing federal funding streams toward strategic sectors is one way to support this goal. U.S. jurisdictions should also emulate the United Kingdom’s “Skills Levy,” in which larger firms are taxed to create a dedicated skills fund that only apprenticeship-hosting employers can draw from: this innovative policy tackles the risk of free riding by larger firms looking to poach apprentices.

(3) Invest in apprenticeship intermediaries to reduce transaction costs. Firms can work together to build up the capacities of third-party apprenticeship intermediaries, including community colleges, industry groups, and companies, to reduce the costs of managing an apprenticeship program. In part due to new federal and state investment in apprenticeships, the selection of intermediaries has grown in recent years. This is why states, such as Colorado, California, and Maryland have embraced the critical roles intermediaries play in the successful uptake of apprenticeship: investing dollars in their capacity, modeling pay for performance schemes to reward successful placement of apprentices, and also seeking to organize the intermediary landscape to make it easier for employers with diverse needs to navigate.

The start-up community should carefully consider what it needs from intermediary partners as their services can range in depth and cost. But at minimum the public sector should surge intermediary capacity in key start-up regions, helping firms raise the coalitions between local governments, start-ups, and educational partners to develop and scale up apprenticeships.

(4) Start young through apprenticeship-ready schools. The industrial resurgence needs to engage and prepare a new generation of skilled workers. But for decades, schools have been oriented to the mission of being college-ready. To mobilize and train fresh young cohorts of skilled workers, industry and government can collaborate to establish a new blue-ribbon designation for schools that are “apprenticeship-ready.”

For schools to earn that designation, they must integrate apprenticeship pathways into their coursework and culture. This would include advanced shop classes for students to engage in applied learning through exposure to the tools and technologies that bridge the physical and digital world. Students must also be made aware of apprenticeship opportunities early and given opportunities while still in high school to explore and start their apprenticeships. In New York City Public Schools, the Career Readiness and Modern Youth Apprenticeship Initiative is a groundbreaking effort to start apprenticeship exposure and preparation as early as tenth grade, enabling students to prepare for apprenticeships that can start as early as the following year. Similarly, high school youth in Wisconsin can participate in a statewide youth apprenticeship program as soon as junior year, which includes a range of manufacturing fields.

Starting early capitalizes on students’ excitement. It can also help offset early apprentice training costs for employers and move them faster toward productivity. But above all, engaging the start-up community as a vanguard partner in this effort links the idea of apprenticeship to the excitement of marshaling the generational buy-in a reindustrialized America needs to succeed.

This plan is both a national security imperative and a monumental economic opportunity. It is also a response to the crescendo of questions around the future of work in an AI-driven economy. Rather than accepting a future of displacement, apprenticeships offer a tangible way to channel innovation into inclusive productivity and shared growth. If start-ups are the engines of job creation and technological advancement, then aligning apprenticeship with their needs can help the United States maintain its competitive edge in such critical fields as robotics, AI, and advanced manufacturing.

By starting with manufacturing, we can create a scalable model for apprenticeships that other sectors, such as energy and health care, can follow. Silicon Valley offers a compelling blueprint for how to achieve this. Just as the region embraces iterative experimentation, apprenticeships can begin with pilot programs at start-ups and expand as they prove their value. The venture capital ecosystem, which is increasingly investing in reindustrialization, can serve as a catalyst by funding early-stage efforts and connecting start-ups with government-supported apprenticeship initiatives. With the right combination of public and private leadership, we can ensure that the United States remains the most innovative, productive, and resilient economy in the world.

A new industrial era beckons Americans from all walks of life. Seizing on and sustaining this momentum demands a new paradigm of workforce development. As we have endeavored to show in this essay, the apprenticeship model is that paradigm: its promise is in delivering a reimagined social contract for the country’s workers, youth, and communities to share in the benefits of the coming growth and innovation. We are already laying the groundwork to bring this vision to life by assembling a group of practitioners, innovators, and workforce leaders committed to building a better system based on the ideas and principles outlined here. For young Americans, the hope is that apprenticeships will act as a new pathway to dignified and well-paid work, as well as to a future in which their individual efforts and energies are joined to the larger story of a dynamic, secure, and prosperous America that is on the rise and on the make once more.

This article originally appeared in American Affairs Volume IX, Number 2 (Summer 2025): 105–19.

Notes