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Income outcomes of apprentices by time to complete training
Key findings

The time that it takes to complete an apprenticeship has been shown to be correlated with the income outcomes. This report assesses the income trajectories of groups of apprentices that took differing amounts of time to complete their apprentices.

Apprentices who complete their training in shorter time generally have better income trajectories, with carpentry apprentices who completed their training within 4.5 years earning $12,000 more on average than those that took longer than 4.5 years to complete their training. This demonstrates that there may be an income advantage for apprentices that take less time to complete their qualification, providing a possible incentive to work quickly towards gaining a qualification.

Introduction

As school leavers and career changers decide what they are going to do next, they tend to take their expected income into account. The income outcomes of different tertiary pathways have already been explored, however focused solely on school leavers. In this report we track all apprentices, including career changers. Age proves to be an important factor when assessing the income outcomes as individuals over the age of 25 made up one third of carpentry apprentices between 2010 and 2013.

This report breaks down the apprentices into groups based on how long it takes them to complete their qualification and if they withdrew. The boundaries on the groups are determined by the expected duration of a qualification, which is confirmed in section “Time to complete training”. The income trajectories of these groups are then tracked from when the group first started their qualification.

Time to complete training

The income trajectories are to be investigated for three groups: those that withdraw from their training, those that complete it within the expected training period, and those that complete it above the expected training period.

To investigate appropriate cut-offs for expected time to complete training we track how long previous cohorts of apprentices have taken to complete their training. The total time is calculated by the difference from their first enrolment date and the date which they completed their qualification. Note that this will therefore factor in time that apprentices took off training before completing their qualification.

BCITO reports that the time to qualify as a carpenter is 3-4 years. This study found a similar range, with carpentry apprentices who started their training in 2012 completing their training on median in 3.5 years with an interquartile range of 2.5 - 4.25 years. By selecting the 'start year' breakdown on the dashboard, we can see the median time to complete a carpentry apprenticeship has decreased from 4.5 years in 2005 to 3.5 years in 2010. The 2010 and 2011 apprentices’ cohorts have long bottom tails. It is suspected that this is because employers held back on employing new entrants in the wake of the global financial crisis. This suggests that many of these apprentices would likely have already had a few years of experience in the industry, explaining the shorter completion times.

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Methodology

We take apprentices first enrollment into apprenticeship (level 4, 100+ credit) course (trade defined by MOE derived occupation). From these apprentices, we calculate the time between their start and end date.

Note this may not be directly comparable to time in training since we include all time between first starting training and ending training. Meaning, if an apprentice takes a break from training to travel overseas, but returns and completes their training, we will include the time they spent overseas.

Income outcomes by completion duration

The chart below demonstrates the average annual income of carpenters over time, where time 0 is when they first started training. When looking specifically at carpentry apprentices that started training in 2005, the group that completed training within 4.5 years slowly diverged away from the other groups over time. After 13 years, this group had an average income of $85,000. This is $12,000 higher than their peers that took more than 4.5 years to complete training. This is likely to be confounded by variables such as ability and ambition that are unobservable.

Unexpectedly, apprentices who withdrew from training but remained working in the industry had income on par with apprentices. More investigation should be done into this group.

In more recent cohorts the starting salaries between different duration groups seem to be diverging, suggesting underlying differences between these groups. It is suspected that this may be due to an increasing number of persons entering apprenticeships after spending a few years working in the industry. A control for pre-apprenticeship industry experience should be added in the future.

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Methodology

We take apprentices first enrollment into apprenticeship (level 4, 100+ credit) course (trade defined by MOE derived occupation). From these apprentices, we calculate the time between their start and end date as their completion duration.

Yearly income of apprentices is tracked from IRD tax records, taking income earned over the whole year from construction businesses only. Monthly income is adjusted for months not working in that year. Real measures are adjusted to 2020Q1 based on wage inflation.

Income is average between groups fitting under different cut offs based on completion duration.

Income outcomes by duration and age

Age at starting apprenticeship seems to explain some of the differences in starting salaries observed in earlier cohorts, however pre-apprenticeship experience in the industry may be a better control.

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Methodology

We take apprentices first enrollment into apprenticeship (level 4, 100+ credit) course (trade defined by MOE derived occupation). From these apprentices, we calculate the time between their start and end date as their completion duration.

Yearly income of apprentices is tracked from IRD tax records, taking income earned over the whole year from construction businesses only. Monthly income is adjusted for months not working in that year. Real measures are adjusted to 2020Q1 based on wage inflation.

Income is average between groups fitting under different cut offs based on completion duration.

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Income outcomes of tertiary pathways

Leave school, go to uni, get a degree, get a job and a haircut. Or could there be another way?

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Where do apprentices end up?

Most apprentices retain in their respective industries after completing training, with many progressing into self-employment

Income Apprentices Income outcomes