Reducing inequality and expanding opportunity are central challenges increasingly acknowledged by leaders across the political spectrum. Policymakers generally agree that one key solution is to prepare young people and adults with the skills to earn a good income. Unlike other advanced countries, however, reform proposals in the United States have typically included little or nothing about apprenticeship—a highly cost-effective mechanism for developing workplace skills and for reducing youth unemployment. However, interest in apprenticeship models is building in the United States, partly because of the recent successes of Britain and South Carolina in stimulating major expansions of apprenticeship training. A robust apprenticeship system is especially attractive because of its potential to reduce youth unemployment, improve the transition from school to career, upgrade skills, raise wages of young adults, strengthen a young worker’s identity, increase U.S. productivity, achieve positive returns for employers and workers, and use limited federal resources more effectively.

Apprenticeship prepares workers to master occupational skills and achieve career success. Under apprenticeship programs, individuals undertake productive work for their employer, earn a salary, receive training primarily through supervised work‐ based learning, and take academic instruction that is related to the apprenticeship occupation. The programs generally last from two to four years. Apprenticeship helps workers to master not only relevant occupational skills, but also other work‐related skills, including communication, problem solving, allocation of resources, and dealing with supervisors and a diverse set of coworkers. The course work is generally equivalent to at least one year of community college. Completing apprenticeship training yields a recognized and valued credential attesting to mastery of skill required in the relevant occupation. Unlike the normal part-time jobs held by high school and college students, apprenticeship integrates what young people learn on the job and in the classroom. Box 7-1 describes a successful youth apprenticeship program in Georgia. (See the PDF for Box 7-1).

In some ways, apprenticeship offers an alternative to the “academic-only” college focus of U.S. policymakers. Increasingly, placing all of our career-preparation eggs in one basket is leaving young adults, especially minority young men, well behind. Among young adults ages twenty-five to thirty-four in 2013, 49 percent of all women and 37 percent of African American women had earned at least an Associate degree; for men, the comparable figures were 40 percent and 28 percent, respectively. Furthermore, in 2011–12, nearly two African American women earned a bachelor’s degree for every African American male who earned one (National Center for Education Statistics 2013). Despite the well-documented high average returns to college, variations in interests, capacities, and learning styles suggest many young people would benefit far more from alternative pathways to rewarding careers than they do from academic-only pathways. 

Apprenticeship can narrow the postsecondary achievement gaps in both gender and race. Having learning take place mostly on the job, making the tasks and classroom work highly relevant to their careers, and providing participants with wages while they learn are especially beneficial to men, particularly minority men. Apprenticeship can give minorities increased confidence that their personal efforts and investment in skill development will pay off, giving graduates a genuine sense of occupational identity and occupational pride. 

Additionally, apprenticeship is a useful tool for enhancing youth development. Young people work with natural adult mentors who offer guidance but allow youth to make their own mistakes (Halpern 2009). Youth see themselves judged by the established standards of a discipline, including deadlines and the genuine constraints and unexpected difficulties that arise in the profession. Supervisors provide the close monitoring and frequent feedback that helps apprentices keep their focus on performing well at the work site and in the classroom. 

Furthermore, apprenticeship is distinctive in enhancing both the worker supply side and the employer demand side of the labor market. On the supply side, the financial gains to apprenticeship are strikingly high. U.S. studies indicate that apprentices do not have to sacrifice earnings during their education and training and that their long-term earnings benefits exceed the gains they would have accumulated after graduating from community college (Hollenbeck 2008). The latest reports from the state of Washington show that the gains in earnings from various education and training programs far surpass the gains from all other alternatives (Workforce Training and Education Coordinating Board 2014). A broad study of apprenticeship in ten states also documents large and statistically significant earnings gains from participating in apprenticeship programs (Reed et al. 2012). 

On the demand side, employers can feel comfortable upgrading their jobs knowing that their apprenticeship programs will ensure an adequate supply of well-trained workers. High levels of apprenticeship activity in Australia, Canada, and Britain demonstrate that even companies in labor markets with few restrictions on hiring, firing, and wages are willing to invest in apprenticeship training. While no rigorous evidence is available about apprenticeship’s costs and benefits to U.S. employers, research in other countries indicates that employers gain financially from their apprenticeship investments (Lerman 2014). 

In general, firms reap several advantages from their apprenticeship investments. They save significant sums in recruitment and training costs, in reduced errors in placing employees, in excessive costs when the demand for skilled workers cannot be quickly filled, and in all employees being well versed with company procedures. One benefit to firms that is rarely captured in studies is the positive impact of apprenticeship on innovation. Well-trained workers are more likely to understand the complexities of a firm’s production processes and therefore to identify and implement technological improvements, especially incremental innovations to improve existing products and processes. A study of German establishments documents this connection and finds a clear relationship between the extent of in-company training and subsequent innovation (Bauernschuster, Falck, and Heblich 2009). In the United States, evidence from surveys of more than 900 employers indicates that the overwhelming majority of them believe their programs are valuable and involve net gains (Lerman, Eyster, and Chambers 2009). Nearly all sponsors reported that apprenticeship programs help them meet their skill demands—87 percent reported that they would strongly recommend registered apprenticeship programs, and another 11 percent recommended apprenticeship programs with some reservations. Other benefits of apprenticeship include reliably documenting appropriate skills, raising worker productivity, increasing worker morale, and reducing safety problems.

While apprenticeship offers a productivity-enhancing approach to reducing inequality and expanding opportunity, activity in the United States has declined in recent years to levels about one-tenth of those in Australia, Canada, and Britain. Some believe the problems include inadequate information and familiarity with apprenticeship, an inadequate infrastructure, and expectations that sufficient skills will emerge from community college programs. Others see the main problem as an unwillingness of U.S. companies to invest, no matter how favorable government subsidies and marketing policies are. In considering these explanations, we should remember that even in countries with robust apprenticeship systems, only a minority of firms actually hires apprentices. Since the number of apprenticeship applicants already far exceeds the number of apprenticeship slots, the main problem today is to increase the number of apprenticeship openings that employers offer. Counseling young people about potential apprenticeship opportunities is a sensible complementary strategy to working with the companies, but encouraging interest in apprenticeship could be counterproductive without a major increase in apprenticeship slots. 

Developing a more robust support system for apprenticeship programs requires action at various levels of government. This proposal consists of a series of targeted initiatives that rely on both state and federal support. At the state level, governments could develop marketing campaigns to persuade employers to create apprenticeship programs, and to build on existing youth apprenticeship programs. At the federal level, the government could provide federal subsidies to encourage take-up of existing vouchers for apprenticeship programs; designate occupational standards for apprenticeship through a joint Office of Apprenticeship (OA)–Department of Commerce (Commerce) team; and develop an infrastructure of information, peer support, and research within the Departments of Commerce and Labor.

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Introduction:

In the ebb and flow of Middle East diplomacy, the two interrelated issues of an Israeli-Syrian peace settlement and Washington’s bilateral relationship with Damascus have gone up and down on Washington’s scale of importance. The election of Barack Obama raised expectations that the United States would give the two issues the priority they had not received during the eight years of the George W. Bush administration. Candidate Obama promised to assign a high priority to the resuscitation of the Arab-Israeli peace process, and separately to “engage” with Iran and Syria (as recommended by the Iraq Study Group in 2006).

In May 2009, shortly after assuming office, President Obama sent the assistant secretary of state for Near Eastern affairs, Jeffrey Feltman, and the senior director for the Middle East in the National Security Council, Daniel Shapiro, to Damascus to open a dialogue with Bashar al-Asad’s regime. Several members of Congress also travelled to Syria early in Obama’s first year, including the chairman of the Senate Committee on Foreign Relations, John Kerry, and the chairman of the House Committee on Foreign Affairs, Howard Berman. In addition, when the president appointed George Mitchell as special envoy to the Middle East, Mitchell named as his deputy Fred Hof, a respected expert on Syria and the Israeli-Syrian dispute. Last summer, both Mitchell and Hof visited Damascus and began their give and take with Syria.

And yet, after this apparent auspicious beginning, neither the bilateral relationship between the United States and Syria, nor the effort to revive the Israeli-Syrian negotiation has gained much traction. Damascus must be chagrined by the fact that when the Arab-Israeli peace process is discussed now, it is practically equated with the Israeli-Palestinian track. This paper analyzes the difficulties confronting Washington’s and Jerusalem’s respective Syria policies and offers an approach for dealing with Syria. Many of the recommendations stem from lessons resulting from the past rounds of negotiations, so it is important to understand what occurred.

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The potential for confrontation between the United States and Iran, stemming from ongoing tensions over Iran’s nuclear program and western covert actions intended to delay or degrade it, remains a pressing concern for U.S. policymakers. The Saban Center for Middle East Policy hosted a one-day crisis simulation in September that explored different scenarios should a confrontation occur.

The Saban Center's new Middle East Memo, A Series of Unfortunate Events: A Crisis Simulation of a U.S.-Iranian Confrontation, authored by senior fellow Kenneth M. Pollack, presents lessons and observations from the exercise.

Key findings include:

• Growing tensions are significantly reducing the “margin of error” between the two sides, increasing the potential for miscalculations to escalate to a conflict between the two countries.

• Should Iran make significant progress in enriching fissile material, both sides would have a powerful incentive to think short-term rather than long-term, in turn reinforcing the propensity for rapid escalation.

• U.S. policymakers must recognize the possibility that Iranian rhetoric about how the Islamic Republic would react in various situations may prove consistent with actual Iranian actions.

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The Center for Medicare and Medicaid Innovation (CMMI, or “the Innovation Center”) recently announced an initiative called Comprehensive Primary Care Plus (CPC+). It evolved from the Comprehensive Primary Care (CPC) initiative, which began in 2012 and runs through the end of this year. Both initiatives are designed to promote and support primary care physicians in organizing their practices to deliver comprehensive primary care services. Comprehensive Primary Care Plus has some very promising components, but also misses some compelling opportunities to further advance payment for primary care services.

The earlier initiative, CPC, paid qualified primary care practices a monthly fee per Medicare beneficiary to support practices in making changes in the way they deliver care, centered on five comprehensive primary care functions: (1) access and continuity; (2) care management; (3) comprehensiveness and coordination; (4) patient and caregiver engagement; and, (5) planned care and population health. For all other care, regular fee-for-service (FFS) payment continued. The initiative was limited to seven regions where CMMI could reach agreements with key private insurers and the Medicaid program to pursue a parallel approach. The evaluation funded by CMMI found quality improvements and expenditure reductions, but savings did not cover the extra payments to practices.

Comprehensive Primary Care Plus uses the same strategy of conducting the experiment in regions where key payers are pursuing parallel efforts. In these regions, qualifying primary care practices can choose one of two tracks. Track 1 is very similar to CPC. The monthly care management fee per beneficiary remains the same, but an extra $2.50 is paid in advance, subject to refund to the government if a practice does not meet quality and utilization performance thresholds.

The Promise Of CPC+

Track 2, the more interesting part of the initiative, is for practices that are already capable of carrying out the primary care functions and are ready to increase their comprehensiveness. In addition to a higher monthly care management fee ($28), practices receive Comprehensive Primary Care Payments. These include a portion of the expected reimbursements for Evaluation and Management services, paid in advance, and reduced regular fee-for-service payments. Track 2 also includes larger rewards than does Track 1 for meeting performance thresholds.

The combination of larger per beneficiary monthly payments and lower payments for services is the most important part of the initiative. By blending capitation (monthly payments not tied to service volume) and FFS, this approach might achieve the best of both worlds.

Even when FFS payment rates are calibrated correctly (discussed below), the rates are pegged to the average costs across practices. But since a large part of practice cost is fixed, it means that the marginal cost of providing additional services is lower than the average cost, leading to incentives to increase volume under FFS. The lower payments reduce or eliminate these incentives. Fixed costs, which must also be covered, are addressed through the Comprehensive Primary Care Payments. By involving multiple payers, practices are put in a better position to pursue these changes.

An advantage of any program that increases payments to primary care practices is that it can partially compensate for a flaw in the relative value scale behind the Medicare physician fee schedule. This flaw leads to underpayment for primary care services. Although the initial relative value scale implemented in 1992 led to substantial redistribution in favor of evaluation and management services and to physicians who provide the bulk of them, a flawed update process has eroded these gains over the years to a substantial degree.

In response to legislation, the Centers for Medicare and Medicaid Services are working correct these problems, but progress is likely to come slowly. Higher payments for primary care practices through the CPC+ can help slow the degree to which physicians are leaving primary care until more fundamental fixes are made to the fee schedule. Indeed, years of interviews with private insurance executives have convinced us that concern about loss of the primary care physician workforce has been a key motivation for offering higher payment to primary care physicians in practices certified as patient centered medical homes.

Two Downsides

But there are two downsides to the CPC+.

One concerns the lack of incentives for primary care physicians to take steps to reduce costs for services beyond those delivered by their practices. These include referring their patients to efficient specialists and hospitals, as well as limiting hospital admissions. There are rewards in CPC+ for lower overall utilization by attributed beneficiaries and higher quality, but they are very small.

We had hoped that CMMI might have been inspired by the promising initiatives of CareFirst Blue Cross Blue Shield and the Arkansas Health Care Improvement initiative, which includes the Arkansas Medicaid program and Arkansas Blue Cross Blue Shield. Under those programs, primary care physicians are offered substantial bonuses for keeping spending for all services under trend for their panel of patients; there is no downside risk, which is understandable given the small percentage of spending accounted for by primary care. The private and public payers also support the primary care practices with care managers and with data on all of the services used by their patients and on the efficiency of providers they might refer to. These programs appear to be popular with physicians and have had promising early results.

The second downside concerns the inability of physicians participating in CPC+ to participate in accountable care organizations (ACOs). One of CMMI’s challenges in pursuing a wide variety of payment innovations is apportioning responsibility across the programs for beneficiaries who are attributed to multiple payment reforms. As an example, if a beneficiary attributed to an ACO has a knee replacement under one of Medicare’s a bundled payment initiatives, to avoid overpayment of shared savings, gains or losses are credited to the providers involved in the bundled payment and not to the ACO. As a result, ACOs are no longer rewarded for using certain tools to address overall spending, such as steering attributed beneficiaries to efficient providers for an episode of care or encouraging primary care physicians to increase the comprehensiveness of the care they deliver.

Keeping the physician participants in CPC+ out of ACOs altogether seems to be another step to undermine the potential of ACOs in favor of other payment approaches. This is not wise. The Innovation Center has appropriately not established a priority ranking for its various initiatives, but some of its actions have implicitly put ACOs at the bottom of the rankings. Recently, Mostashari, Kocher, and McClellan proposed addressing this issue by adding a CPC+ACO option to this initiative.

In an update to its FAQ published May 27, 2016 (after out blog was put into final form), CMMI eased its restriction somewhat by allowing up to 1,500 of the 5000 practices expected to participate in CPC+ to also participate in Medicare Shared Savings Program (MSSP) ACOs. But the prohibition continues to apply to Next Gen ACOs, the model that has created the most enthusiasm in the field. If demand for these positions in MSSP ACOs exceeds 1,500, a lottery will be held. This change is welcome but does not really address the issue of disadvantaging ACOs in situations where a beneficiary is attributed to two or more payment reform models. CMMI is sending a signal that CPC+, notwithstanding its lack of incentives concerning spending outside of primary care, is a powerful enough reform that diverting practices away from ACOs is not a problem. ACOs are completely dependent on primary care physician membership to function, meaning that any physician practices beyond 1,500 that enroll in CPC+ will reduce the size and the impact of the ACO program. CMMI has never published a priority ranking of reform models, but its actions keep indicating that ACOs are at the bottom.

The Innovation Center should be lauded for continuing to support improved payment models for primary care. Its blending of substantial monthly payments with lower payments per service is promising. But the highest potential rewards come from broadening primary care physicians’ incentives to include the cost and quality of services by other providers. CMMI should pursue this approach.

Editor's note: This piece originally appeared in Health Affairs Blog.

Public housing has long been criticized as a breeding ground for concentrated poverty, under-achieving schools and for its lack of access to services. As a means to expand opportunity to some of the nation’s most impoverished communities, the Obama administration has proposed the Choice Neighborhoods Initiative, a program that aims to take the current HOPE VI program beyond public housing by transforming these neighborhoods in a new way.

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Last week, we showed how the share of the nation’s venture capital going to the Bay Area has actually increased over the last decade and posed the question: Are San Francisco and Silicon Valley good models for most cities to imitate? And with the answer being “no,” what strategies should cities employ to bolster local capital networks?

The answer depends upon regions’ technical strengths—different technologies imply different venture capital strategies. A common assumption is that most cities look like Silicon Valley with software monopolizing venture funding, but in many places a mix of different technologies are far more important. Metropolitan level venture capital data from 2005 to 2015 from Pitchbook illustrates how different cities require different strategies.

In Cleveland, for example, more than three-quarters of deals are in clinical care services and medical devices driven by Cleveland Clinic’s world-renowned success in identifying and funding companies creating novel health care technologies. However, software and medical technologies require very different venture capital strategies. Software companies need upfront funding but can scale quickly with few additional funding rounds. Medical technologies require FDA approval and clinical trials, costly and lengthy processes, implying the need to consider whether regional venture capital efforts can provide not only seed funding but multiple rounds. If not, promising health care companies may flame out or relocated elsewhere.

Pittsburgh, on the other hand, has a far more mixed portfolio than either Cleveland or the Bay Area, one of the most diverse in the country. Pittsburgh’s top 10 technologies funded over the last decade include laboratory services, energy exploration, battery storage, medical devices, software, and electronic equipment—with none making up more than one-fifth the metro area’s portfolio. Pittsburgh’s mix of educational and non-profit institutions like Carnegie Mellon University, University of Pittsburgh and UPMC support research in engineering, software, medical technologies, and therapeutics. In addition private companies like Google, Alcoa, and the shale gas boom have provided the region with a blend of market opportunities that are extremely different than that of the Bay Area.

Equally important to the type of technologies funded is how venture capital deals are funded. In the Bay Area private venture capital firms represent the vast majority of funding both in terms of numbers of deals and overall value. Deals from accelerators and universities together equal less than one-tenth of what is invested by private venture capital firms. Given the many private investment firms in the Bay Area, universities and accelerators are better at creating and incubating technologies instead of funding them. Unfortunately, other markets lack such private sector assets and try to jumpstart investments through other methods.

Over the last decade, Pittsburgh made just 3 percent as many total venture deals as the Bay Area, but breaking that figure down by the funding source, universities outperformed in Pittsburgh. There they funded nearly 30 percent as many deals as universities did in San Francisco and Silicon Valley, a rate 10 times as high as would be expected based the Bay Area “norm.” One reason for this is Pittsburgh is relatively new to venture funding and may have more research assets than private venture capital firms. Therefore, university funds could fill an important capital gap.

A common worry is these non-private sector deals are poor investments that private firms, with superior market intelligence, simply refused to make. This argument is most persuasive in regions like the Bay Area where there is no shortage of private capital to fund good ideas. However in other regions these investments can prove to be smart precursors to private funding. Also, rarely do public institutions make investment decisions. Instead, public dollars are funneled through private investment firms to kick start regional activity. For example, Philadelphia’s new StartUp PHL fund is paid for by taxpayer dollars but investment decisions are made by First Capital, the city’s largest private venture capital fund. The fund requires recipients to stay in the city for at least six months after funding, with the hope to increase the number of growing technology companies in Philadelphia.

Cleveland and Pittsburgh are specific examples of a general point. Cities have unique technology competencies and pathways to venture capital. Economic strategies to attract outside, and bolster local capital, should reflect those attributes and not simply default to what seems to have worked in the Bay Area. 

Last week, we showed how the share of the nation’s venture capital going to the Bay Area has actually increased over the last decade and posed the question: Are San Francisco and Silicon Valley good models for most cities to imitate? And with the answer being “no,” what strategies should cities employ to bolster local capital networks?

The answer depends upon regions’ technical strengths—different technologies imply different venture capital strategies. A common assumption is that most cities look like Silicon Valley with software monopolizing venture funding, but in many places a mix of different technologies are far more important. Metropolitan level venture capital data from 2005 to 2015 from Pitchbook illustrates how different cities require different strategies.

In Cleveland, for example, more than three-quarters of deals are in clinical care services and medical devices driven by Cleveland Clinic’s world-renowned success in identifying and funding companies creating novel health care technologies. However, software and medical technologies require very different venture capital strategies. Software companies need upfront funding but can scale quickly with few additional funding rounds. Medical technologies require FDA approval and clinical trials, costly and lengthy processes, implying the need to consider whether regional venture capital efforts can provide not only seed funding but multiple rounds. If not, promising health care companies may flame out or relocated elsewhere.

Pittsburgh, on the other hand, has a far more mixed portfolio than either Cleveland or the Bay Area, one of the most diverse in the country. Pittsburgh’s top 10 technologies funded over the last decade include laboratory services, energy exploration, battery storage, medical devices, software, and electronic equipment—with none making up more than one-fifth the metro area’s portfolio. Pittsburgh’s mix of educational and non-profit institutions like Carnegie Mellon University, University of Pittsburgh and UPMC support research in engineering, software, medical technologies, and therapeutics. In addition private companies like Google, Alcoa, and the shale gas boom have provided the region with a blend of market opportunities that are extremely different than that of the Bay Area.

Equally important to the type of technologies funded is how venture capital deals are funded. In the Bay Area private venture capital firms represent the vast majority of funding both in terms of numbers of deals and overall value. Deals from accelerators and universities together equal less than one-tenth of what is invested by private venture capital firms. Given the many private investment firms in the Bay Area, universities and accelerators are better at creating and incubating technologies instead of funding them. Unfortunately, other markets lack such private sector assets and try to jumpstart investments through other methods.

Over the last decade, Pittsburgh made just 3 percent as many total venture deals as the Bay Area, but breaking that figure down by the funding source, universities outperformed in Pittsburgh. There they funded nearly 30 percent as many deals as universities did in San Francisco and Silicon Valley, a rate 10 times as high as would be expected based the Bay Area “norm.” One reason for this is Pittsburgh is relatively new to venture funding and may have more research assets than private venture capital firms. Therefore, university funds could fill an important capital gap.

A common worry is these non-private sector deals are poor investments that private firms, with superior market intelligence, simply refused to make. This argument is most persuasive in regions like the Bay Area where there is no shortage of private capital to fund good ideas. However in other regions these investments can prove to be smart precursors to private funding. Also, rarely do public institutions make investment decisions. Instead, public dollars are funneled through private investment firms to kick start regional activity. For example, Philadelphia’s new StartUp PHL fund is paid for by taxpayer dollars but investment decisions are made by First Capital, the city’s largest private venture capital fund. The fund requires recipients to stay in the city for at least six months after funding, with the hope to increase the number of growing technology companies in Philadelphia.

Cleveland and Pittsburgh are specific examples of a general point. Cities have unique technology competencies and pathways to venture capital. Economic strategies to attract outside, and bolster local capital, should reflect those attributes and not simply default to what seems to have worked in the Bay Area. 

SUMMARY

Replacing inefficient kerosene lighting with electric lighting or other clean alternatives can rapidly achieve development and energy access goals, save money and reduce climate warming. Many of the 250 million households that lack reliable access to electricity rely on inefficient and dangerous simple wick lamps and other kerosene-fueled light sources, using 4 to 25 billion liters of kerosene annually to meet basic lighting needs. Kerosene costs can be a significant household expense and subsidies are expensive. New information on kerosene lamp emissions reveals that their climate impacts are substantial. Eliminating current annual black carbon emissions would provide a climate benefit equivalent to 5 gigatons of carbon dioxide reductions over the next 20 years. Robust and low-cost technologies for supplanting simple wick and other kerosene-fueled lamps exist and are easily distributed and scalable. Improving household lighting offers a low-cost opportunity to improve development, cool the climate and reduce costs.

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