Business groups tout tax credit as way to expand high-paying job opportunities in SC

Legislation would increase tax breaks for companies with apprenticeship programs for high schoolers and adults

By: - November 16, 2023 4:22 pm

Apprentices get on-the-job manufacturing experience with chemical maker and precious metal recycler BASF at the company’s Seneca facility. The program is a partnership between BASF and Tri-County Technical College. (Provided by Apprenticeship Carolina)

COLUMBIA — More South Carolinians could earn a paycheck while training for high-paying jobs under legislation business advocacy groups are pushing as a way to reduce the state’s workforce shortage.

The state Chamber of Commerce and state Manufacturers Association want the Legislature to expand tax credits for apprenticeship programs. It’s a priority for both groups heading into the 2024 session that starts in January.

For 16 years, companies have been able to claim a $1,000 annual income tax break – for up to four years – for every apprentice working in a program registered with the U.S. Department of Labor.

Apprenticeship programs, which combine on-the-job training with classroom instruction, are touted as win-wins for both the employer and employee: They prepare workers for high-paying jobs while providing companies with a skilled workforce.

The average salary of apprentices nationally who complete a registered program is $80,000, according to the federal labor department. South Carolina has 33,695 registered apprentices and 1,048 registered programs, according to Apprenticeship Carolina’s most recent federal report.

But launching a program can be expensive. Upfront costs include paying for course design, training material and supplies. Companies also cover technical college tuition and other instructional costs after an apprentice signs up.

The costs, coupled with burdensome paperwork, can discourage companies from creating such programs. Plus, they lose money if an apprentice drops out early or no students apply, said state Chamber of Commerce President Bob Morgan.

That’s why the chamber and manufacturers group are backing legislation to increase the tax incentive to up to $4,000 annually for each adult apprentice and $6,000 for high school students. That credit could still extend up to four years.

And if the apprentice stays on the company’s payroll after completing the program, the company can continue claiming the $1,000 credit for three more years of employment.

Companies that bring on veterans or workers who were formerly incarcerated qualify for additional credits – $3,000 for the first year, $2,500 for the second year and $1,000 for the third year a person is employed. These credit options sunset at the end of 2026.

According to the state Department of Revenue’s most recent annual report, 64 employers claimed credits in 2021. Those credits were worth almost $1.6 million total, enough to support nearly 1,600 apprentices in the state.

Those numbers have fluctuated over the past five years, rising as high as 75 employers in 2017 and a total claim number as high as $1.8 million in 2020.

To get the tax breaks, companies must register their program with the U.S. Department of Labor’s apprenticeship office. Registration ensures quality instruction. Companies also must agree to raise apprentices’ pay as their skills grow.

The legislative effort to increase the credits is led by Sen. Michael Johnson. The Fort Mill Republican said he took up the mantle after hearing from York Technical College about the success of such programs.

Trident Technical College President Mary Thornley also praises the program. She points to the success of Bosch, which partners with her school for apprentice training. The German company’s Charleston facility has graduated more than 400 apprenticeships since starting its program in 1976.

This month, Apprenticeship Carolina is highlighting apprentices working at auto parts maker Cooper Standard in Spartanburg, the Savanah River Site federal nuclear complex outside Aiken and chemical manufacturer BASF Seneca.

Separate versions of the legislation passed both chambers unanimously earlier this year. The difference could be worked out in a compromise committee after the session resumes in January.

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Jessica Holdman
Jessica Holdman

Jessica Holdman writes about the economy, workforce and higher education. Before joining the SC Daily Gazette, she was a business reporter for The Post and Courier.