Last week, I provided an overview on a topic of vital importance: the highly uneven nature of America’s economic recovery since the Great Recession of 2008. Corporate America and its shareholders are doing very well – but the great majority of wage earners are not. What accounts for this unevenness? Noted Harvard economist Gregory Mankiw is quoted as saying, “The best way to address rising inequality is to focus on increasing educational attainment,” (The New York Times, “Income Inequality and the Ills Behind It,” July 30, 2014). Is this statement true? Or does the real answer lie elsewhere?
Let’s begin by noting that the nature of the job market in America has changed dramatically in recent years, owing to both globalization (the export of jobs to countries with lower labor costs) and technology (the elimination of jobs by substituting robots and software for human employees). We should also note that a changing job market is nothing new: at the beginning of the 20th century, 30 percent of America’s jobs were on farms. Now just two percent of Americans work on farms (The New York Times, “Fear Not the Coming of the Robots,” June 22, 2014). But the pace of job loss has escalated, and the new jobs either pay less or require more specialized skills.
To be specific, more than 1.5 million jobs have been eliminated in America since 2000, involving such varied positions as typists, telephone operators, computer operators, telemarketers, travel agents and carpenters. But 2.5 million jobs have been added this century in fields such as computer software engineering, nursing, finance and physical therapy – all requiring a college education and all paying relatively well (“Fear Not the Coming of the Robots,” cited above). So college graduates, at least, should be doing well, right? Clearly, our economy will be fixed once we have more educated people.
Except that more than half of those who graduated from college in the past three years are working in jobs that did not traditionally call for a college degree – and these jobs tend not to pay well (Bloomberg, “College Graduates Struggle to Find Employment Worth a Degree,” June 5, 2014).
And this change in the nature of the workforce is by no means an exclusively American issue. A survey of 42 countries conducted by the Organization for Economic Cooperation and Development (OECD) found that “the demand for skilled workers is still rising faster than the supply,” yet “the people who really paid the price for the financial crisis are those without baseline qualifications,” (The New York Times, “Financial Crisis Amplifies Education’s Value,” June 30, 2013).
How do we reconcile “rising demand for skilled workers” with underemployed college graduates? An economist at George Mason University “posits that technology and globalization have essentially split the labor market in two: high and low earners. Far fewer stable jobs are left over in the middle to support what through much of the 20th century we called the middle class,” (“Income Inequality and the Ills Behind It,” cited above).
It is important to recognize that “skilled workers” and “college graduates” are not synonymous. If what corporate America requires are people who have the skill set necessary to do a particular job – and these people must be job-ready when they apply for work – then engineers, accountants and nurses, along with pipefitters, electricians and technology assistants, will be hired preferentially over those without job-ready skills.
And that means college graduates without the specific skills that business and industry need will find themselves on the margins of the job market, often forced to accept a low-skill and low-paid position just to have a job.
This point is graphically underscored in a number of states that chart the starting salaries of recent college graduates by major. “To make the most money coming out of a North Carolina university, study nuclear engineering and you’ll earn almost $90,000 a year. To make the least, study dramatic theater and earn $10,400,” (Diverse Education, “Big Data Measuring Dollar Value of College Degrees,” August 13, 2014).
I have no data to prove this point, but I very much doubt if, at any time in the past few decades, we have seen an eight-fold difference in starting salaries, based on choice of majors from the same institution.
So is more education the answer? It should be clear that a general call for more people with more education is too simple a response. A college degree without specific skills valued by the marketplace no longer guarantees a well-compensated position.
There are actually several problems with the idea that more and better education will cure an ailing economy. Let me summarize:
- Quality of Education 1. Nationally, only about 80 percent of children starting the first grade subsequently graduate from high school. The percentage of dropouts has changed very little in recent decades, but the economic consequences of not finishing high school have never been greater. Few high school dropouts will find jobs that pay even moderately well. There is, at present, no agreement on how to solve the dropout problem, nor is there any evidence that society is ready and/or willing to implement a solution, should one be found.
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Quality of Education 2. College completion rates are far worse than are the high school completion rates. Across all sectors, less than 60 percent of all college students receive a bachelor’s degree within six years of starting as freshmen. This percentage has actually declined somewhat in recent years. There is very little economic value in a partial college degree, and too many college dropouts face the added burden of having taken out student loans that they will have difficulty repaying. No concerted effort exists to address the non-completion problem.
A recent OECD report that surveyed the work skills of adult Americans found that 36 million have low skills, resulting in “a highly educated super class at the top and a highly undereducated underclass at the bottom, with very little in the middle…which is exactly what Third World countries look like,” (Salon, “America’s Rotting Empire: Billionaires Galore and a Crumbling Infrastructure,” May 8, 2014).
- Quantity of Education. As I have just noted, both high school and college completion rates have been stalled for several decades. If our goal is to have an increasing percentage of adult Americans with higher levels of education, we are falling painfully short of our objective – and there is nothing to suggest that this situation will improve in the near to mid-term.
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Access to Higher Education. Students from the top quintile of family income are seven times more likely to complete a bachelor’s degree than are students from the bottom quintile of family income. The strongest predictor of a young person’s level of economic success is the level of education of his or her parents. Moreover, the students from more affluent families tend to go to the most selective colleges and universities; students from less affluent families often must make do with community colleges and nonselective four-year institutions.
What, then, should we tell those from working class families who aspire to climb the socioeconomic ladder? “Instead of being a great equalizer…the American way of college rewards those who come not just academically but socially prepared, while treating working-class students more cruelly, and often leaving them adrift,” (The New York Times, “College, the Great Unequalizer,” May 3, 2014).
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The Role of Higher Education. Well into the 20th century, the primary purpose of a college education was to permit a higher quality of life for both the possessor and society at large. People learned how to do their job on the job (The Herbert H. Lehman Memorial Lecture, “The U.S. Workforce and Higher Education: A New Deal,” April 2, 2014). Over time, and dramatically over the last decade, employers have minimized or eliminated their role in teaching bright college graduates how to do their specific job in favor of expecting colleges to do most of that work for them: to prepare students to be job-ready when they graduate.
This expectation has led to the situation we find ourselves in today, where college students must too often choose between a major in a field they love, and a major that promises to pay them a decent salary. The consequence has been a dramatic shift from the liberal arts to the professional programs, and higher education finds itself in serious risk of being reduced to a smorgasbord of training programs – the antithesis of the role it has played since the Middle Ages.
The danger is creating a nation full of doers but devoid of thinkers – people with skills and some knowledge, but without wisdom.
To conclude, the idea that more and better education is the silver bullet that will repair a seriously damaged economy is fanciful, in large measure because there is no strategy or mechanism to get us there, but also because, even if we knew how to do it, the price we would have to pay – using higher education for the primary purpose of turning huge numbers of Americans into foot soldiers for corporate America – is too high.
We will come back to this point in Part 4 of our series. Next week, Part 3: The role of income inequality in our ailing economy.