The United States pioneered universal free primary education to provide literacy to its newly enfranchised citizens. We flourished. It then led the world in the industrial era on the strength of the free high schools that provided skills to build the corporations and factories which dominated. Again we flourished. Next the GI Bill was created to educate 8 million veterans returning from World War II to resume our lead in industry and begin the transition to a service economy. And, of course, we flourished again. The question now becomes what sort of education do we need for this century and particularly, to create high quality, high wage jobs at scale.
What Doesn’t Work: Two decades in we appear to be on the wrong track. The drive to improve schools as measured by heavy use of standardized testing has seemingly backfired. Ushered in by the No Child Left Behind legislation of 2001, schools at both the elementary and secondary levels were tasked with making substantial improvements in the performance of their students as measured by fourteen separate tests of math, science and reading. Failure to improve led to the firings of principals and teachers and ultimately to the shuttering of non-performing schools.
Because very little progress has been made since its passing, the No Child Left Behind legislation was absorbed and modified by subsequent initiatives such as the Common Core. However, the emphasis on standardized testing continues, accompanied by the need to “teach to the test” where teachers religiously prep their students at the expense of actual learning time.
The emphasis on standardization and high stakes testing was done with laudable intentions to better prepare graduates for college and for jobs in a near-future economy. The problem is that the future state is unfolding very rapidly driven in part by disruptive technologies such as artificial intelligence and robotics. These technologies are eroding openings in both high wage professions such as medicine and engineering as well as the semi-skilled, routinized labor in factories and even commercial kitchens. Studies done by respected authorities such as Oxford University and McKinsey forecast that up to 50% of jobs will be at risk of being automated away in the next one to two decades.
The fragile nature of the job market has been exposed by the rapidity in which the US economy shed 30 million jobs in response to the corona virus thereby eclipsing the losses of Great Recession. Most of these jobs were in hospitality, restaurants, bars and retail stores with wages at the bottom end of the scale, so much so that the average wage actually rose for those still working.
The American labor force consisted of 160 million jobs before the virus hit out of a population of 330 million. Our labor force participation rate was 63.5%, a relative low number – down by 4% from 20 years ago – which likely indicates that more people would enter if good jobs presented themselves. The virus has reduced the participation rate further by 2% so that the hill to climb to full employment is daunting. This is made more so because most of the new jobs according to the Bureau of Labor Statistics are low wage, low skill requirements:
|Job Title||Existing 2018||To Be Added by 2028||Med Annual Wage|
|Personal Care Aides||2,241,000||881,000||$26,880|
|Home Health Aides||831,000||305,000||$25,330|
Software developers, often seen as one of the most desirable professions, represent less than 1% in both today’s jobs and in 2028. It is the only one typically requiring a four year degree, even though there are many examples of excellent technologists that thrived without one, highlighted by Bill Gates.
The challenge to get back to full employment populated by higher wage jobs is burdened by the full effect of the corona virus. The long slow recovery from the Great Recession was exacerbated by businesses getting “leaner and meaner” during the downturn, making full use of the technologies they deployed leading up to the crisis. Executives seldom take staff reductions in good times but look very hard at measures in slow periods. This is no doubt underway currently in larger companies and is potentially compounded in small business. McKinsey & Co forecasts that the recovery for small business may take up to five years. Many owner/operators have been reported to be choosing retirement rather than virtually start over to re-open.
Where to Start: Educating Kids for Good Careers. Unsurprisingly, the clearest path to success is to obtain a college degree, as shown in this table:
|High School||4 Year College||Notes/Sources|
|Unemployment Rate||10.8%||8.1%||FRED July 2020|
|Median Wage/Week||$712||$1173||$1173 BLS 2017|
|Household Wealth||$77,000||$229,000||St Louis Fed 2017|
The story, however, is more complicated:
- Students who major in studio arts or Hibernian culture will not capture the same returns on their tuition investment as those who sat through boring accounting courses.
- Students who start out pursuing a four-year degree but do not obtain one have little to show for their efforts but a mound of debt and no real advantage in the job market. Their wages are slightly higher than high school graduates but they actually have less wealth.
- Graduates frequently feel underemployed and unable to use skills they gained in college. 40% of recent graduates started out in jobs that did not require a degree with negative effect on their long term economic success.
- High School graduates who pursue vocations that typically require certification but not multi-year degrees can earn like their college peers. But these jobs, while growing well at an above average rate of 12% versus only .5% overall, are still just 1% of the workforce.
For the two thirds of American adults who lack four year degrees prospects are increasingly grim, as evident in the Deaths of Despair that have actually shortened the lifespan for white, non-college educated males in this country. High wage manufacturing jobs, historically unionized, have shrunk from 30% to 7% of the workforce. Our manufacturing output has actually risen while employment has declined due to off-shoring of components and automation.
If – potentially as a result of the pandemic – we bring manufacturing jobs back, the share of semi-skilled factory labor will most likely be small and relentlessly chased by robots whose average wage can be computed today at $5 per hour and dropping. A few highly skilled engineers and certified technicians will be all that is required, fulfilling the fevered vision of Kurt Vonnegut in Player Piano, published seventy years ago. In subsequent posts we will explore if and how kids without degrees can stay ahead of the job terminators.
Automation will be an indirect threat in the form of stiff competition versus traditional businesses. Entry level jobs in retail sales were stagnant due to the continued expansion of eCommerce, and have been decimated during the quarantine. This will drastically reduce the opportunity for many kids with limited options to enter the workforce.
Given these challenges, what should our schools do? These options present themselves:
- Dominate the Knowledge Economy – the aggregate of innovative enterprises primarily in the STEM fields such as Apple, Google, Pfizer and Tesla
- Prepare for the Gig Economy in which tens of millions find themselves entrepreneurs of their own personal start-up, intentionally or otherwise. For our purposes this will include Uber drivers but also construction workers and related fields that don’t have stable weekly compensation.
- Prepare for a Post-Work Economy – as suggested by John Maynard Keynes in which we will live a comfortable middle class existence working only 15 hours per week
- Establish an equitable Starting Line for the kids who are getting left behind, an increasingly large number of Caucasian, Black and Hispanic students.
Each of these options will be more fully examined in future posts.