• April 18, 2014

The Economy Does Not Depend on Higher Education

The Economy Does Not Depend on Higher Education 1

PAT KINSELLA FOR THE CHRONICLE

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close The Economy Does Not Depend on Higher Education 1

PAT KINSELLA FOR THE CHRONICLE

The presumption that a shortage of educated people is responsible for a stagnant economy has been repeated frequently, especially since the onset of the recession, in 2008. A commission sponsored by the American Association of Community Colleges concluded that the nation's fiscal problems were accentuated by the fact that 59 percent of all employees needed postsecondary degrees or certificates for their jobs. In announcing the American Graduation Initiative, President Obama specified that an additional five million college graduates were needed because the nation's economy depended on the education of its workers. The Lumina Foundation has declared the imminence of an economic decline due to a gap of 23 million two- and four-year degrees by 2020.

These contentions tying the state of the economy to the number of people completing college programs are not warranted. Full-time employment declined by 5.7 million from November 2007 to November 2011, a figure that does not include the millions more who lost their jobs and gave up seeking new ones after their unemployment benefits ran out. Had all the laid-off workers somehow become unskilled and forgotten how to work? Or had their jobs been downsized, automated, or exported out from under them?

No reliable data are available showing the number of certificates or degrees needed for work-force development, unemployment reduction, or economic improvement. The oft-cited shortfall of millions of degrees is based on deceptive reasoning: Credentials are not even relevant for most jobs. For example, the great majority of jobs that were sent overseas have been filled by people less educated than the Americans they displaced. These jobs will not return until the declining salaries paid in the United States intersect with rising wages in other countries; that is, until the United States gets closer to the bottom in the worldwide race to pay the lowest wages for the same work.

Discouraging as such a concept may be, the trend toward lower-paying jobs is already evident. Most jobs that were lost during the recession paid mid-level wages, but the majority of positions filled in the recovery pay less. Those jobs that paid from $7.69 to $13.83 per hour accounted for 21 percent of the job losses during the recession but 58 percent of the job growth from late 2009 through early 2012. The mid-level occupations with hourly pay of up to $21.13 accounted for 60 percent of the jobs lost but only 22 percent of the new hires. Furthermore, this June, the Labor Department reported 2.7 million temporary workers, the highest number in history. If they were included in the statistics, they would further depress the salary figures.

Recently the U.S. unemployment rate dropped below 7.2 percent as thousands of workers regained their old jobs or found new employment. In particular, residential construction has revived, and the building industry has added 377,000 jobs over the past two years. Legions of carpenters, electricians, plumbers, and equipment operators have returned to work. It is doubtful that many of them obtained postsecondary credentials while they were unemployed, nor did those who regained their jobs selling building supplies, home furnishings, or appliances as a consequence of increased construction activity.

Advances in productivity in other countries have not depended on significant increases in schooling. For many years, the apprenticeship systems in Japan and Northern Europe have been popular ways of preparing the work force. Short-term technical and vocational programs are another. Contentions that problems of international competitiveness can be solved by increasing the years of schooling divert attention from the corporate managers who exported the jobs originally, lobbied incessantly to avoid paying taxes on the profits derived thereby, converted full-time positions to part-time to avoid paying benefits, and did not invest significantly in on-the-job training for their remaining workers.

The paucity of corporate-training and apprenticeship programs creates a niche business opportunity for postsecondary institutions—community colleges and for-profit enterprises, especially—to provide worker training and curricula to upgrade skills. Indeed, these occupational programs have received $2-billion in special federal funds over the past four years and will undoubtedly contribute to the number of people holding postsecondary degrees and certificates.

At first glance, everyone wins with efforts to encourage more people to go to college, such as the College Board's College Completion Agenda, for which the goal is to have 55 percent of Americans with college degrees by 2025. Community colleges and for-profit institutions increase their enrollments, and in the latter case, profit from tuition revenues subsidized almost wholly by federal student-aid programs. Businesses gain skilled workers at little or no cost to themselves. And America's workers can add a new line or two to their résumés. But the question remains: Are all these new degrees and certificates necessary?

The data on necessary educational levels are based on variant definitions. The Current Population Survey administered by the U.S. Census Bureau classifies more than 60 percent of all jobs as postsecondary, but the Bureau of Labor Statistics reports half as many: 31 percent. This wide discrepancy is because the CPS tallies the education levels of people who are currently working in various jobs, whereas the BLS statistics reflect the entry-level education requirements for those jobs (a classification that seems to change from year to year). Thus, the job held by a college-educated barista would be classified as postsecondary by the CPS but not by the BLS. Obviously, jobs data that trace the degrees held by current employees are subject to distorted interpretation.

The Economic Policy Institute's review of job data shows that 52 percent of employed college graduates under the age of 24 are working in jobs that don't require college degrees. Put another way, of the 21 million workers earning less than $10.01 per hour, 3.57 million hold college degrees and an additional 5.46 million have some college. That these sales representatives, clerks, cashiers, and restaurant servers hold associate or bachelor's degrees does not mean they needed to present them when they applied.

Certainly higher education is desirable. The community gains people more likely to be charitable, to vote, and to participate in civic affairs, and less likely to rely on governmental assistance or engage in antisocial behavior. The individual learns to reason scientifically and think critically and gains a sense of historical perspective, an appreciation for aesthetics and cultural diversity, and access to training for the professions that require credentials.

The notion that a person without a degree is doomed to unemployment is at best a widespread misconception, as unwarranted as blaming an economic recession on a paucity of skilled workers. The high unemployment numbers are not due to workers' lacking the right education. The numbers reflect the weak demand for goods and services, a weakness that makes it unnecessary for employers to hire workers at any level of education.

Yet, sustained by the mutuality of interests between college educators who embrace the jobs attendant on high enrollments and the business leaders who profit from having their employees prepared at public expense, the misrepresentation persists. The statement "By the year 2018, all jobs will require a higher education," which comes from a report called "Help Wanted," by the Center on Education and the Workforce at Georgetown University, has become so commonplace that a version recently appeared as an advertisement on the rear of buses in Los Angeles. The sponsor? A local nonprofit group promoting its chain of preschools. Nobody would argue that greater access to education is a bad thing—especially for the preschool set—but the motives of those promoting these statements, as well as those who uncritically accept them out of self-interest, are open to question.

Arthur M. Cohen is a professor emeritus of higher education at the University of California at Los Angeles and a former president of the Center for the Study of Community Colleges. Florence B. Brawer is former research director of the Center for the Study of Community Colleges. Carrie B. Kisker is a consultant in education research and policy based in Los Angeles. This article is adapted from their book, The American Community College (6th edition, Wiley, 2013).

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