A reasoned perspective on the importance of increasing the number of Americans with postsecondary degrees and certificates requires a clear understanding of the labor market and its evolving demands. A number of different approaches to developing educated guesses about the future provide insights. Here are two.

We call the first approach the “manpower approach.” In (overly) simple terms, this approach pictures the labor market as a set of boxes called “occupations” nested inside collections of businesses called industries. Each box has certain “requirements” attached, which are sets of skills and dispositions. In its extreme form, fitting into the boxes is a “yes-no” proposition: if you don’t meet the requirements, you just can’t do the job, and if you have the requirements, further skills don’t enable you to do the job better. Nobody takes this literally but that is the starting point. Needed skills can be effectively captured in levels of education—this job “requires” a college education—and/or specific programs, certificates, or majors. Understanding the evolution of the labor market and forecasting its future is essentially a matter, on the demand side, of examining the sizes of the various boxes and projecting their growth, building up the picture from particular industries into a global forecast. On the supply side, it’s about projecting the number of different kinds of degrees and credentials.

Just as the manpower approach emphasizes rigidities, so the approach we will call “ the human capital outlook” pictures markets as fluid and continually adjusting. Human capital is seen as more like a substance that you can have more or less of, and less as a list of specific skills and certifications. On the education side, the basic measure of how much human capital you have is educational attainment, the number of years you have been in school. (Human capital is also produced by health improvement, job training, experience, etc.) Over time, the labor market will adjust in a variety of ways to the availability of workers who offer more or less of this human capital substance. Market signals steer workers toward jobs where their human capital can be most productive and—importantly—the work content of any particular job or occupation will be adjusted through market forces to take advantage of the human capital that is available.

Just as manpower folks don’t believe the job structure is completely rigid, human capital people understand that the economy isn’t completely fluid, especially in the relatively near term, but again we are talking about starting points. Any sensible person attempting to make a forecast of the future of the labor market while looking at the past will conclude that people with more education should expect substantially better results than people with less. This basic conclusion doesn’t differ between these perspectives—the differences are more subtle than that.

Analysts with a human capital perspective tend not to put much stock in ten or twenty year forecasts of employment in specific occupations, picturing adjustments as too complex and fluid for projections to really pay off over that time frame. They put more emphasis on broad trends in investments in new technology, changes in the structure of demand, and national investments in education. The manpower team, while not denying the impact of such forces, will put more stock in detailed forecasts, take more interest in investments in particular skills, and worry more about potential mismatches between particular skill requirements and particular types of training.

Both of these perspectives are valuable. But the best planning for the future will rely on more than a count of educational credentials. It requires a more nuanced understanding of both labor markets and the role of education in equipping people to participate productively.