next »

[pclark]

here’s the link  http://chronicle.com/free/v54/i46/46b01001.htm
 
First the article goes over the familiar history:
Computers did it. Among both Democrats and Republicans, that is one of the most frequently cited explanations for the post-1975 spike in American wage inequality. As the story goes, information technology has transformed almost every job, increasing employers' thirst for workers with advanced skills and college credentials. In the lingo of economists, this is "skills-biased technological change."

Goldin and Katz throw doubt on this, and after all, computers are becoming easier and easier to use, no?  When one can put up a web page in less than 10 minutes, is computer skill really advanced anymore?

Next the article hones in on what may explain the recent era:
"There was enormous growth in educational attainment between 1900 and 1970," Goldin says in an interview. "But after 1970, the growth in attainment became much more sluggish. Putting those two parts together, you can explain a large amount of the story of wage inequality in the 20th century...Goldin and Katz concede that institutional features — trade policies, labor laws, and so on — have also helped to shape American inequality over the last century. But as a rough cut, they say, the simple supply and demand of skilled labor — the race between education and technology — tells most of the story…"Education has not kept pace," says Katz. "In the early 20th century, we created almost universal access to high school. We have not done the same with college, which essentially we would need to have done to have kept this sort of widespread prosperity present."

Here’s the kicker:
Goldin and Katz…are scrutinizing the recent growth of wage inequality within the group of people who hold college degrees. "There has been much more growth of inequality among college graduates than among noncollege workers," Katz says. Only some people, he says, are coming out of college with the high-level abstract-reasoning skills that fully complement the new information technologies and command high salaries. Workers with "midlevel" skills, by contrast, are more likely to see their tasks simply replaced by computers.  Does that mean, then, that too many people are going to college, and that the rewards of a B.A. are overrated, as some commentators have recently suggested?  "That's absolutely wrong," Katz says. "The reason we know that is the following: It's true that there's growing inequality among college graduates. But there's shrinking inequality among noncollege workers. The market is very bad for people with only a high-school diploma — they're not doing much better than people who dropped out in the eighth grade. So the return [on investment] to college is still very high. Even if you wind up in the bottom half of the college group, you're still much better off than in the top half of the high-school group."

Full disclosure:  I haven't read any of the sources the article refers to, merely the article itself, but I am curious to know your thoughts on this article, especially vis-a-vis Marty Nemko and the overrated bachelor's degree.

[litcrittr82]

I'm glad you posted this, because I was thinking about posting excerpts from it as well.  I find the "it's the computers!" claim pretty absurd, given how basic 'industry' work with computers really is.  You don't need advanced knowledge, programming knowledge, or particular technical skills to use MS Word and conduct a Google search.  Even spreadsheet software is pretty straighforward for anyone with a HS education who passed algebra.  For the kinds of entry-level jobs occupied by people who hold college degrees, aside from engineering, sciences, and accounting/finance, using XML is about as hairy as it's going to get.  In other words, I like any explanation for the wage gap OTHER than the technology explanation, and I like what I've read thus far about Goldin and Katz. 

 

[kmellendorf]

I very much agree with the article.  I cannot say that I have access to official data, but I have listened to people with a wide range of backgrounds comment on the "value of education".  Ages range from midteens to early forties.  I am sure there are many factors that apply, but these seem to arise most often:  value, time.

Many believe that an education has no significant value.  A common reference in such a discussion is the media.  Many view teachers as a nuisance rather than a source of significant information.  I often hear this saying:  If you can, do; if you can't, teach.  What is taught in the first few grades is viewed as worthless by many:  If you will never use it, you don't need to lean it.

Another reference is time.  Spending money for at least four years before financial returns are possible is too long for some people.  Immediate payback is desired and often expected.  Long term investment and patience are not particularly common in today's society.

[daurousseau]

The answer lies in the years cited, rather than in the iffy proposition that some blip in the education stats for those years has independent significance. 1971 defines the end of the post-war economic boom and the beginning of the long-term decline in the rate of profit. There are only a few options for turning around the rate of profit, and most of them were not available during the 1970s: lengthening of the working day, destruction of capital, expansion of markets, and cutting wages. With the 1980s all these became options. The gap in wages is simply the emiseration of the working class predicted by Marx.

A lot of people see education as a way out of the working class, of course, but the nature of a pyramid is that only so many layers are available at the top. So education has become for many only a stepping stone to other jobs inside the working class. As we have seen in Silicon Valley and elsewhere, these are subject to the same downward pressures as factory jobs after a while, when there is no union movement to force employers to raise their profits elsewhere than from the laborers' share.

[zharkov]

Only some people, he says, are coming out of college with the high-level abstract-reasoning skills that fully complement the new information technologies and command high salaries. Workers with "midlevel" skills, by contrast, are more likely to see their tasks simply replaced by computers. 

Half the colleges are below average; half of their graduates graduate in the bottom half of their class.  And it is likely that many of these grads have essentially taken four years of associates-level classes, since so many schools are retention and tuition driven.

[eumaios]

This part that pclark quotes is interesting:

Goldin and Katz…are scrutinizing the recent growth of wage inequality within the group of people who hold college degrees. "There has been much more growth of inequality among college graduates than among noncollege workers," Katz says. Only some people, he says, are coming out of college with the high-level abstract-reasoning skills that fully complement the new information technologies and command high salaries. Workers with "midlevel" skills, by contrast, are more likely to see their tasks simply replaced by computers.  Does that mean, then, that too many people are going to college, and that the rewards of a B.A. are overrated, as some commentators have recently suggested?  "That's absolutely wrong," Katz says. "The reason we know that is the following: It's true that there's growing inequality among college graduates. But there's shrinking inequality among noncollege workers. The market is very bad for people with only a high-school diploma — they're not doing much better than people who dropped out in the eighth grade. So the return [on investment] to college is still very high. Even if you wind up in the bottom half of the college group, you're still much better off than in the top half of the high-school group."

Yes; "midlevel skills." During my first year in the magazine trade, I enjoyed going back to the art department and watching the paste-up artists work. That was back when magazines were made with mechanical boards, columns of type on repro paper, and waxers. The typesetters' and paste-up artists' jobs are gone. When I landed my first assistant-editor job, a publisher needed an art department of several people--several employees--to make magazines. At the last magazine I edited, we sent text files and photos to a freelance designer. Two days later, she sent proof pages for us to read. Thanks to desktop computers, scanners, and so forth, a couple of jobs with salaries and benefits were replaced by a contractor doing piecework. Now, it's true that some former layout artists adapted and became Web-page designers--mostly as contractors doing piecework. Others watched their careers disappear.

I've never been a master mechanic; never went to mechanic school. Almost 30 years ago, though, I worked in an auto-repair shop. The regular customers would bring in their cars for tune-ups every 8 or 10 thousand miles. I'd replace the spark plugs, install new points and condensor (capacitor, technically speaking), set the dwell angle and ignition timing, replace the air and fuel filters, tinker with the idle-speed and idle-mixture screws, and send the customer on his way with a car that ran better than when it was new. Every 8 to 10 thousand miles. Cars no longer need that kind of maintenance. A shop needs some highly trained technicians and some grease monkeys to do simple stuff like changing oil. The shop doesn't need anyone with the level of skills I had when I was twenty years old. A mechanic like me is either too knowledgeable or not knowledgeable enough for the jobs in a contemporary shop.

We can all think of more examples. As mid-level jobs vanish, most of the people who do them have to move down. That depresses wages in the bottom end of the economy. The higher-level jobs require more and more technical knowledge, skills, or intelligence.

Why shouldn't the trend described in the paragraph quoted above eventually apply to bachelor's degrees? That is, will we eventually talk about growing wage inequality among people who have advanced degrees but less inequality among people with bachelor's degrees because a B.A. or B.S. just isn't enough anymore?

[zharkov]

Why shouldn't the trend described in the paragraph quoted above eventually apply to bachelor's degrees? That is, will we eventually talk about growing wage inequality among people who have advanced degrees but less inequality among people with bachelor's degrees because a B.A. or B.S. just isn't enough anymore?

Alternatively, we have some kind of leaving exam to gauge the outcomes of each and every bachelor's program in the country.  (Or even more drastic, have high stakes leaving exams, no pass, no BA.)  I think that we'll see it in 5 or 10 years.  An example of such a leaving exam is the Collegiate Learning Assessment (see http://www.cae.org/content/pro_collegiate.htm ).

I'm not a big fan of standardized testing, but even less of a fan of BA programs that don't prepare students with the high level skills mentioned in the article.

[pyshnov]

This article, as well as the quotations from the book discussed, are an example of nonsense to me. Between the conclusions and the data there is no obvious connection, let alone - the cause and effect relationships. There could be another hundred of such articles giving four hundred of other interpretations of the data in the book, and, another hundred of books giving four hundred of other interpretations to the same data. The choice of data is also completely incomprehensible to me.

I would look at the data that are related to the ways of obtaining higher wages. First, where the higher wages are paid? I would say - in large corporations. Can a high school graduate be hired there? Only as a technical staff; but a college graduate gets from the start a position of manager. Why? Did the college graduate learn the trade? Well, he learned how to behave with the boss and in a department and in an organisation. This is his specific skill, that's all. A BA in English will work as a manager in making food. A BSc in Zoology - a manager in making rubber soles. The best skill is given by the Bachelor in business administration, here there is no any specific skill, except being a universal manager. A BA knows how to be a nice fit anywhere, and that's what corporations are giving the high salaries for.

The short story of the corporation is this. The product is made in enormous quantities on the production lines run by just a few workers. The chemistry of food and rubber is made by a couple of chemists. The sales are enormous but as a matter of fact only a miniscule percentage of the population is needed. The rest of the population would be unemployed rioters..., if not for the fact that nobody wants riots. Therefore, corporations must employ BA and BSc who have know-how in behavior, can listen to BS with the straight face and learn to generate the same in higher positions. I suspect that many high school graduate types will make a mistake of asking for real work.

What actually is discussed in the article (and, apparently in the book that the article is discussing) is irrelevant and smart. BTW, a kid of 12 is the best guy to operate computers.

[eumaios]

Therefore, corporations must employ BA and BSc who have know-how in behavior, can listen to BS with the straight face and learn to generate the same in higher positions.

Pyshnov, you have written the only business-school curriculum worth having. It will work just as well for programs that train people to be administrators in education. I say we give most students the sentence quoted above and a copy of Machiavelli's The Prince and turn them loose. Save everyone a lot of time and frustration.

[zharkov]

Only some people, he says, are coming out of college with the high-level abstract-reasoning skills that fully complement the new information technologies and command high salaries.

Thinking about this article, I come to the conclusion that "high level abstract reason skills" is what most of us would just call math.  Or to say that differently, math is -- more or less -- abstract reasoning.

Information technologies basically do the scut work -- crunch numbers and compile data -- but they don't reason.  One needs to be pretty sharp to, for example, write a database report and interpret the results.  IT is the dataset and software; the analyst adds the real value here.

Where I live, pyshnov's shoe shops left 50 or 75 years ago.  Maybe his examples are correct, but essentially irrelevant to my state's economy.  My state's economy needs sharp people who can work as underwriters and portfolio managers; those are the only kind of jobs that big corporations hire for where I live. And if you don't make the cut, then there is retail.

[pclark]

This is a compelling thread so far. 

One comment for Psyhnov:  "Can a high school graduate be hired there? Only as a technical staff; but a college graduate gets from the start a position of manager."

Except that surprisingly often the college graduate gets hired only as a worker bee as well.  Nevertheless, one never sees the high school grad get the management job, so your point is well taken.