Education and Employment

Stephen DeAngelis

November 18, 2009

Just over a year ago, while President Obama was running for office, he gave a major economic speech in Toledo, Ohio, during which he declared: “Today I’m proposing a number of steps that we should take immediately to stabilize our financial system, provide relief to families and communities and help struggling homeowners. It’s a plan that begins with one word that’s on everybody’s mind, and it’s easy to spell: J-O-B-S.” Fast forward to today and one can only be disappointed that an effective job creation strategy has yet to emerge. As New York Times op-ed columnist Charles M. Blow writes, “Job creation has dropped from top priority to one of many, and President Obama has been remanded to pandering for patience and offering excuses. On the one hand, he argues the tortured rationale that there is good news in the awful numbers: Things are still getting worse but at a slower pace. On the other, he incessantly reminds us that he inherited the crisis. The implication: Don’t blame me, blame Bush. But this president can’t keep deflecting to the last one. Pain is presently felt. The crisis that took form on Bush’s watch is being experienced on Obama’s. Fair or not, finger-pointing is not effective policy.” [“Obama’s to Fix,” 6 November 2009]. Candidate Obama had the solution correct, but he has yet to produce the strategy that can achieve it. As Blow puts it, “It isn’t President Obama’s fault that he inherited this mess, but it is his to fix, and he must make haste. To paraphrase his Toledo prelection: you need to do it not five years from now, not next year, you need to do it right now. J-O-B-S.”

The unemployed and underemployed in America don’t feel that the U.S. is on the verge of recovery. As one headline declared, “Of all the signs of recovery being seen, ‘help wanted’ is not one of them.” The graphic that accompanied Blow’s op-ed column reveals the devastating reality of the current crisis.

Jobs

Amid this awful news, “the White House is touting reports from recipients of stimulus funds asserting that they have created or saved 640,000 jobs so far.” [“Why won’t Obama give you a job?” by Alec MacGillis, Washington Post, 8 November 2009]. But those numbers have been questioned. MacGillis’ article is about getting people to work by “subsidizing workers’ private-sector employment or by creating new government-paid jobs.” I agree with the White House that those approaches may not produce long-term value and, once started, such programs are difficult to end. Germany, however, has used some of those strategies to keep unemployment in check with some success. MacGillis insists that some of the recommendations for creating immediate job opportunities could translate into long-term benefits. He writes:

“There is plenty of direct job creation that could be done, short of heavy infrastructure, that could have lasting value. The liberal Economic Policy Institute has drafted a plan that, along with a new business tax credit for hiring that the White House is already considering, includes a pure public jobs proposal: giving money to states and cities to hire people to paint schools, board up vacant homes, staff child-care centers and reopen library branches. Workers would be paid the market wage. It would cost $35 billion for a year, not much more than the combined price tag for the homebuyers’ tax credit and the $250 checks that Obama has proposed sending to Social Security recipients. [Economics professor Robert] Lerman offers a variation: Pay people lower-than-market wages, maybe $8 an hour, and reserve the jobs for those who really can’t find better work. Instead of extending unemployment benefits over and over, the government would help people develop job skills and would get something in return. He estimates the cost of 1 million jobs (including supervisors) at $30 million, or about $30,000 for each job created, compared with the $92,000 per job that the White House estimates its approach is costing. And taxpayers would be able to see clearly that the spending was putting people to work — instead of questioning, as many are now doing, the reliability of the job totals that the White House is attributing to the stimulus.”

Even though the President has been criticized for “pandering for patience,” I fear he is right. America’s long-term economic health depends on the creation of substantive jobs that provide career opportunities for U.S. workers for the next generation of workers. Creating such jobs is going to take a few years and will require a change of strategy beginning with how we educate and train the work force. Professor Lerman’s recommendation for creating job opportunities may be a start, but we have to start immediately educating the next tranche of workers — beginning with those just getting started with their education. The proof that our education system needs to change can be found in today’s job market. There are jobs begging to be filled right now; but available workers don’t have the skills to fill them. That has to change. The current recession has exposed the U.S. education system and many of its work force to the sad truth that they are not up to meeting the challenges of the future. As New York Times‘ op-ed columnist Thomas Friedman puts it, they have been “swimming without a suit.” [“Swimming without a Suit,” 22 April 2009]. Friedman writes:

“Warren Buffett once famously quipped that ‘only when the tide goes out do you find out who is not wearing a bathing suit.’ So true. But what’s really unnerving is that America appears to be one of those countries that has been swimming buck naked — in more ways than one. … In our case, the excess consumer demand and jobs created by our credit and housing bubbles have masked not only our weaknesses in manufacturing and other economic fundamentals, but something worse: how far we have fallen behind in K-12 education and how much it is now costing us.”

Friedman points out that in the 1950s and 1960s, when America was becoming the world’s economic engine, “the U.S. dominated the world in K-12 education.” Since then, the U.S. has not only slipped a rung or two on the educational ladder, it has fallen dramatically. As Friedman puts it, “Today, we have fallen behind in both per capita high school graduates and their quality. Consequences to follow.” Part of the slow U.S. job recovery picture can be directly attributed to its past demise in educational quality. You don’t recover from that quickly. This gloomy picture of U.S. education is not simply Friedman’s personal opinion. It’s based on a study entitled The Economic Impact of the Achievement Gap in America’s Schools completed by the McKinsey consulting group. Friedman continues:

“In the 2006 Program for International Student Assessment that measured the applied learning and problem-solving skills of 15-year-olds in 30 industrialized countries, the U.S. ranked 25th out of the 30 in math and 24th in science. That put our average youth on par with those from Portugal and the Slovak Republic, ‘rather than with students in countries that are more relevant competitors for service-sector and high-value jobs, like Canada, the Netherlands, Korea, and Australia,’ McKinsey noted. Actually, our fourth-graders compare well on such global tests with, say, Singapore. But our high school kids really lag, which means that ‘the longer American children are in school, the worse they perform compared to their international peers,’ said McKinsey. There are millions of kids who are in modern suburban schools ‘who don’t realize how far behind they are,’ said Matt Miller, one of the authors. ‘They are being prepared for $12-an-hour jobs — not $40 to $50 an hour.'”

In a nutshell, that is the conundrum facing the President and the reason that job creation is such a difficult thing to achieve. The situation is not hopeless. Friedman continues:

“It is not that we are failing across the board. There are huge numbers of exciting education innovations in America today — from new modes of teacher compensation to charter schools to school districts scattered around the country that are showing real improvements based on better methods, better principals and higher standards. The problem is that they are too scattered — leaving all kinds of achievement gaps between whites, African-Americans, Latinos and different income levels. … There are some hopeful signs. President Obama recognizes that we urgently need to invest the money and energy to take those schools and best practices that are working from islands of excellence to a new national norm. But we need to do it with the sense of urgency and follow-through that the economic and moral stakes demand.”

Not keeping its educational system relevant cost the U.S. dearly in the past and will continue to cost it in the future if the situation is not corrected.

“If America had closed the international achievement gap between 1983 and 1998 and had raised its performance to the level of such nations as Finland and South Korea, United States G.D.P. in 2008 would have been between $1.3 trillion and $2.3 trillion higher. If we had closed the racial achievement gap and black and Latino student performance had caught up with that of white students by 1998, G.D.P. in 2008 would have been between $310 billion and $525 billion higher. If the gap between low-income students and the rest had been narrowed, G.D.P. in 2008 would have been $400 billion to $670 billion higher.”

In addition, all of those good paying jobs that currently unfilled because there are no skilled workers to fill them would be providing livable incomes for someone and the unemployment rate would be slightly lower. Friedman’s New York Times‘ colleague, Bob Herbert, agrees with Friedman’s assessment of America’s educational system [“Peering at the Future,” 29 September 2009]. He writes:

“Visiting classrooms is like peering into the nation’s future. Right now the view is somewhat frightening. American kids drop out of high school at an average of one every 26 seconds. Only about a third of those who graduate are prepared to move on to a four-year college. And in the savage economic downturn that has gripped the U.S. for the better part of the past two years, retrenchment in public schools and colleges is widespread. For a country that once led the world in educating its citizens, we are now moving decidedly in the wrong direction.”

Herbert’s column focused on the work being done by the Bill and Melinda Foundation in the area of education. He continues:

“The Gateses are co-chairs of the Bill and Melinda Gates Foundation, the world’s largest philanthropic organization. They are investing billions of dollars and much of their considerable energy in an effort to spark not just change but a transformation in the way American youngsters are educated. It’s an overwhelming challenge, and not all of their early efforts have borne fruit. Educating children in the U.S. means engaging issues like poverty and homelessness, racial and ethnic transformations and entrenched, outdated ways of doing things. But the Gateses seem determined to master this issue and do what they can to help reverse the current dismal trends. … The issues can be maddeningly complex. There are school districts in which much of the population is aging and predominantly white and the taxpayers are less than enthusiastic about supporting a school population that is largely poor and black or Hispanic. There are schools trying desperately to raise their test scores, an important measure of accountability, while at the same time trying to keep poor and struggling youngsters from dropping out — the very youngsters who are often a drag on overall test scores. But the many challenges will have to be met and overcome if the U.S. is to maintain a successful society. The American work force is becoming increasingly black and Hispanic, and a two-year or four-year college credential has become a prerequisite to a middle-class standard of living. With that in mind, it’s not difficult to see how disastrous it is to have nearly 50 percent of minority kids dropping out of school before they even get a high school diploma.”

In a follow-up column to his earlier one, Friedman writes that there is some truth to the assertion that “our struggling public schools — was actually a critical, but unspoken, reason for the Great Recession.” [“The New Untouchables,” 21 October 2009] The assertion was made to Friedman by Todd Martin, a former global executive with PepsiCo and Kraft Europe and now an international investor. Of that encounter, Friedman reports:

“Now that we are picking up the pieces, we need to understand that it is not only our financial system that needs a reboot and an upgrade, but also our public school system. Otherwise, the jobless recovery won’t be just a passing phase, but our future. ‘Our education failure is the largest contributing factor to the decline of the American worker’s global competitiveness, particularly at the middle and bottom ranges,’ argued Martin. … ‘This loss of competitiveness has weakened the American worker’s production of wealth, precisely when technology brought global competition much closer to home. So over a decade, American workers have maintained their standard of living by borrowing and overconsuming vis-à-vis their real income. When the Great Recession wiped out all the credit and asset bubbles that made that overconsumption possible, it left too many American workers not only deeper in debt than ever, but out of a job and lacking the skills to compete globally.’ This problem will be reversed only when the decline in worker competitiveness reverses — when we create enough new jobs and educated workers that are worth, say, $40-an-hour compared with the global alternatives. If we don’t, there’s no telling how ‘jobless’ this recovery will be.”

It takes nearly 20 years to create an educated individual with the skills necessary to compete in the information age. It might be pandering to patience to argue that good jobs are not right around the corner, but it’s also painting a more realistic picture. Friedman concludes:

“Those who are waiting for this recession to end so someone can again hand them work could have a long wait. Those with the imagination to make themselves untouchables — to invent smarter ways to do old jobs, energy-saving ways to provide new services, new ways to attract old customers or new ways to combine existing technologies — will thrive. Therefore, we not only need a higher percentage of our kids graduating from high school and college — more education — but we need more of them with the right education. As the Harvard University labor expert Lawrence Katz explains it: ‘If you think about the labor market today, the top half of the college market, those with the high-end analytical and problem-solving skills who can compete on the world market or game the financial system or deal with new government regulations, have done great. But the bottom half of the top, those engineers and programmers working on more routine tasks and not actively engaged in developing new ideas or recombining existing technologies or thinking about what new customers want, have done poorly. They’ve been much more exposed to global competitors that make them easily substitutable.’ Those at the high end of the bottom half — high school grads in construction or manufacturing — have been clobbered by global competition and immigration, added Katz. … Just being an average accountant, lawyer, contractor or assembly-line worker is not the ticket it used to be. As Daniel Pink, the author of ‘A Whole New Mind,’ puts it: In a world in which more and more average work can be done by a computer, robot or talented foreigner faster, cheaper ‘and just as well,’ vanilla doesn’t cut it anymore. It’s all about what chocolate sauce, whipped cream and cherry you can put on top. So our schools have a doubly hard task now — not just improving reading, writing and arithmetic but entrepreneurship, innovation and creativity. Bottom line: We’re not going back to the good old days without fixing our schools as well as our banks.”

I couldn’t agree more. If you want a resilient society, you need to stress entrepreneurship, innovation, and creativity. That is why the pages of this blog are filled with articles on those subjects. Education plays an enormous role in preparing individuals to think clearly and critically. Education exposes tomorrow’s entrepreneurs to possibilities. Entrepreneurs, in turn, create jobs and creative people keep theirs. In a country struggling to create jobs, those in power need to understand that the education system needs to be fixed in order to ensure a better long-term future for America.