School & District Management

Economic Trends Fuel Push to Retool Schooling

By Lynn Olson — March 17, 2006 13 min read
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With an urgency not seen in decades, policy leaders concerned about America’s global competitiveness and widening income gaps within U.S. society are propelling issues of academic and workforce preparation to the forefront of the nation’s education policy debates.

Worried that current expectations and structures are ill suited to the 21st century, politicians, scholars, and business executives are pushing to ground educational standards far more closely in the knowledge and skills needed to succeed in the new economy.

To that end, they are arguing for a closer connection between K-12 and postsecondary education, on the assumption that decent-paying jobs with opportunities for advancement will require at least some education beyond high school, as well as lifelong learning to adjust to a fluid labor market.

The changes such leaders are advocating could have tremendous repercussions from preschool through graduate school. But do those calling for a new agenda for American education have the analysis right?

Wage Trends

Growth in hourly wages has been stronger for workers with more education.

*Click image to see the full chart.


SOURCE: Economic Policy Institute

“The profound problem or challenge in all this is that the relation between education and the economy is essentially a black box,” said Anthony P. Carnevale, an economist with the National Center on Education and the Economy, based in Washington. “It may be that as education more and more determines economic opportunity, we’re going to have to make these links a lot clearer.”

On one side of the debate are those who believe that fundamental shifts in the economy, brought about largely by technology, are creating a premium for knowledge and skills. Students must be prepared to take advantage of those new opportunities, they warn, or risk joining the ranks of the working poor.

On the other side are economists who see a more gradual rise in skill requirements and no shortage of college-educated workers over the next decade. They question the extent to which education offers a solution to the United States’ broader economic problems.

Meanwhile, large disagreements remain about how best to redesign secondary and postsecondary institutions to meet the shifting demands.

Impact of Computers

“There is a growing division within human labor itself—a divide between those who can and those who cannot do valued work in an economy filled with computers,” write the economists Richard J. Murnane and Frank Levy.

In their 2004 book The New Division of Labor: How Computers Are Creating the Next Job Market,they argue that not only have job titles changed, but so also have the very tasks within jobs, with routine procedures increasingly being handled by computers or outsourced to workers overseas.

A Sampling of College- and Workforce-Readiness Efforts

Concerns about the need to better prepare young people for college and careers have generated a host of recent initiatives.

American Diploma Project Network: In 2005, the Washington-based Achieve Inc. launched this coalition of 22 states committed to raising high school standards, strengthening curricula and assessments, and better aligning high school expectations with the demands of postsecondary education and work. The ADP Networks’ agenda aims to improve the preparation of all students for success in college and the workplace.

Data Quality Campaign: Ten national organizations have teamed up to launch this initiative, whose goal is to encourage state policymakers to improve the collection, availability, and use of high-quality education data from prekindergarten through the postsecondary level.

High School Honor States Grant Program: This $23.6 million program, operated by the National Governors Association, supports governor-led initiatives to reform high schools and improve college-ready graduation rates in 26 states. Recipients of the grants have pledged to follow the blueprint agreed to by governors and business leaders at the 2005 National Education Summit on High Schools.

Partnership for 21st Century Learning Skills: Formed in 2002, this coalition of business, education, and policy leaders is focused on infusing a set of “21st-century skills” into education, including thinking and problem-solving; information and communication skills; interpersonal and self-direction skills; global awareness; financial, economic, and business literacy; and civic literacy. The partnership is currently working with North Carolina Gov. Michael F. Easley and West Virginia Governor Joe Manchin III on statewide skills initiatives.

Tapping America’s Potential: By 2015, this coalition of 15 business organizations wants to double the number of college graduates with bachelor’s degrees in science, technology, engineering, and mathematics. Earlier this month, it kicked off a national campaign to place math and science education at the top of the U.S. competitiveness agenda.

U.S. Chamber of Commerce: The chamber’s Center for Workforce Preparation is collaborating with five states—Florida, New Jersey, New York, Rhode Island, and Washington—and the District of Columbia to develop a “work-readiness credential” based on a portable assessment, scheduled for release in June. Initiated in response to business concerns about the difficulty of finding qualified applicants for entry-level jobs, the credential is based on a cross-industry standard, defined by experts from multiple business sectors, of what entry-level workers need to be able to do to be fully competent.

SOURCE: Education Week

The result is a “hollowing out” of the occupational structure and an increasingly unequal income distribution, they say. At the bottom end of the pay scale are personal-service jobs held by the working poor, such as janitors, cafeteria workers, and security guards.

At the upper end are jobs that require extensive skills and in which people such as managers, doctors, lawyers, engineers, teachers, and technicians use computers to increase their productivity.

“We’ve seen this extraordinary widening of the income distribution,” said Mr. Murnane, a professor at Harvard University’s graduate school of education, “and a key piece of it is this growth in the college-high school earnings differential. I see this as a real threat to democracy.”

College graduates in the United States earn on average 80 percent more than high school graduates—a gap that has more than doubled in the past two decades, even as the number of college-educated workers has risen. High school dropouts are four times more likely than college graduates to be unemployed.

Mr. Carnevale describes that phenomenon as “middle-class dispersion,” with high school dropouts and graduates falling out of the middle class between 1976 and 2004 and those with bachelor’s degrees or more rising into higher income brackets. “What is striking about this is the ante keeps going up,” he said. “We are certainly creating an hourglass-shaped society, ... and it’s around educational attainment.”

A Skills Shortage—or Not

Other economists agree that there’s a substantial income divide but see no evidence of a looming skills shortage or of a surge in the need for college-educated workers in coming years.

After analyzing U.S. Bureau of Labor Statistics data on projected shifts among 724 occupations between 2002 and 2012, for example, the economist Lawrence Mishel, the president of the Washington-based Economic Policy Institute, concluded that the jobs of the future would require only slightly greater education credentials than those of today.

In 2002, about 27 percent of workers were in occupations requiring a college degree or more, he calculates. That would rise to 28 percent by 2012, with no expansion, he predicts, of jobs requiring only some college. The BLS does not track changes in education and skill demands within job categories, however.

Mr. Mishel points out that in the most recent business cycle—between 2000 and 2004—the real earnings of those with a bachelor’s degree actually fell by 5.2 percent. That could mean the supply of such workers is catching up with the demand, he says, or that the offshoring of skilled jobs is generating a downward pressure on earnings growth even among the college-educated.

While it’s right to stress the importance of a highly educated workforce, Mr. Mishel says, simply increasing Americans’ education levels won’t resolve issues of rising income inequality or global competition from such emerging powerhouses as China and India.

“If you were speaking to a sophomore class or a senior class of high school students, my message would be, ‘It’s in your best interest to get as much education and skill as you can because you would do better than you otherwise would,’ ” he said. “If I were sitting with the president [of the United States], it’s not clear to me that I can say we need to do something to accelerate the growth of college graduates.”

Similarly, in his Feb. 27 column in The New York Times, the economist Paul Krugman argued that the growing income inequality in the United States stems less from the rise of college-educated workers and more from the “giant income gains of a tiny elite.” Between 1972 and 2001, he noted, the wage and salary income of Americans at the 99.99th percentile rose 497 percent—creating a “rising oligarchy” that has little to do with the returns to education, he said.

A Leaky Pipeline

Economists generally agree, meanwhile, that demographic changes over the next two decades threaten to make income disparities worse unless the nation does a much better job addressing the educational needs of low-income and minority students. Those students traditionally have been least well served by the public schools and have far less access to postsecondary education and training than do their white and better-off peers.

In a report released in November, the National Center for Public Policy and Higher Education, based in San Jose, Calif., warned that if current trends continue, the proportion of workers with high school diplomas and college degrees will decrease and the personal incomes of Americans will drop over the next 15 years.

Earnings Advantage

The differential between the wages of college and high school graduates has grown over time.

College graduates earned an average of 80 percent more than workers with just a high school diploma in 2004, a gap that was far wider than in 1975. But from 2000 to 2004, the differential shrank as real earnings of college graduates fell by 5.2 percent.

*Click image to see the full chart.


SOURCE: Economic Policy Institute

That’s because the non-Hispanic white portion of the working-age population ages 25 to 64 is declining, and the minority portion is increasing. In 2000, 30 percent of white working-age Americans and 46 percent of Asian-Americans had at least a bachelor’s degree. But that was true for only 15 percent of African-Americans and 11 percent of Hispanics.

High school students seem to have gotten the message that college is important: More than 90 percent of seniors say they plan to obtain some form of postsecondary education. But a far lower percentage actually earn a degree of any kind.

A recent study by the National Center for Higher Education Management Systems, based in Boulder, Colo., found that for every 100 students who start high school, only 67 earn a diploma within four years. Of those, only 38 enter college, 26 are still enrolled after sophomore year, and just 18 graduate on time with either an associate’s or a bachelor’s degree. (“On time” is defined as three years for an associate’s and six years for a bachelor’s degree.)

One problem is that an estimated 40 percent of students in four-year colleges and 63 percent of those in two-year colleges must take at least one remedial course, decreasing the likelihood that they will earn degrees and forcing their institutions to invest resources in reteaching skills that should have been learned earlier.

One reason it’s hard to resolve the debate about the relationship between education and the economy is that both employers’ “needs” and the “skills” required for specific jobs are not easily defined or measured, says James Rosenbaum, a professor of sociology at Northwestern University in Evanston, Ill.

“Needs,” for example, are often measured by the wages employers pay for employees with certain years of education or test scores. But that doesn’t necessarily mean the workers actually need or use those academic skills or education levels on the job.

School-Work Disconnect

In an analysis for the American Diploma Project, for example, Mr. Carnevale and researcher Donna M. Desrochers found that 84 percent of workers in well-paid professional jobs had taken Algebra 2 or higher, and that the vast majority had taken four years of at least grade-level English.

The ADP—a coalition of states organized by Washington-based Achieve Inc.—then assembled teams of curriculum experts to identify the content within such courses, and to develop a preliminary set of workplace expectations for English and mathematics. Teams of English and math faculty members from K-12 and two- and four-year colleges in participating states also identified the skills needed for college, based on a review of their states’ high school graduation tests, as well as national college-admission and -placement exams.

The ADP found a growing convergence between the intellectual demands needed for work and higher education. For instance, both employers and college professors stressed correct English grammar and usage, effective oral and written communication skills, and the ability to define and research a problem and present a reasoned position or solution.

The 22 states that now belong to the ADP Network have agreed, among other steps, to make the college-preparatory curriculum the default curriculum for students, including the levels of math and English identified by Mr. Carnevale and Ms. Desrochers.

But Mr. Carnevale is quick to point out a “profound disconnect” between what students take in school and its ultimate use.

“It is true that if you’re going to get a good job in America, you’ve got to take Algebra 2,” he said. “On the other hand, when you look at college majors, and even more so when you look at occupations, the content in Algebra 2 has very little to do with either.

“That is, you never use that content again,” he said, “but it predicts your success in college and in the labor force. So it is effectively a screen.”

More recently, Mr. Carnevale has analyzed data from the Occupational Net Data System, a federally financed project in which a team of industrial psychologists interviewed workers in 1,000 occupations to identify the knowledge, skills, and abilities used on the job. Higher scores on measures of complex problem-solving, critical thinking, and creativity all were associated with both higher education levels and higher earnings.

Similarly, in The New Division of Labor, Mr. Murnane and Mr. Levy argue that high-wage jobs demand “expert thinking” skills (the ability to solve new problems that cannot be solved by rules, or to apply previously acquired knowledge to new, open-ended situations) and “complex communication” skills (the ability to convey information and persuade others of a particular interpretation of an idea).

Empowering students with such skills, the two authors write, will require high schools to re-evaluate both what and how to teach.

“These are not specific subjects that compete for classroom time with math, science, and social studies,” Mr. Murnane explained. “These are the tools that enable students to understand the concepts behind the facts.”

Academic Emphasis

Others worry that by focusing too much on academic skills and preparation for college, educators may ignore other skills and habits of mind that employers value, such as attendance, dependability, and a strong work ethic.

Demographic Divides

The percent of working-age people who have a bachelor’s degree varies among groups.

The proportion of Americans ages 25 to 64 with a four-year degree or higher has increased for all racial and ethnic groups, but the gaps between the various groups widened from 1980 to 2000, according to figures from the U.S. Census.

*Click image to see the full chart.


SOURCE: National Center for Higher Education Management Systems

They also question whether young people headed directly to the workplace or those already struggling in school would benefit more from a traditional college-preparatory curriculum than from one tailored to their situation. While the achievement level of high school graduates needs to rise, those experts say, the more immediate goal should be to equip many more of them with solid 9th- or 10th-grade-level skills.

In their 1996 book Teaching the New Basic Skills,Mr. Murnane and Mr. Levy calculated that a large part of the growing wage gap between high school and college graduates between 1978 and 1986 could be attributed to the stronger basic skills that college graduates had acquired in high school, which they defined as the ability to read and do math at the 9th grade level or higher.

Requiring all young people to complete a curriculum that demands far more, critics of such policies say, could backfire and fails to address students’ lack of engagement, motivation, or interest in academic coursework.

“If we’re losing students now,” said Robert I. Lerman, an economist at American University in Washington, “it’s unlikely, unless we’re able to really have massive gains in achievement up to the 8th and 9th grade, that just tacking on more of these high school requirements will do the job.”

While research has found that taking a full slate of academically rigorous courses in high school significantly increases students’ likelihood of completing a college degree, Mr. Lerman and others worry that a “college for all” mentality has devalued the role of career and technical training.

Research by John H. Bishop, an economist at Cornell University in Ithaca, N.Y., has found that taking career and technical courses in high school beyond the introductory level predicts higher wages and earnings eight years after graduation, with the effects of vocational coursetaking slightly larger for students who get an associate’s or bachelor’s degree.

“I don’t think we’ve even begun to exploit the possibilities of improved career-focused education and training,” said Mr. Lerman.

Most policy experts and researchers agree that the signals students now get from postsecondary institutions and employers about the skills they need and the importance of acquiring those skills in school are weak at best.

Conflicting tests for college admissions and placement send different signals to students about what they need to know to succeed in college, such experts say, and the fact that most students enroll in nonselective institutions means few feel any real pressure to take high school academics seriously.

On the labor-market side, employers typically don’t hire students directly out of high school for jobs with career ladders and benefits, and rarely look at high school transcripts, so few graduates see an immediate payoff to doing well academically.

“Our secondary schools can do a lot better,” said Mr. Bishop. “But the way to get better is … to somehow persuade our kids to work harder, and to hire teachers who know their subjects better and to empower them to demand more of the students.”

And that, many policy experts argue, requires tighter connections between secondary and postsecondary institutions and between schools and employers.

“All the roads to improving our economic position in the world lead through high school,” said Bob Wise, a former governor of West Virginia and the president of the Alliance for Excellent Education, a Washington-based group focused on improving secondary education. “It’s the jumping-off point for what people do with their lives, whether it’s on to college or whether they go into the workplace.”

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A version of this article appeared in the March 22, 2006 edition of Education Week as Economic Trends Fuel Push to Retool Schooling


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