Equity & Diversity

ETS Study Warns of Growing Inequality in Income, Skills

By Lynn Olson — February 05, 2007 5 min read
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The next generation of Americans will have lower literacy and math skills, on average, and experience greater income inequality than the current working-age population, a new report warns.

The study by the Princeton, N.J.-based Educational Testing Service draws on demographic projections, shifts in the labor market, and data on current gaps in educational attainment and skills to paint a sobering picture of America’s future.

If trends continue, the average literacy levels of the working-age population in the United States will decrease by about 5 percent by 2030, while the variability of the distribution will increase by about 7 percent, the authors estimate.

In a labor market that increasingly rewards education and skills, warns the report, “America’s Perfect Storm: Three Forces Changing Our Nation’s Future,” that could mean tens of millions of Americans who are unable to qualify for higher-paying jobs.

Gaps to Grow?

“Society is really changing, and the future, from an economic point of view, is not whether people will be able to find jobs, but whether they’ll be able to find jobs with long-term opportunities,” said Irwin S. Kirsch, a senior research director at the ETS and one of the study’s authors. “If they don’t, what happens to us as a society is we keep growing further and further apart.”

“America’s Perfect Storm” is posted by the Educational Testing Service.

The depiction of a population increasingly ill-equipped to compete on a global stage mirrors warnings in other recent reports.

But the new study focuses more explicitly than some of them on the inequitable distribution of education and skills within the United States and its implications for the future.

The report draws on data from the U.S. Bureau of Labor Statistics to show jobs associated with a college-level education accounted for a majority of the nation’s job growth between 1984 and 2005.

That trend is expected to continue, according to the report, with much of the future job growth concentrated in clusters of occupations associated with a college-level education, such as professional, management, technical, and high-level sales positions.

One consequence of the changing economy has been the increasing returns on schooling and skills, Mr. Kirwin said. The expected lifetime earnings of men with a bachelor’s degree, for example, are now 96 percent higher than those of men with only a high school diploma.

The study found that even among adults with college degrees, individuals with stronger literacy and numeracy skills typically earn more and are more likely to be employed in jobs actually requiring a college degree than their less literate peers.

But Jared Bernstein, a senior economist with the Washington-based Economic Policy Institute, cautioned that while some occupations requiring a college-level education may be growing the fastest, it’s from a relatively small base.

Among occupations adding the most jobs, based on BLS statistics, he said, five of the top 10 call for short-term, on-the-job training, including retail sales, food preparation, home health aides, and janitors and cleaners. “You’ll see lots of low-end jobs at the same time you see computer-software engineers,” he said. “We’ll create lots of jobs for folks who have less than a college education.”

“No one has ever made a convincing case that schools are failing to produce a workforce with the skills that employers need,” he added. “Despite the fact of how popular that argument is, it’s largely unsubstantiated.”

The ETS report draws on familiar statistics regarding the relatively low rates of high school graduation in the United States, particularly for African-American and Hispanic young people, and the large and persistent achievement gaps on the National Assessment of Educational Progress.

But it also probes data from national and international surveys of adult literacy that may be less familiar to a K-12 audience.

Adult-Literacy Rates

Those surveys categorize adult-literacy performance from level 1, indicating, at best, basic-level skills, to level 5.

In the 1992 National Adult Literacy Survey, about 70 million adults ages 16 to 65 were in levels 1 and 2. By 2030, that figure is projected to rise to about 118 million, including 30 million more in level 1, if current performance trends continue, the report says.

That’s because the U.S. population is becoming increasingly diverse, with immigration having a significant impact on the composition of the workforce. Black, Hispanic, and Asian adults in the United States were significantly more likely to perform in the lowest levels in prose literacy on the survey than non-Hispanic white adults.

The Hispanic share of the population, fueled by immigration and higher birth rates, is projected to grow from 14 percent in 2005 to slightly more than 20 percent by 2030. And, if current patterns continue, many of that group will lack high levels of education and skills.

For example, 57 percent of the country’s 16- to 64-year-old Hispanic population in 2004 was foreign-born, and more than half that group of immigrants lacked a high school diploma. Almost 80 percent of immigrants who have not earned a high school diploma report not speaking English well, or at all.

“If you acknowledge that we’re in the midst of a storm,” Mr. Kirsch said, “then we can either sit back, and watch what happens, or we can choose to make investments in policies that would try to return us to a period of more shared prosperity.”

Study Panel Forming

While the report does not make specific recommendations, the ETS plans to convene a panel of education and business leaders in the next few months to suggest recommendations based on the report and publish a white paper.

“I’m not naive enough to think that schools are the only thing that need to improve,” Mr. Kirsch said, “but given all the changes that are on the horizon in terms of the economy, I don’t see how people are going to have a real opportunity unless we find ways of improving the overall skill levels of the population and narrowing the gaps.”

A version of this article appeared in the February 07, 2007 edition of Education Week as ETS Study Warns of Growing Inequality in Income, Skills


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