While official unemployment in the US has fallen to 7.3%, few would argue our jobs recovery since 2009 has been tepid. This is underscored by America’s broader unemployment figure including “discouraged” workers—those no longer looking for work—which has soared to almost 14%; it doesn’t take into account 2+ million Americans in prison or the astonishing 14 million drawing disability checks. Thus in total, roughly one-quarter of the US working age population doesn’t hold a full-time job.
Historically in this country, learning has meant earning. Median US household income is about $50,000. Households in which no one has finished high school drops to less than half of this, while households with college degrees are roughly 50% higher. According to the Bureau of Labor Statistics, more education has also translated into lower unemployment rates.
If this generation of Americans is the first not to live better than the previous one, it may be because it is the first generation in memory to not have achieved more education. High school graduation rates stand at less than 75%. The Organization for Economic Cooperation and Development notes that the odds of a young American attaining higher education if his or her parents did not do so are less than 30%, which ranks as one of the lowest levels among the 34 OECD countries.
Part of America’s unemployment conundrum simply lies in the fact there is more competitive human capital globally. A generation ago, America had among the world’s highest college completion rates—almost double the OECD average. That number has not budged in 30 years. Indeed, the country with the highest college completion rate is now South Korea at nearly 60% (pdf). According to the OECD, graduation rates for our America’s older generation (55- to 64-year-olds) and younger (25- to 34-year-olds) are flat—roughly 40%—while in many other developed countries the younger generation far surpasses the older. The plateau in US college completion rates contrasts sharply with gains in emerging markets. Take China: In 1976 with nearly 1 billion people, the country enrolled less than 50,000 in college. By 1998, this rose to a remarkable 18 million people and by 2007 China surpassed the US in total college graduates. Today, China has over 25 million students enrolled in higher education, 4 million more than in the US.
How did this happen?
For much of the 20th century, America kept ahead. The 2008 book, The Race Between Education and Technology, notes that until the 1970s, we did a decent job of educating the country to keep pace with technological advances and provide a broad dispersion of America’s economic gains. But somewhere in the ’70s and ’80s, US education began to lose the race with technology; skill advancement no longer occurred broadly. Those lucky enough to keep pace with the new required skills began to see wage gaps increase versus those who didn’t. At the same time, millions of educated workers from dozens of emerging markets in Asia and elsewhere started to compete for many industrial and low-tech jobs. These phenomena have probably contributed to America’s growing inequality, an education/skill/wage premium thesis also confirmed by the invaluable work of Thomas Picketty and Emmanuel Saez (pdf). The OECD agrees; its 2012 Economic Survey of the United States noted US demand for university-educated workers has outstripped supply for a generation to the point that US companies are now no longer more likely to innovate than companies in the other OECD member countries. So while we try to consider short–term stimulus solutions to reduce unemployment, we might consider four new, longer-term education policies to put the US back on the right path:
1. More schooling, reoriented calendar
Our public education system is a vestige of the 18th century, when 85% of Americans were farmers and schools lacked air conditioners. Who says our system should only be from kindergarten through 12th grade, with long summer breaks?
In the global age, we need to create better students by starting public education much earlier. Influential Harvard studies note that without sufficient early nurturing, nutrition, and stimulation, a child’s ability to learn and thrive is severely impaired over a lifetime. Indeed, income levels that a child is born into generally determine his lifetime economic and health trajectory. This is sad but true; children who are deprived—both economically and socially—routinely enter American kindergartens already “left behind.” Many studies note the wide economic disparities and problems later in life could be alleviated through earlier interventions in education. As former undersecretary of education Linus Wright observes:
…what if all children during their very early years were given the tools to be successful in the school environment? They would be better able to make good choices, follow a productive path, and have greater chance of success in their college years. As a matter of economic policy, this change could substantially reduce expenses, at all levels, associated with remedial education and student dropouts—not to mention potential longer-term savings in reduced welfare, incarceration, and Medicaid costs.
By mandating full-day public education for all 3- and 4-year olds, America would begin cultivating human capital much earlier. How to pay for this? Wright suggests cutting 12th grade—the least productive and most expensive of all school years. The money saved by eliminating it would cover more robust early-childhood programs, which have proven to be the most productive and cheapest. These could snowball, boosting high-school graduation, college-enrollment, and employment rates in a virtuous circle. We might also consider more school days per annum with shorter summer vacations. Data suggest that prolonged summer breaks actually lead to learning loss and the need for reteaching; we might be better off with three four-week breaks spread more evenly throughout the year. Improving student capabilities over a lifetime would also help to increase college completion rates. Even at the community college level, half of all students need remedial education and have trouble completing programs.
2. Wider range of higher education
An important Georgetown study highlights that some 29 million jobs in America pay middle-class wages that require higher education but not necessarily a four-year degree. Five learning pathways to these jobs including (1) employer-based training, (2) industry-based certifications, (3) apprenticeships, (4) postsecondary certificates by colleges, and (5) associate’s degrees.
These suggestions could leverage the vast American community college system, more than 1,200 institutions, spread across the country. Unfortunately, labs and technology equipment cost money, and federal funding for these institutions is currently modest, with most monies going to four-year public schools. Part of the solution lies in tapping into local and regional businesses for more cooperative educational programs. Municipal governments and colleges, in combination with state and federal incentives, should encourage potential employers to help tailor programs to their local needs. In addition, federal funding incentives could promote relationships among community colleges, regional technical schools, and employers to build more cooperative-style schooling that includes internships and work programs, similar to what has been done in Germany and Switzerland.
3. Cheaper four-year degrees
There are two frequently cited reasons for failing to raise US college completion rates: poor preparation and exploding cost. The first may be fixable with some of the suggestions above. Improving people’s ability to learn through earlier education certainly should help student preparedness. Moreover, steering people away from four-year tracks toward one of Georgetown’s five suggested pathways would also reduce dropout rates.
While college costs have outpaced inflation for decades, there are other changes that could be implemented to curb such growth. Online education could certainly be harnessed to revamp the cost structure of college degrees. One of the largest costs of American schools is their bricks and mortar. The US residential college system is unique; with the exception of a few universities worldwide, most colleges are largely urban. The 500-acre suburban campus with beautiful quads, high-end dorms and frat houses, and professional football stadiums—while appealing—is something of a luxury.
It’s early days for online education, but there is increasing evidence that solid programming can be delivered this way. While we’ve all seen advertising from for-profit schools like University of Phoenix, some excellent public models such as Western Governor’s University have been able to develop solid online degrees and bring down tuition to roughly $6,000 per year. In 2013, Georgia Tech began offering an online master’s degree in computer science for a remarkable $7,000—a fraction of the cost of comparable residential degrees. As soon as we abandon the notion of “going off to college” and see higher education as merely advanced learning, we can begin to figure more cost-efficient ways to deliver it to more people.
4. Eliminate property tax-based public education
This is hugely controversial, but it has clearly shaped much of the American experience for a century. Property taxes have largely financed American public education, with very little federal funding. As wealthy zip codes can spend more on education, the overall system becomes uneven and reinforces skill gaps and socio-economic divides.
If we could start with a blank slate and look around the world, we would probably institute state and federal funding in public education like virtually every other country, and not fund education largely through property taxes. This would create a far more even system. For those who want to opt out of the public system, there will always be private alternatives. A political impossibility? Maybe, but not insurmountable if implemented over a 30-year period, for example, with re-balancing over time from real estate taxes towards state and local income taxes.
These educational recommendations have the potential for multiple dividends in America: building better human capabilities, better economic possibilities, better health, less inequality, and a more competitive workforce amid intense global competition.