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July 2013
The World of Work: Postsecondary Education Critical in the New Economy
By John Paul Galles

     Hindsight, though not always 20/20, helps us see more clearly the mass casualties of the undeclared war we’ve found ourselves in with the global economy, leveling the inequalities of wages and production. As we try to resurrect ourselves, and reconstitute our jobs and our businesses from the destruction of the Great Recession, we keep hoping that the worst is behind us.

     Not so for college graduates, however, who are experiencing an all-time high in unemployment with no immediate prospects for improvement. Not so for the displaced workers, misfortunes of business failures and layoffs, wondering themselves if they are any longer employable. Not so for the vital industries in this new economy who rue the dearth of qualified workers for positions left unfilled.

     We’re not done reeling from the damage, but with the precious resources we have left, it is important to assess the forces at work and put our available resources to the best use possible in negotiating this new terrain. First off—what is this new world of work and how does it work?

 

How Technology is Destroying Jobs

     A recent analysis by two academics summarized in the MIT Technology Review and quoted from herein quite frankly describe the current phenomenon as “How Technology is Destroying Jobs.”1

     “Impressive advances in computer technology—from improved industrial robotics to automated translation services—are largely behind the sluggish employment growth of the last 10 to 15 years.

     “Even more ominous for workers, the MIT academics foresee dismal prospects for many types of jobs as these powerful new technologies are increasingly adopted not only in manufacturing, clerical, and retail work but in professions such as law, financial services, education, and medicine.

     “They believe that rapid technological change has been destroying jobs faster than it is creating them, contributing to the stagnation of median income and the growth of inequality in the United States. And, they suspect, something similar is happening in other technologically advanced countries.”

     For the most damning piece of evidence, they point to productivity—the amount of economic value created for a given unit of input, such as an hour of labor—as a crucial indicator of growth and wealth creation and progress.

     “For years after World War II, the two lines closely tracked each other, with increases in jobs corresponding to increases in productivity...As businesses generated more value from their workers, the country as a whole became richer, which fueled more economic activity and created even more jobs.

     “Then, beginning in 2000, the lines diverge; productivity continues to rise robustly, but employment suddenly wilts. By 2011, a significant gap appears between the two lines, showing economic growth with no parallel increase in job creation.” The MIT academics call it the “great decoupling,” concluding that technology is behind both the healthy growth in productivity and the weak growth in jobs.

     “It’s a startling assertion because it threatens the faith that many economists place in technological progress. They assert that technology boosts productivity and makes societies wealthier, but they think that it can also have a dark side: technological progress is eliminating the need for many types of jobs and leaving the typical worker worse off than before.”

     They add to it the fact that median income is failing to rise even as the gross domestic product soars.

     “It’s the great paradox of our era. Productivity is at record levels, innovation has never been faster, and yet at the same time, we have a falling median income and we have fewer jobs. People are falling behind because technology is advancing so fast and our skills and organizations aren’t keeping up.”

     In addition to the automation of manufacturing, the academics point to a less dramatic change, but one with a potentially far larger impact on employment that is taking place in clerical work and professional services. “Technologies like the Web, artificial intelligence, big data, and improved analytics…are automating many routine tasks. Countless traditional white-collar jobs, such as many in the post office and in customer service, have disappeared.

     And, they say, “‘Digital versions of human intelligence’ are increasingly replacing even those jobs once thought to require people. It will change every profession in ways we have barely seen yet.”

 

New Economy?

     Some academics and economists have doubts that technology could account for such an abrupt change in total employment, but they do agree that computer technologies are changing the types of jobs available, replacing jobs which typically provided middle-class pay while at the same time creating higher-paying jobs requiring creativity and problem-solving skills, often aided by computers. Meanwhile, low-skill jobs demand has increased for others doing service work that is nearly impossible to automate.

     David Autor, an economist at MIT, says, those changes are resulting in a “‘polarization of the workforce’ and a ‘hollowing out’ of the middle class—something that has been happening in numerous industrialized countries for the last several decades.”

     Some argue that even if today’s digital technologies are holding down job creation, history suggests that it is most likely a temporary, albeit painful, shock; as workers adjust their skills and entrepreneurs create opportunities based on the new technologies, the number of jobs will rebound. The question, then, is whether today’s computing technologies will be different, be “disruptive,” creating long-term involuntary unemployment.

     Not everyone agrees with the MIT academics’ conclusions—“particularly the contention that the impact of recent technological change could be different from anything seen before. But it’s hard to ignore their warning that technology is widening the income gap between the tech-savvy and everyone else. And even if the economy is only going through a transition similar to those it’s endured before, it is an extremely painful one for many workers, and that will have to be addressed somehow.”

     Lawrence Katz, a Harvard economist, has shown that the United States prospered in the early 1900s in large part because secondary education became accessible to many people at a time when employment in agriculture was drying up. The result, at least through the 1980s, was an increase in educated workers who found jobs in the industrial sectors, boosting incomes and reducing inequality. That would suggest that a possible route to recovery may be investing more in the training and education of workers.

 

Recession Accelerating Need for Postsecondary Education

     Another powerhouse of education and workforce analysis, Georgetown University’s Center on Education in the Workforce, has released a comprehensive analysis of the jobs front in its report Help Wanted: Projections of Jobs and Education Requirements Through 2018. The report maintains that the recession is accelerating the shift to jobs requiring postsecondary education.

     The purpose of the report was to provide a detailed forecast of jobs and their education requirements because they believe that the ability of individuals to connect education, training and careers has become key to employability and to attaining and maintaining middle class status, and that in spite of its growing importance, our ability to match education alternatives with career options is woefully underdeveloped.

     Quoting liberally: “These are the wrong times for inadequate information on jobs and skill requirements. Not only is the United States climbing out of the worst downturn since the Great Depression, it has transformed from an industrial to a services economy, with all of the pain and upheaval that accompanies such change. Educational and career planning need to catch up and adjust to this new reality.”

     “[P]ostsecondary education and training is critical to helping our nation’s workers navigate this transformation successfully.” Education is a gateway to further training and greater earning potential.

     “One key to understanding this issue is an appreciation of the overall landscape of postsecondary education and training. College is only one piece of the puzzle. In fact, colleges and universities represent only 35 percent of the entire postsecondary education and training system. The rest consists of on-the-job training, formal employer-provided education programs, military training, apprenticeships, and a variety of other programs.

     “Still, the role of colleges and universities is vital. Among other things, higher education acts as an important gateway to other parts of the postsecondary learning system. Postsecondary education provides entry to the jobs offering the most employer-provided training, plus access to the most powerful, flexible workplace technology. This is reflected in the positive correlation between employer-provided training and employee education levels. College graduates are almost twice as likely as high school graduates to receive formal training from their employers.”

 

Matching Skills to Jobs: Critical Skill Assessment

     We develop our workforce in a number of ways by helping both individuals and organizations to identify and cultivate their abilities and competencies. Tests and assessments are often key tools in achieving this important goal.

     One such tool is the ACT WorkKeys job skill assessment used by professional associations, businesses, and government agencies to measure workplace skills of employees and job applicants, helping employers select, hire, train, develop, and retain a high-performance workforce to increase global competitiveness, and assisting individuals in developing successful career pathways.

     This ACT WorkKeys series of tests measures foundational and soft skills and offers specialized assessments to target institutional needs. ACT has one of the largest, most robust occupational profiles databases available. It contains more than 19,000 job titles, ranging from white-collar professional to blue-collar technical positions, that have been profiled and extensively researched to identify the essential skills and skill levels for employee selection, hiring, and training.

     ACT, Inc. has also developed a World-of-Work Map (see front cover), an empirically based system for summarizing and displaying basic similarities and differences between occupations.

     To help individuals navigate among hundreds of occupations, the World-of-Work Map organizes 555 occupations into 26 groups of similar occupations (career areas). The Map serves as a visual bridge, linking people (via career assessment results) to personally relevant occupations. Used together with the ACT Interest Inventory, the World-of-Work Map can help people see the connections between the work world and the activities they like to do. Find more information at: www.act.org/wwm.

 

What Conclusions Can Be Drawn?

     The Carolinas in particular have suffered shocking losses in the manufacturing sector, ranking second only to Michigan. In fact, according to the Information Technology and Innovation Foundation (ITIF), during the period between 2000 and 2012, North Carolina lost 43.5 percent of its manufacturing jobs, while Michigan lost 46.7 percent. South Carolina ranked 10th losing 37.7 percent.

     The ITIF discovered that the American manufacturing decline has actually been worse during the last five years than during the Great Depression. Their numbers show a 30.9 percent decline in manufacturing employment during the years 1929-1933 compared to a 33.1 percent manufacturing job loss in the recent decline. Approximately 7 of 10 jobs have been lost in apparel; 6 of 10 in textiles; and 5 of 10 in furniture.

     Postsecondary education and training is critical to helping workers navigate this transformation successfully. In fact, if anything, this recession is accelerating the shift to jobs requiring postsecondary education. Since 1973, the number of jobs that require at least some college has more than tripled, while those requiring a high school diploma or less have flatlined.

     We have to do more to bring industry and education together—it is the chemistry of this collaboration that will keep expanding the job opportunities and the economy. If we can stimulate an active and exciting relationship between area businesses and educational resources, we can add substantial value that will propel us through these cataclysmic times.

_____________________________________________________________

Sources quoted:

1 David Rotman, MIT Technology Review Magazine, July/August 2013

2 Georgetown University Center on Education in the Workforce, Help Wanted: Projections of Jobs and Education Requirements Through 2018

John Paul Galles is the publisher of Greater Charlotte Biz.
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