Education and the Economy

The failures of our schools are receiving well-deserved attention, fueled by the view that an uneducated workforce has serious economic and social consequences. However, the focus on education too often becomes a substitute for looking at the economy. The failure of our schools is part of a larger failure of our economic structures to create high-skill, high-wage jobs. By ignoring this economic reality, we encourage the mistaken view that such jobs are out there, if only people got a better education.

Heightened concern about our schools results from a couple of factors. First, there is a widespread belief that the economic imperatives of a high-tech, internationalized economy are forcing the restructuring of jobs in ways that demand high skill levels from virtually all workers. Second, a declining youth population, together with a growing minority share of that youth population, means that employers will no longer have the luxury of picking those who appear most qualified or acceptable and rejecting the rest.

Together, these factors have created a concern that schools provide higher levels of educational skills to all students, including those whose talents were previously viewed as either absent or unneeded.

Thus, our education system is very properly receiving attention for its wasteful failure to develop the full range of creative capacities of our youth — particularly those youth, now labeled “at-risk” youth, who have traditionally fared least well in our schools, as in other institutions. While the dropout rate has steadily declined over the last 50 years (to about 14%), dropout rates above 40% are common in many of our largest cities. While virtually all high school students have successfully mastered basic or rudimentary skills, most have sizeable deficits in higher-order skills requiring more advanced levels of comprehension, analysis, problem solving, and decision making — skills increasingly being touted as critical to our economic future.

Like many other institutions, the schools serve low-income families less well than others. The more obvious examples include lower quality curriculum, staff, and facilities; lower expectations; assignment to lower “ability groups” or tracks where academic content is watered down; less responsiveness to student, parent, and community input; and harsher discipline.

Yet the current focus on “at-risk-youth” too often becomes a vehicle for harmful labeling of children, ungrounded assumptions about individual, familial, or cultural pathology, and new forms of segregation. Locating the problem in youth diverts attention from fundamental problems in the structures of both the schools and the economy which put these youth “at risk.”

Problems in the Economy

We cannot assume that the problem is just a failure of our educational system to develop the full creative capacities of all our youth. It is also a failure of our economic system to use those capacities.

When low-income youth look at their communities, they do not see high-skill, high-wage jobs waiting, if only they stay in school long enough to qualify. Instead, they see high levels of youth unemployment. For those youths who can find work, the jobs are most often low-skill and low-wage.

This is not a misperception on their part. For example, despite the fact that many of the “fastest growing occupations” in terms of percentage growth are relatively high-skill and high-wage, they still provide very small numbers of jobs, while the fastest growing occupations in terms of sheer numbers are mostly of a different sort, with much lower wages and skill levels. Of the 10 most rapidly growing occupations only one — food preparation and service workers/fast food restaurants — is among the 10 where the largest number of new jobs will be (along with janitors, nurses aides and orderlies, sales clerks, cashiers, waiters/ waitresses, clerks, nurses, secretaries, and truck drivers.)

This is consistent with other data indicating that almost three-fifths of the net gain in new jobs generated in the 1980s comprised jobs paying under $11,104 in 1986 dollars — i.e., less than half the median income that full-time employees earned in 1973.

Those who argue that better education will lead to better jobs for youths also tend to ignore the effects of discrimination on one’s job prospects. If education by itself could explain people’s economic fortunes, we would expect to see the income gap between men and women disappear as the education gap closed. Men and women now have similar average levels of educational attainment (12.8 years), high school completion, college attendance, and cognitive skill levels, yet the income gap remains. In fact, as of 1986, among full-time workers 25 years old and older, female college graduates earned 10% less than males with only high school diplomas.

Female high school graduates earned 16% less than males with only 8 years of elementary school education.

Further, the unemployment rate for African-American high school graduates is actually 20% higher than the rate for white high school dropouts, according to a report by the William T. Grant Foundation.

An Economy Out of Sync

These statistics are in turn confirmed by a closer analysis of data used to describe “at-risk” youth. Being born into a black, Latino, or a single-parent family is not a “problem” in and of itself. It becomes so only because our society is structured so that having these characteristics increases one’s chances of being poor. For example, once you control for economic status, being from a single-parent home (a popular “at-risk” category) or having a working mother is not associated with falling behind in school.

There is something odd about industry’s concern with “at-risk” students. Children are poor because their parents don’t have jobs that pay above-poverty-level wages. If companies are not providing the parents with jobs that pay living wages, then where are the high-skill, high-wage jobs for the children?

Thus, rather than an educational system out of sync with an economy that is generating jobs requiring high skills which the schools are failing to impart, the educational system and the employment system are both out of sync with our real social and economic needs. We have both an educational system which fails to develop and an economy which fails to demand and utilize the full set of capabilities of our youth.

In fact, in the absence of such a demand from the economy, it becomes harder to get the schools to provide high-quality education in the first place.

In education, there are two facets to this issue. First, a high-wage economy is needed in order to generate the revenues to pay for high-quality education. But the issue goes deeper — it depends upon whether the nature of jobs and the organization of work generate the need for higher education skills. Even the most recalcitrant of current problems in education would become immeasurably more resolvable if the local economy were being restructured to assure that good jobs, providing good income and demanding the full use of each person’s creative capacities were available for all — thereby creating a real, not just rhetorical, demand for schools to help students develop those capabilities and a real, not just rhetorical, reason for youths to feel that they and their education were valued.

Political and Economic Choices

Whether we move to a high-skill, high-wage economy is not a question to be answered with projections or predictions about the labor market of the future. It is primarily a question of economic and political choice.

First, the answer is not dictated by technology itself — high tech can be used to expand and enrich jobs, or it can be used to further routinize them. In both manufacturing and the service sector, there are plenty of examples (such as food service) where companies have found ways to take complexity and thinking skills out of the jobs and put them into the computers — “fool-proof” technology.

Second, the answer cannot be based on assuming that our economy will automatically move in the healthiest direction. Our long-term economic interests do lie in a high-skill, high-wage economy. Yet short-term economic interests often tempt firms to go the low-skill route: if technology can be used to routinize work, then (1) it is easier for companies to control the work process,

(2) lower skill levels command lower wages because a larger share of the labor pool is eligible, and (3) companies have less need to be concerned about workers’ technical and academic preparation and have less need to pay for worker retraining themselves.

Third, we should not assume that we will be able to move toward a high-skill, high-wage economy simply by producing highly educated workers, when even now the economy is not able to accommodate the skilled students that do come out of our far-from-perfect education system. Sole reliance on such a “supply-side” approach will not work — any more than we could have expected supply-side economics to work when we simply provided corporations with additional capital in the form of big tax breaks so that they would use it to build new productive capacity, when their existing plant capacities were underutilized.

In both cases, supply-side increases — whether of human potential or financial capital — cannot substitute for increased demand. We must ensure that we have an economy which is there to demand and use that potential.