The Declining Value of a High School Diploma
The Hamilton Project at the Brookings Institution is producing some of the most interesting and revealing data out there on higher education and jobs. This chart is a real stunner. It shows what has happened to employment prospects for male high school graduates, both in terms of rates and salaries.
It is not a pretty picture, but it’s a very clear one. In 1970, a high school diploma was more than sufficient to assure good employment prospects with a solid middle class income. Of course, this is no longer true. Aside from showing how dire the prospects are for males with just a high school diploma (imagine how bad they are for high school dropouts), the chart show this is the result of a long term trend that has accelerated in recent years.
What is going on here? The short answer is the increasing demand for higher skills across almost all industries and occupations. The chart documents the declining number of low skilled but well paid jobs in manufacturing, construction, natural resources, and other industries. Most of these industries have not gone away, but the skills they require have increased (manufacturing is a good example). To get the skills they need, employers show a clear preference for workers with higher levels of education, and pay an increasing premium to get them. This is happening within occupations—not just across them—which has huge implications for education systems. More on that next time.
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OECD Data, Revisited
In response to my earlier post about the latest OECD data on educational attainment, Cliff Adelman wrote the following comment:
The data are by some accounts deceiving, and by others, absolute nonsense, and Dewayne knows that. First, these are population ratios, in which the trend in denominators are conveniently neglected. The US denominator is growing; those of most others in the bin are flat or declining. Your 4th grade math should tell you what happens to percentages under those basic, undeniable facts. Second is the impact of the turn to 3-year bachelor’s degrees in Bologna Process countries since 2003. Guess what happens to degree completion ratios? Third is the inclusion of what we call associate’s degrees (ISCED 5B in international accounting), where the US does miserably compared with those countries that have these “short-cycle” credentials (e.g. Japan, Korea, Canada, Ireland, France, Denmark, and others). Fourth are the Canadians, who even OECD notes inflate their degree completion data by including certificates with associate’s degrees. International comparisons of this type are lousy reasons to push for more degrees, but it’s the going propaganda goad. What a shame!
Cliff is an old friend and valued colleague, so I try not to take it too personally when he accuses me of either being deliberately deceptive or writing “absolute nonsense” (I’m not sure which is worse). Let me just say for the record that I believe the OECD data on education attainment is both accurate and important, and I believe everything I wrote in my post on the subject.
Let’s take Cliff’s four points in turn. First; of course these are population statistics. The issue is whether the overall education level of the population matters. I believe very strongly that it does. Second; I have seen no evidence that Bologna cycle degrees account for the increase in attainment rates in European countries. I’ve never heard Cliff argue that European degrees are lower in quality than US degrees. Besides, many of the countries that have higher attainment rates than ours are not in the Bologna process, including the top three. As to Cliff’s third point, I’d say fine—increasing dismal rates of Associate degree completion would be an excellent place for us to start to increase overall attainment. As to his fourth, exclude Canada and we’ve only fallen to 14th. Yes, I’m being sarcastic.
I continue to use and talk about the OECD data for two reasons. The first is that I believe it points to the increasing global demand for skills and knowledge in advanced economies. The second, as I said in my original post, is that I believe it shows we can do better.
New data on education and employment
I just came across two very interesting charts from the Hamilton Project at the Brookings Institution.
The first answers the frequent question about whether recent college graduates are actually getting jobs in today’s labor market. According to this chart, the answer is an emphatic yes. It shows the employment rates of all Americans aged 23 and 24 who are not in school. As you can see, college graduates in that age group are already employed at much higher rates than non-college graduates, who presumably have been in the labor market longer. Even people with some college are much better off in terms of employment. The chart also shows average income is, of course, much higher for college graduates. Best of all, the data is very recent (2010).
The second chart shows unemployment (and underemployment) by level of education. This chart is similar to one I already use in my speeches and presentations, and shows (perhaps not surprisingly) that unemployment is much lower for people with college degrees. However, adding data for 2010 shows something both interesting and important. As unemployment leveled off at higher levels in 2010, two things became clear – 1. Job loss in the recession was MUCH worse for people with lower levels of education, and 2. The recession made this disparity even greater than it was before. Compare how much farther apart the lines are today compared to even 2008.
Good stuff!
OECD Data on Higher Education Attainment
There is always a lot of interest in the international data on higher education attainment that OECD publishes in its report Education at a Glance. The latest version of the report, which includes data for 2009, was released at 11 a.m. Paris time this morning. Here are the highlights:
- The U.S. has slipped to 15th in the proportion of young adults (25 to 34) who have obtained a two- or four-year college degree. Last year, the U.S. was tied for 8th.
- The reasons the U.S. fell so dramatically is that the U.S. rate fell by one percent (from 42% to 41%) while other countries increased. (The U.S. also lost one position due to the addition of Israel to OECD this year.)
- The top three countries are the same as last year: South Korea, Canada, and Japan. South Korea’s attainment rate (25 to 34) increased by an astounding 5%; from 58% to 63%.
- For all adults (25 to 64), the U.S. ranks 4th at 41%, behind Canada, Israel, and Japan.
- In four-year degrees for young adults, the U.S. now ranks only 11th. Last year, we ranked 7th.
- At 9%, the U.S. ranks 20th (out of 33) in two-year degree attainment.
Our take away from this data is very simple: We must do better.
Higher Education, Economic Recovery, and Job Creation (Part 2)
In a time of high unemployment, where even college graduates have a hard time finding a job, it may seem like wishful thinking to say increasing higher education attainment plays a key role in driving economic growth—and therefore job creation. But the evidence is clear that it does. Unemployment rates are dramatically lower for college graduates, they are usually the first ones hired in a recovery, and employers pay an increasing premium for their knowledge and skills.
To understand how this works, we can first consider employment growth in the economic recovery. Naturally enough, we tend to think of employment as a lagging indicator of recovery. In the current weak recovery, unemployment has remained stubbornly high. A lot of hypotheses have been advanced to explain this, but there is a growing consensus that a large part of the explanation is that the economic recovery is being hindered by a lack of workers with the advanced skills and knowledge demanded in this economy. Put another way, our ability to retool and “up-skill” workers to meet the changing requirements of employment markets is itself a significant factor in economic growth.
David Altig, the research director at the Federal Reserve Bank of Atlanta, has written about the unexplained causes of the slow recovery of the job market from the recession. According to Altig, based on standard econometric models the U.S. unemployment rate should be significantly lower than it is. He suggests that our inability to match jobs to people with the right skills may be the single most important factor in explaining why (the other factors being lack of mobility due to people being underwater on their mortgages and extended unemployment benefits). One of the more interesting things Altig says is that this mismatch is not at the level of specific occupations—i.e. unemployed auto workers needing to be retrained as nurses—but at a deeper level related to general skills across all occupations. Better educated workers are more adaptable, they learn new skills more quickly, and they contribute their thinking to innovation not just in new products, but just as importantly in streamlining and improving processes throughout the enterprise, whatever its mission.
Of course, we need to know more about the specific skills and knowledge needed in the workforce. Fortunately, the Georgetown University Center on Education and the Workforce has developed powerful new approaches to answering this question. Developing a system with the capacity to help people develop higher level skills in the much larger numbers needed in today’s economy is the great challenge facing higher education.
Higher Education, Economic Recovery, and Job Creation
In my last post, I promised to comment on what we are learning about how increasing higher education attainment can actually drive economic growth, and not just respond to it. We tend to think that the knowledge economy creates jobs demanding higher levels of skill and knowledge, and the higher education system responds to this demand by educating more people qualified for the new jobs. This is certainly true, but it doesn’t tell the whole story.
The emerging understanding of the deepening relationship between higher education attainment and the economy points toward an even more profound connection. Lumina’s work on this issue is highlighted in this video:
The bottom line is: In a knowledge economy, increasing higher education attainment plays a key role in driving economic growth—and therefore job creation.
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