Earlier this year the communications firm Burson-Marsteller along with research firm PSB interviewed 1,500 Americans from all walks of life to shed light on their feelings about the current state of the economy and their expectations for the future. “Americans are concerned about the present, but optimistic about the future,” was the survey’s overriding finding. “However, opinions about the economy and the future are somewhat driven by education level.”
While only 33% said that the country is headed in the right direction, 67% said that they were somewhat or very optimistic about the future. To a large extent, this optimism is based on the belief that their jobs are safe over the next 5 years, with 62% believing that they won’t be laid off and 60% that a machine couldn’t replace them. In their opinion, the high cost of living, unemployment and jobs, the gap between rich and poor and taxes are the top issues facing the US economy, ahead by a fairly wide margin over corporate corruption, loss of manufacturing jobs, and falling or stagnant wages.
Their feelings about the future differed by educational level. 71% of Americans with a college education or more said that they have the right skills to succeed in the 21st century, compared to 42% of those with a high school education or less. Only 14% of survey participants with a college education worried that their jobs could be automated within five years, compared with 30% of those with high school or less. And 55% of Americans with college or more felt that technology will improve overall employment compared to 45% of those with high school or less.
These findings are consistent with a number of other recent studies. Last year, for example, the Pew Research Center, - in association with the Markle Foundation, - published The State of American Jobs, a report based on interviews with a national sample of over 5,000 adults to learn what Americans are thinking about the skills and training needed to get ahead in our fast changing digital economy. One of its key conclusions was that “Educational attainment is a clear and consistent marker when it comes to feelings about job security and future prospects.”
The report analyzed employment data on more than 950 occupations. It found that employment growth was highest in occupations requiring higher social or analytical skills, - those skills we most associate with a college education. Between 1980 and 2015, employment in occupations requiring stronger social skills, - e.g., interpersonal, communications, management, - increased by 83%, while employment in occupations requiring higher levels of analytical skills, - e.g., complex problem solving, computer usage, - increased by 77%. Over the same time period, the number of workers in jobs requiring higher levels of manual or physical skills, - e.g., machinery operation, physical labor, - increased by only 18%.
Most Americans are happy and secure in their jobs. Almost 80% said that the were satisfied (49%) or somewhat satisfied (30%) with their current jobs, and almost 90% said that they were not at all (60%) or not too likely (28%) to lose their jobs in the next 12 months. But, less educated workers felt more vulnerable. They were more likely to believe that their current skills are insufficient to advance in their careers, while also feeling less secure about their current jobs. Almost 40% of those without a high school education said it was very or fairly likely that they might be laid off within the next 12 months, while only 7% with a bachelor’s or higher degree said the same thing.
In a 2014 article, Skills, education, and the rise of earnings inequality among the “other 99 percent”, MIT economist David Autor wrote: “Much popular discussion of inequality concerns the top 1 percent, referring to the increasing share of national income accruing to the top percentile of households. Although this phenomenon is undeniably important, an exclusive focus on the concentration of top incomes ignores the component of rising inequality that is arguably even more consequential for the other 99 percent of citizens: the dramatic growth in the wage premium associated with higher education and, more broadly, cognitive ability.”
A few numbers illustrate this skills and education premium. Between 1965 and 2010, the lifetime present value, - after accounting for the costs of tuition and fees, - of a college versus a high school education has risen from $213,000 to $590,000 for men and from $129,000 to $370,000 for women.
According to Autor, “the earnings gap between the median college-educated and median high school-educated among U.S. males working full-time in year-round jobs was $17,411 in 1979, measured in constant 2012 dollars. Thirty-three years later, in 2012, this gap had risen to $34,969, almost exactly double its 1979 level. Also seen is a comparable trend among U.S. female workers, with the full-time, full-year college/high school median earnings gap nearly doubling from $12,887 to $23,280 between 1979 and 2012.”
To translate these numbers into household income, Autor estimated that the difference in the yearly earnings between a college-educated two-income family and a high school-educated two-income family has risen by almost $28,000 between 1979 and 2012, - from $30,298 to $58,249. This is four times as large as the household inequality gap between the 1% and the 99% that’s been so widely discussed, especially since the release of Capital in the Twenty-First Century by French economist Thomas Piketty.
These figures suggest that the education differentials are arguably more consequential for the vast majority of workers, those in the 99%, than the dramatic earnings rise of the 1%. And, particularly troubling is the fact that the education differential is not only due to the rising earnings among college-educated workers, but also to the falling real earnings among less educated workers.
What accounts for this growing earnings gap? While many factors have an impact on wages, - including the decline of unions, low minimum wages, and global trade, - most economists agree that this is primarily a matter of supply and demand. In technologically advanced economies like the US, large numbers of mid-skill jobs, mid-wage jobs, - where a high school education previously sufficed, - have been automated by information technologies or have moved to less expensive regions around the world. At the same time, opportunities have continued to expand in high-skill, high wage jobs that involve expert problem solving and complex communications that put a premium on a highly educated workforce.
More than one third of American adults now have college degrees. But, what about about the two thirds of the population who don’t have and are not likely to get a four-year college degree? As a number of studies have pointed out, skills are in demand in a number of fields that require a post-secondary associate degree from a community college or vocational/trade school, but not necessarily a four year college degree. These include health care oriented jobs like nursing aides and nutritionists, and technical jobs like welders, electricians and mechanics which are using increasingly sophisticated technologies and tools. This demand is reflected in employment projections from the US Bureau of Labor Statistics, which shows that the median earnings of those with associate degrees is almost 20% higher than those with high school degrees, while their unemployment rate is 30% lower.
A number of European countries, most notably Germany, Switzerland and Austria, have developed successful dual track educational programs that combine apprenticeships in a company with a formal education at a vocational or trade school. A number of US communities have recently established such dual track programs in partnership with local employers, schools and government agencies.
Economists don’t generally agree on much, given the complexities of their discipline. But they’re pretty much of one mind when it comes to the growing importance of skills and education in our 21st century digital economy. There’s no more important policy for the US to follow than investing in the education and training of its citizens, as we so successfully did in the first half of the 20th century.
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