It's Not Just Education

The vast inequalities in American society, even in prosperous times, include correlated inequalities in income, wealth, security, health, occupation, and education. We need policies to remedy each of these inequalities; addressing any one of them will impact the others. Raising the education and skill levels of youth from more disadvantaged backgrounds is a valuable end in itself as well as a way to improve the quality of our civic and cultural life. It will also enable these youth to compete with middle-class youngsters for more skilled and better paying jobs.

For example, the unemployment rate of young African American men is scandalously high -- 22 percent. So is their high school dropout rate: over 50 percent in many large urban areas. If we could figure out how to get more of them to persevere in high school and then get the additional postsecondary education and training to qualify for jobs paying middle-class wages, we'd take a meaningful step toward narrowing inequality.

On this proposition, nearly all policy-makers nationwide, at the national, state, and municipal levels agree. Yet although the necessity of education and labor-market policies to bring more disadvantaged youth into productive and remunerative employment is self-evident, it is naive to expect skill enhancement alone either to create jobs or to ensure that the jobs created are sufficiently compensated to narrow inequality. For the first goal, we need growth-oriented macroeconomic policy; for the second, policies to enhance economic security and worker bargaining power.

The relationship of education to economic growth and good earnings raises several awkward questions. If more youth from disadvantaged backgrounds got the education and training to compete for skilled jobs, would the number of good jobs expand to soak up these newly qualified beneficiaries of better schooling and active labor-market policies? Or would these youth displace competitors from middle-class backgrounds? If the answer to this question is "displacement," are active labor-market policies then effectively "affirmative action" policies, and are they politically sustainable? What additional policies might increase the supply of well-paid jobs, to offset the depressive effect of the increased labor supply on wages and mitigate the social conflict that will inevitably arise when qualified workers must accept less desirable employment that does not utilize their skills?


These questions are not new. Back in 1994, for example, the national unemployment rate was 6 percent overall, 10 percent for high school dropouts, and nearly 12 percent for black workers. Counting those who had given up looking for work because none was to be found, and those who had to settle for part-time jobs, the unemployment rates were much higher. There was a near-consensus among macroeconomists that efforts to use monetary or fiscal tools to reduce this "natural" unemployment rate were bound to fail: Greater demand for workers would only spur inflation, because the unemployed lacked education and training to fill jobs that might become available. Alan Greenspan, then chairman of the Federal Reserve, told the Senate Banking Committee that anyone still unemployed simply didn't have the skills employers needed. President Bill Clinton's nominees to the Federal Reserve, Alan Blinder and Janet Yellen, had little dispute with Greenspan's assessment that we presently had a "natural" level of full employment.

Yet by the end of the decade, an economic boom had cut these unemployment rates to 4 percent overall, 7 percent for those without a high school diploma, and 8 percent for black workers. Somehow, roughly one-third of those supposedly unproductive non-workers suddenly became attractive employees. Lower unemployment was not caused by improved and targeted education and training but rather by a willingness to experiment with pro-growth monetary policies and tighter demand.

Now, of course, unemployment has zoomed back up: Nearly 10 percent for all workers, 15 percent for those without a high school education, and 15 percent for blacks. This rise has nothing to do with the skills of the work force. We might reduce these rates somewhat with better education and training, but it is foolish to rely entirely on this approach. A new economic stimulus package and other macroeconomic tools are likely to pack a bigger punch.

Even at its best, however, appropriate macroeconomic stimulus can hope mostly to reduce unemployment. With weak labor bargaining power, fuller employment is still consistent with gross inequality. So better skills and stronger demand cannot by themselves do enough to raise wages of workers at the bottom; for this we also require policies that affect wages directly, such as enforcement of the right to unionize and enactment of stronger minimum- and living-wage laws.


Today's conventional wisdom has it that the 21st century is a changed world: A half-century ago, without an education you could get a "good" job with compensation to support middle-class comfort, but today, jobs that pay well require more than a high school education. Without postsecondary training, only "bad" jobs are available.

But if you think about it, attaching parts on a moving assembly line is not inherently better work than changing bed linens in a hotel -- nor is it more skilled. As Lawrence Mishel and I wrote in a previous issue of this magazine ["Schools as Scapegoats," TAP, October 2007]: "What made semiskilled manufacturing jobs desirable was that many (though not most) were protected by unions, provided pensions and health insurance, and compensated with decent wages. That today's working class doesn't get similar protections has nothing to do with the adequacy of its education. ... Hotel jobs that pay $20 an hour, with health and pension benefits (rather than $10 an hour without benefits), typically do so because of union organization, not because maids earned bachelor's degrees."

Periodically, the Bureau of Labor Statistics projects future labor-force demands. The most recent projections (developed in late 2007, before the current economic collapse) were that by 2016, 21.7 percent of jobs would require a bachelor's degree or more; another 19.2 percent would require a community college degree, other postsecondary training, or comparable work experience; while 59.2 percent would require only a high school diploma or less, as well as on-the-job training, most of it very short-term. This future occupational structure will require just slightly more educational preparation than does the current structure -- the comparable present shares are 20.6 percent, 18.8 percent, and 60.4 percent, respectively.

One job category with great anticipated demand is registered nurses, requiring an associate degree. But also in great demand are retail salespersons (requiring short-term on-the-job training); customer service representatives (moderate on-the-job training); and food service (fast food) workers, office clerks, and personal, home care, and home health aides, all of whom require only short-term on-the-job training.

Providing community college places to deal with the more than half-million more registered nurses we'll need between 2006 and 2016 is an important policy initiative, and making extraordinary efforts to prepare and recruit students for those places from disadvantaged communities will enhance equality. But providing more than a half-million places is not likely to create many additional registered nurse jobs; most likely, it would cause nurses' wages to fall, increase the number of nurses forced to take jobs as home health aides, and support some increase in the wages of those aides (because nurses will be more productive home health aides than those with only short-term on-the-job training).

A significant number of well-educated workers, even in good economic times, already take jobs requiring less education. Contrary to popular myth, we have been producing many more science and engineering college graduates than there are job openings in these fields, for example.

Few jobs requiring only short-term training pay well, and they will continue to generate more employment opportunities than well-paying jobs. A more egalitarian society would recruit more disadvantaged youth for nurses' training. With an expanded supply of nurses generated by these policies, some additional skilled nursing positions would be created, as hospitals figured out how to realize productivity growth by giving parts of the work presently performed by physicians to the additional nurses. A surplus supply of nurses would also result in some youth from working- and middle-class families, who had obtained training as nurses, having to settle for jobs as retail salespersons, fast-food workers, and home health aides.

Is such an egalitarian ambition feasible? It is certainly possible for retail salespersons, fast-food workers, and home health aides to earn middle-class incomes, but this won't happen because these workers got better postsecondary training. It will be because we ensure that workers in these occupations get middle-class incomes by providing much stronger minimum-wage and labor-union protections, economic security with good health care, as well as community-development and social-insurance programs. Better education and training are important, but asking them to narrow our extreme social inequality on their own is asking too much. 

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