Education, Work and US Leadership in the 21st Century
A few weeks ago, the Council on Foreign Relations (CFR) released The Work Ahead - Machines, Skills, and U.S. Leadership in the Twenty-First Century, a report by a CFR-sponsored Task Force to assess the future of work and its implications for the US economy and national security. The Task Force was led by Penny Pritzker, - former Secretary of Commerce and founder and chair of PSP Partners, and by John Engler, - former Governor of Michigan and interim President of Michigan State University.
Their comprehensive report, - over 150 pages and 276 citations, - explored in great depth the changing nature of work as global competition and advanced technologies like AI, robotics, and smart IoT devices transform jobs and careers. It states right up front that “The most important challenge facing the United States - given the seismic forces of innovation, automation, and globalization that are changing the nature of work - is to create better pathways for all Americans to adapt and thrive. The country’s future as a stable, strong nation willing and able to devote the necessary resources and attention to meeting international challenges depends on rebuilding the links among work, opportunity, and economic security.”
For much of the 20th century, technology and globalization helped lead America to its leadership position in the world stage. Underpinning this US leadership was the American Dream, - the promise that anyone can get ahead and achieve success and prosperity through talent and hard work. But this promise has been eroding for decades. For many of its citizens, the American Dream has been steadily disappearing.
Technology advances have led to massive innovations and efficiencies, enabling companies to get the same work done with significantly fewer people. At the same time, many US-headquartered companies are truly global, doing business all over the world. Beyond outsourcing jobs to countries with lower labor costs they’ve been investing and adding jobs where the demand is highest, - which has often been in faster growing emerging markets.
The US thus faces two major challenges: “creating new work opportunities, better career paths, and higher incomes for its people, while developing a workforce that will ensure U.S. competitive success in a global economy that will continue to be reshaped by technology and trade.”
The report organized its detailed Findings into seven major areas. I’ll focus my discussions on two in particular: Technology and Work; and Education, Training, and the Labor Market.
Technology and Work
“Accelerating technological change, including automation and advances in artificial intelligence that can perform complex cognitive tasks, will alter or replace many human jobs. While many new jobs will be created, the higher-paying ones will require greater levels of education and training. In the absence of mitigating policies, automation and artificial intelligence are likely to exacerbate inequality and leave more Americans behind.”
New technologies have been replacing workers and transforming economies over the past two centuries. But, over time, these same technologies led to the creation of whole new industries and new jobs. Will the AI revolution play out like past technology revolutions, - short term disruptions followed by long-term benefits, - or will this time be different? Will there be enough work in the future? Is the US facing an age of mass unemployment, in which machines will do most of the work once reserved for human beings?
The report references a recent McKinsey study that directly addressed these questions. The study examined the work that will likely be displaced by automation through 2030, as well as the jobs that will likely be created over the same period. Its overall conclusion was that a growing technology-based economy will create a significant number of new occupations, - as has been the case in the past, - which will more than offset declines in occupations displaced by automation. However, “while there may be enough work to maintain full employment to 2030 under most scenarios, the transitions will be very challenging - matching or even exceeding the scale of shifts out of agriculture and manufacturing we have seen in the past.”
While it’s impossible to predict with any certainty whether advanced technologies will destroy more jobs than they create, there’s far more agreement that they’ve been contributing to the increased polarization of US labor markets. Given the increased technological sophistication and complexity of many work environments, demand has continued to grow for employees with good problem solving and communication skills.
“Nearly two-thirds of the thirteen million new jobs created in the United States since 2010, for example, required medium or advanced levels of digital skills; mean annual wages in the highly digital occupations are more than double those in occupations that require only basic digital skills,” notes The Work Ahead report. “Basic familiarity with spreadsheets, word processing, and customer relationship management software is becoming a baseline requirement for many positions.”
At the same time, jobs dealing with more routine tasks that can be well described by a set of rules have been prime candidates for technology automation as well as for offshoring to lower-cost countries. Many blue collar jobs, such as manufacturing and other forms of production, have fallen into this category. So have white-collar, information-based activities like accounting, record keeping, and many kinds of administrative tasks. Such jobs have been steadily declining over the past few decades.
Education, Training and the Labor Market
“More Americans will need to complete postsecondary education. Occupations that require a college education or advanced degree will grow over the next decade and beyond, whereas employment in occupations requiring only a high school education or below will decline… The lack of accessible educational opportunities that are clearly and transparently linked to the changing demands of the job market is a significant obstacle to improving work outcomes for Americans.”
The report reminds us that education was the critical ingredient in the US becoming the world’s most successful economy in the first half of the 20th century. A stream of technological breakthroughs - e.g., electricity, cars, airplanes, phones, radio, TV, computers, - increased the demand for skilled workers. The US responded by expanding public high school education and state universities.
In 1910, only 18% of 14-17 years old attended high school, and 9% graduated. Those number increased to 73% and 51% respectively by 1940, way before other countries achieved similar levels. The 1944 GI Bill offered the nation’s 16 million WWII veterans payments of tuition and living expenses to attend high school, college or vocational/technical schools. By 1956 over 2.2 million had used the GI Bill to attend college or university, and 5.8 million had used it for some kind of job training program.
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. Education is more important than ever to keep up with the demands of a rapidly changing labor market, - not just higher levels of education, but a more targeted education that leads to better work opportunities even as the targets continue to shift during one’s career.
In a 2014 article, MIT economist David Autor argued that the biggest inequality in today’s economy is the dramatic growth in the wage premium associated with higher education. The earnings gap between the median college-educated and median high school-educated U.S. male in a full-time job rose from $17,411 in 1979 to $34,969 in 2012 as measured in constant dollars. For female workers, the equivalent earnings gap nearly doubled from $12,887 in 1979 to $23,280 in 2012.”
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. 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.
The report made a number of key points regarding education:
- For most Americans, their educational choices will be the most economically consequential decision in their lives;
- Students need far greater assurance that their investments in education and training - in both time and money - will be rewarded in the job market;
- A change in thinking is needed, from seeing education and work as distinct and separate activities to considering them as closely linked; and
- The US should set and meet a goal of bringing postsecondary education within the reach of all Americans and linking education more closely to employment outcomes.
The report also includes an extensive set of recommendations primarily aimed at the Federal, state and local governments and at the private sector, including a call to Launch a National Dialogue on the Workforce of the Future:
“To underscore the urgency of the task of building the workforce of the future, the president and the nation’s governors should create a National Commission on the U.S. Workforce to carry out research, share best practices, and conduct public outreach on workforce challenges. This should be the start of an ongoing effort to put workforce issues at the center of the national conversation.”