Posted by: dstieglitz | August 30, 2010

EVERYONE BACK TO SCHOOL

    Last month I visited my alma mater, Rensselear Polytechnic Institute, for the first time since receiving my PhD in 1970. The old buildings looked much the same, but there were many new ones. The most impressive was the Experimental Media & Performing Arts Center (EMPAC), a 220,000 square foot facility where technology and the arts challenge and transform each other. Seeing the large-scale visualization, immersion, and simulation environments in that building left me feeling outdated. I felt like I needed go back to school – my 40-year old PhD was incomplete in today’s world! I concluded that a national educational system that ends when people are in their early 20s (or sooner) is inadequate in a world of rapid change.

     Everyone is wondering these days: “The recession is over, when will people go back to work?” It’s a tough question because many jobs will never return. Unemployment is being blamed on everything from off-shoring, to big business hoarding cash, to illegal immigrants, to the decline of unions. But most economists agree the real cause is that rampant technological change reduced the need for workers with low-level skills. At the same time, the highly educated and highly skilled are stuffing their pockets with money. Evidence suggests that America does not offer as much opportunity as it once did – the American Dream is at risk of becoming an allusion.

      The federal government is doing everything it can (e.g., extending unemployment and rescuing the auto industry) to restore the old normal – but it’s an expensive and futile effort. 15 million unemployed workers, sluggish growth, and soaring deficits are just symptoms. The real challenge is preserving U.S. living standards in the face of global competition. For 50+ years, the U.S. pioneered breakthroughs in electronics, pharmaceuticals, and computing. Those innovations built a prosperous middle class while other countries joined the party by manufacturing the innovations more cheaply than we could. From a humanitarian view, the emergence of those countries is fantastic news – hundreds of millions of people have been lifted from poverty. But American workers are being left behind – those who do find new jobs often earn less than before the recession. In fact, economists say as many as one-third of all American households (that’s 100 million people!) earn less than their parents did at the same age.

     President Obama and Congress don’t see the decline in living standards, or don’t know what to do about it. Two things require their urgent attention. First, they must stimulate jobs that pay wages commensurate with U.S. living standards in fledgling industries like nano-technology, bio-technology, and green technologies. Second, they must ensure American workers have the skills to perform those jobs! So far, Congress seems to be ignoring the living standard challenge. True, the stimulus provided funds for some technologies with real promise. But we’re not even close to the level of public-private cooperation that is necessary. Worker education is particularly neglected. Billions are being spent on extended unemployment, but virtually nothing has been invested to prepare unemployed and under-employed workers for jobs in other industries. Congress could jump-start continuing education by linking extended benefits to mandatory educational programs for workers unemployed past the basic 26-week period.

     Roughly half the jobs lost in this recession were in cyclical service industries like leisure and retail. Those relatively low-paying jobs will return as the economy recovers. The other half of the jobs were lost in manufacturing, construction, and finance where many of the high-paying jobs are unlikely to return. On the other hand, jobs are being added in health, education, and government. Sadly, a majority of the 15 million unemployed workers aren’t qualified for jobs in those fields.

      Surprisingly, even the manufacturing sector is struggling to expand. Manufacturing companies have added jobs slowly in 2010 and complained that they can’t find workers. For the last ten years, manufacturers have moved relentlessly toward automation, cutting workers and off-shoring low-skilled tasks to countries with cheap labor. Today, manufacturers of advanced products like solar cells and medical devices want to expand, but they need workers who can operate automated machinery, read blueprints, and apply math skills that most assembly line workers don’t have. Governments and companies must cooperate to train workers who are exhausting unemployment in the skills required to fill those jobs.

     Arne Duncan, Obama’s Secretary of Education, has an unprecedented opportunity in this regard. No Education Secretary has ever had so much money to work with – $10 billion in stimulus funds! A large block of that money went to states to prevent teacher lay-offs, but Mr. Duncan himself called the remaining money “a moon shot for America.” Race-For-the-Top grants will be issued this fall; and school districts, non-profits, and for-profit educational institutions lined up to grab the money. The focus seems to be accountability, merit pay for teachers, innovative K-12 curricula, and lowering drop-out rates – all worthwhile efforts. But some money should be used to retrain unemployed workers. President Obama hit the nail on the head when he asked every American to commit to at least one year of post-high school training – but unemployment and stimulus funds weren’t provided to help them do that.

      Congress has passed infrastructure projects, extended unemployment, and financial regulations; but precious little to maintain our living standards in the face of intense global competition. In the past, we led the world because of our education and innovation – and we can do it again! I had more education than my father, who had more education than his father. But that trend is reversing even in my own family. In the 1960s, the U.S. had the top high school graduation rate in the world (today we’re barely in the top 20). Those graduates filled high-paying jobs in aerospace, electronics, computing, and communications. But U.S. innovation has slowed too – only three of the top 10 global companies in solar power are based in the U.S.

      After past recessions, U.S. workers moved to higher paying jobs in new fields. But today, productivity gains and technological changes happen so fast that skills from old jobs often aren’t transferrable to new industries. Our national educational system needs a make-over – it is inadequate to meet the global competition we are facing. Working together, governments, companies, and workers can met the living standard challenge through research, innovation and, most importantly, continuing education. The government must encourage job-generating R&D and training programs using business-friendly policies and incentives, rather than quick fixes like unemployment extensions. Companies must evaluate their strategic plans against the challenges of the new global economy. And workers (that includes me and you) must continuously reach out for more training and education throughout our careers. We all need to go back to school!

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