Today's date:
Winter 1993

Failing Our Youth: America's K-12 Education

Laura D'Andrea Tyson - Chairwoman of the President's Council of Economic Advisors

Does America face a skills shortage in the sense that the skill requirements of American jobs exceed the skills of the American work force? Surprisingly- and worrisomely-the answer may be no. This is the startling conclusion reached by two important studies, a report by the Commission on the Skills of the American Workforce, organized by the National Center for Education and the Economy, and a report issued by the Economic Policy Institute.

True, America's business leaders are shocked and concerned to find that many of their workers do not possess the elementary skills necessary to read a production schedule, follow an instruction card, or add a column of numbers. There is most definitely a shortage of such elementary skills among a growing portion of America's work force, and companies who are forced to foot the bill for remedial training are rightfully angry at the nation's education system.

True, American employers complain that there is a shortage of workers with a good work attitude.

True, American companies confront a shortage of specific skills for some occupations, especially in traditional craft apprentice trades, like skilled construction or manufacturing, and in such traditionally female occupations as skilled secretaries and nurses.

However, despite their concern about finding workers with elementary-school skills and a good work ethic, or locating workers in specific occupational categories where labor is in short supply, most American companies do not believe that the skill requirements of their jobs exceed the skills of the available work force. Nor do they believe that the education and skill requirements of these jobs will increase significantly over the next decade. According to extensive interviews carried out by the Commission on the Skills of the American Workforce, the nation's employers anticipate that 70 percent of the jobs of the future will continue to require little more than today's American high-school education.

The fact of the matter is that even if American education is reformed to fulfill employers' wish list by guaranteeing threshold levels of literacy and numeracy and by encouraging a better attitude among future workers, the nation will still have a skills and education crisis on its hands.

The US faces a shortage of skilled, high-productivity jobs capable of providing future income growth for the average, noncollege-bound American worker. And this shortage cannot be eliminated without significant improvements in the nation's standards for K-12 education.

Since 1969, real wages for the majority of American workers have declined by 12 percent. The economic expansion of the 1980s was based largely on more work, not better work. Even with great effort, the payoff in family incomes was small - median family incomes increased only .4 percent a year between 1979 and 1988. As even conservative observers have come to acknowledge, the 1980s economic boom was not for everyone. The benefits went disproportionately to the very wealthy, while the bottom of the income distribution suffered in both absolute and relative terms. Further, benefits went disproportionately to the college educated whose earnings increased, while those holding high-school diplomas-the vast majority of the American population-saw their earnings decline.

Most American workers were poorly paid in the 1980s American companies, facing low-cost competition from foreign producers, slashed costs by holding the line on wage increases, laying off workers, outsourcing work to lower-wage locations abroad, and cutting payrolls at home, often by replacing higher-priced permanent workers with lower-priced temporary workers.

At the high-wage end, American companies were challenged by their European and Japanese counterparts who benefitted from lower capital costs and an inflated dollar, and who succeeded in making their high-wage labor more productive not simply by investing in more equipment but by organizing their workers in ways that upgraded their skills. These new forms of work organization relied on greater delegation of authority, reduction of supervision, job rotation and flexibility, and continuing training to improve worker productivity. Often, these features of the work place were complemented by the introduction of profit-sharing and employee-involvement schemes such as quality-control circles, joint labor-management consultation committees and employee representation on company boards.

In part as a result of these new organizational forms, the Europeans and Japanese succeeded in meeting the competition by making their high-paid workers more productive rather than by cutting into their real wages. Some American companies, such as Hewlett Packard, Xerox, and IBM, did the same. But the vast majority of American companies continued to opt for traditional hierarchical work organizations that made few demands on the skills of their workers. In fact, most American companies interviewed by the Commission on the Skills of the American Workforce continue to prefer this approach, which dooms most American workers to a low-wage future. If American workers are to look forward to anything more than low-wage employment, changes in work organization are required to upgrade their skills and productivity so that American companies can afford to pay higher wages and still compete in world markets.

The nation's educational system is essential to this development of worker competence and company competitiveness. High-productivity workplace organizations depend on workers who can do more than read, write and do simple arithmetic, and who bring more to their jobs than reliability and a good attitude. In such organizations, workers are asked to use judgment and make decisions rather than to merely follow directions. Management layers disappear as workers take over many of the tasks that others used to do -from quality control to production scheduling. Tasks formerly performed by dozens of unskilled individuals are turned over to a much smaller number of skilled individuals. Often, teams of workers are required to monitor complicated computer-controlled production equipment, to interpret computer output, to perform statistical quality control techniques, and to repair complex and sensitive equipment.

Tasks such as these require higher-order language, math, scientific, and reasoning skills that America's K-12 education system is not providing. The facts are well known and appalling: We have the highest dropout and illiteracy rates among the advanced industrial countries. Our students consistently perform at or near the bottom of almost every group on international examinations in a wide range of subjects. Forty percent of European high-school students can solve math problems that are beyond the ability of go percent of American high school students. Japanese high school graduates can solve calculus problems that not even most American college graduates can tackle. The glaring reality is that all of the advanced industrial countries provide high school educations for all their students that equal or exceed those that we provide for only our college-bound students. Increasingly, our high school graduates are also trailing those of the newly industrializing countries.

The failure of our education system begins with our belief in ability, not effort, as the key to academic achievement. Our system writes off youngsters early in their school career on the basis of their ability. We provide very little in the way of financial support or educational standards for the majority of our children who do not go on to four-year colleges. Since almost half of the funding for public education is drawn from local property taxes, the financial system favors those who are most likely to go to college.

Although America ranks first in terms of the share of national resources devoted to education, it ranks 14th out of 16 industrial nations in the share of resources devoted to precollege education. We spend big money on our college and university education systems, but underfund our K-12 system. It would take an additional $20 billion-spare change compared to the projected cost of the savings and loan loan bailout - simply to bring us up to the average. And the average is not good enough. To provide an education comparable to that in these other countries, we have to spend proportionally more because our school system, based on local autonomy, is more expensive than a centrally administered system and because our heterogeneous school age-population requires diverse programs. We also have to spend more to meet the special educational needs of children raised in poverty-an estimated 20 percent of all American children, more than twice the percentage in any European country.

The Commission on Skills in the American Workforce, of which I was a member, concluded that nations with excellent school systems have one thing in common: a set of stringent national performance standards that virtually all students must meet by age 16 and that have a direct effect on their employment prospects. These standards establish high goals for student achievement and provide an objective measure against which the performance of individuals and schools can be assessed. None of these nations have a system of choice.

Based on this evidence, the Commission has proposed that the US adopt a new educational performance standard for A students, to be met by age 16. This standard should be established nationally, not locally, and should be benchmarked to the highest in the world. Students passing a series of performance-based examinations that incorporate this standard would be awarded a Certificate of Initial Mastery. Unlike all the major tests currently used in the US, these new examinations would not be used as a sorting device but would set a tough standard that almost all students would be trained to reach, although not all at the same time. The Commission has also recommended that the states, with federal assistance, create and fund alternative learning environments for dropouts and others who cannot attain the certificate in regular schools.

The establishment of a system of national standards and assessment would ensure that every student leaves compulsory school with a demonstrated ability to read, write, compute and perform at world-class levels in general school subjects. The certificate would certify labor market readiness and a mastery of the basic skills necessary for high-productivity employment. The same certificate would also be required for entry into all subsequent forms of education, including college preparatory and certified professional and technical programs.

In addition to setting stringent national standards for academic achievement, most of the other advanced industrial nations have multi-year educational programs after high school that prepare students for specific trades and ease their school-to-work transition. In contrast, we prepare only a tiny fraction of our non-college- bound students for work.

To catch up to the skills of our competitors, the Commission has also recommended the creation of a national system of technical and professional certificates for the majority of students and adult workers who do not pursue four-year college degrees. Such certificates should be offered across the entire range of service and manufacturing occupations that do not require a college baccalaureate. A student could earn the entry- level occupation-specific certificate for the job of his/her choice after completing a program of combined work and study. A sequence of advanced certificates, reflecting the mastery of complex skills, would be available and could be obtained throughout each worker's career.

Finally, the Commission has called for a greater commitment by American companies to train their workers during their employment careers, Many of the other advanced industrial nations support company-based training through financing schemes based on general tax revenues or compulsory payroll deductions. We do not. Most American companies spend virtually nothing to train their workers. The bulk of business spending on training occurs in a small number of companies and is focused on their college-educated workers. Only one-third is spent on the non-college educated, affecting no more than 8 percent of our front-line workers. The total training budget of the business community represents less than 10 percent of the nation's annual public education budget. We thus devote almost all our educational resources to the first 15 or 20 years of a worker's life. We assume that little learning will be required during the subsequent 40 or 50 years. In a time of radical changes in the technologies of work, this assumption makes no sense. If American companies are to provide high-wage job opportunities for American workers, they must spend more to train them.

The Commission recommends that the federal government require all employers to spend approximately 1 percent of their payroll on education and training. Employers failing to meet this target would be required to contribute approximately 1 percent of payroll to a national fund for skill development that would be used to train temporary, part-time, dislocated and disadvantaged workers whose training employers would probably not underwrite.

During the 1990s we are in for a shock: There will be fewer workers in America relative to the population that depends on them. The 1980s option of maintaining real incomes by more work instead of better work will not be available. If the real earning power of the nation's workers continues to fall, everyone will be in trouble.

A world-class education system is important for many reasons. It is essential to the knowledge required to make good decisions as individuals and as a nation, It is essential to the sense of civic responsibility and understanding on which our democratic institutions depend. And it is essential to our future standard of living.


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