Winds of Economic Change Blow Away College Degree: Peter Orszag

[FarCenter]

Many parents in the U.S. are legitimately concerned about the prospects for their college-age children. After all, today’s students face three overlapping challenges: a long-term structural shift as the world’s effective labor supply expands; rising tuition and growing concerns about the quality of public higher education; and the misfortune of graduating into a weak labor market.

The first challenge arises from rapid shifting of the tectonic plates that underlie the world labor market. Over the past 25 years, the effective global labor supply has at least doubled and by some estimates has quadrupled. This has suppressed wage growth in the developed economies and reduced the share of national income accruing to labor. So far, people without a college degree have primarily borne the consequences. As a result, globalization has widened the inequality between workers at the 90th percentile of wages and those at the 50th percentile.

The effects of globalization are already moving up the wage scale, though, and that trend will likely continue. As Alan Blinder of Princeton University trenchantly noted in 2006, “Many people blithely assume that the critical labor-market distinction is, and will remain, between highly educated (or highly skilled) people and less-educated (or less-skilled) people -- doctors versus call-center operators, for example.” Instead, the crucial distinction is between those tasks that are easily digitized (and thus subject to substantial competition from workers abroad) and those that are not.

Widening Wage Gap

As a result, in the future, a college degree by itself will be less likely to guarantee a high wage. Ongoing economic globalization may even reduce the gap between the 90th percentile and 50th percentile, but continue to widen it between the 99.9th percentile and the 90th percentile. As Blinder argues, “Since the distinction between personal services (likely to remain in rich countries) and impersonal services (likely to go) does not correspond to the traditional distinction between high-skilled and low-skilled work, simply providing more education cannot be the whole answer.”

http://www.bloomberg.com/news/2011-11-09/winds-of-economic-change-blow-away-college-degree-peter-orszag.html

[liberal N proud]

1. I have one who graduated last year and one ready to enter college next year

The older still has no job, I fear for our younger child.

[RKP5637]

2. In many ways we have no linkage from education to a defined job upon

graduation. It's haphazard. In the ideal system we would link education to defined jobs upon graduation; i.e., there would be a job waiting upon graduation. We need to redefine the paradigm in this country as to what education means and as to what a job means and the correlation for the 21st century. Our current models are obsolete IMO.

[riderinthestorm]

8. Heard an interesting stat: 60% of today's high schoolers will enter a job market

after college in careers that haven't been invented yet.

Not sure if that's true but I heard it in a speech given by the principal of a reputable private high school in Chicago. Meant to ask her where she got that stat but was in a hurry after the program and didn't get back to finding out the source.

If true, then today's kids simply cannot know how to choose a college/career - it's impossible with technology, the economy and globalization warping the job scene at incredible speed.

[RKP5637]

16. It's a real dilemma. I've often asked myself what I would do today if starting

college again, and I really can't come up with a good answer. As you said, it just moves too fast.

[RickFromMN]

3. How many children find "employment" in the military because they can't find employment elsewhere?

They can't afford college. They can't find work.

Going into the military gives them the chance to go to college and have work.

World War 2 was a great source of "employment" for everyone out of work.
The GI Bill provided educational benefits for those fortunate enough to return.

The Republicans don't believe in "public" jobs. Laughter. Military jobs are public jobs.

[FarCenter]

7. Military training is a good entry to police and private protective services

These are jobs that can't be off-shored or automated, and there is likely to be more demand in the future.

[Zoeisright]

17. If you survive it.

Physically and emotionally.

[riderinthestorm]

4. Mine graduated in May 2010 with a masters, still no job

When she started college 5 years ago, her field was a high demand area with very high starting salaries. The economy means jobs in her field have completely collapsed.

How does a parent or child even begin to cope with that?? One can only begin down another educational path so many times because the debt these kids rack up trying to finish is exorbitant. Pretty bad....


FWIW, my daughter graduated with an archaeology degree. Virtually the entire world (except the US of course) requires an archaeological study before construction of anything can begin. With a masters, she'd be a field supervisor instead of a field tech - which she has many years experience. But the construction industry is completely soft right now and she is SOL, even for field tech work.

[dmallind]

5. Not yet, but possibly soon

The unemployment rate for graduates is under 5% and less than half that of the non-degreed.

The logic is sound enough, albeit beyond many businesses and roles to exploit. A major global corporation can easily have a Thai VP of Purchasing, say, but a $20MM injection molder in Milwaukee is unlikely to hire a Materials Mgr in Bengal no matter how easily they could analyze information and negotiate with suppliers from there. Smaller businesses will have face-time expectations for a long time I fear.

But if job security is paramount above all other concerns I have always suggested young folk to choose between the 3 P's - plumber, police officer and physician. Damn hard to outsource or live without those.

[SoCalDem]

6. There are too many "throwaway" people still needing work

and the jobs they do have been devalued to the point of nothingness.

All those high school grads who worked their way up or who were lucky enough to find union jobs in the 80's/90's are middle aged and still with us..and will be for a long time to come.

Their progeny came along at a time when Mom & Dad's incomes started to stagnate, decline ..or jobs went away entirely. College for those kids came with huge debt for them and their families.

The jobs that used to be good ones, and were available to non college people, are now either menial/low paid jobs, done by robots, or outsourced altogether.

Studies come out all the time telling us about "where the jobs are", but not everyone has an affinity for elder-care, nursing, or hospitality"..and even for the ones that do, those jobs are not plentiful or well paid enough to go around.

All these people need places to live, food to eat and jobs to sustain them..these people will be here long after the jobs they once had, go away..

and these statistics & studies don;t even touch the hardcore issues of people who do not graduate or who start, but do not finish college...They still owe the debt they accrued, but lack the skills.opportunities to find work to pay their debts.

These people will procreate, and their progeny will start out from a place far behind

rinse repeat.

[RKP5637]

19. It's a major crisis in this country and I think it's just going to get worse. And

I just don't feel our gov. is addressing it as a crisis. That's not meant to be an Obama bash or anything, just that collectively it's being treated business as usual.

The entire model needs to be changed for the 21st century, and even with the view that we may be entering a century wherein it's statistically impossible for everyone to have what is thought of as a traditional job.

Millions are going to be left behind, and as that occurs the country will stagnate because the human infrastructure will not be in place financially to prop up those in jobs, and erosion of the society will continue.

[Fool Count]

9. This dynamics, and all the problems resulting from it, will come to an immediate end

together with the global capitalist system. There can be no other resolution to this problem
and all the worrying without recognizing the true cause is just a useless whining. Nothing
can be "the whole answer", or a partial answer, other than complete dismantling of the
globalized profit-driven economic system.

[dmallind]

10. Yeah good luck with that. When humanity has evolved beyond human nature perhaps. nt

[Fool Count]

15. That has nothing to do with evolution - just scientific reasoning

and ability to comprehend cause and effect of things. Human flight didn't require
humans to evolve wings, just to understand the laws of physics and some engineering
skills. Was it "human nature" to fly? Is it human nature to enslave and exploit
fellow human beings? I don't think so. This "human nature" argument is the big load
of crap IMHO.

[dmallind]

20. We are however not dealing with capabilities but with character here

I'm pretty sure humans wanted to fly long before they managed to work out how.

But "dismantling the for profit economy" is not a tecnological challenge that is an obstacle to an innate desire of humanity.

In fact the for-profit economy is the RESULT of a innate human desires - the desire for material goods and the desire for power. Replacing capitalism does not mean that everyone will suddenly become completely altruistic and content with an equal distribution of goods and power. It just means they will channel those desires into other paths - either into feudalism via warlord-dominAted anarchy or into totalitarianism via oligarchy. I prefer capitalism to either. Even in the US ther is SOME socioeconomic mobility without bloodshed - there would be none in any system that replaced it.

Until we are all Plato's philosopher kings capable os subsuming personal desires for the greater good that is.

Is it in human nature to at least exploit and most likely enslave other humans given the chance that doing so will make meeting desires more likely? What on earth in human history suggests to you that it isn't? When is the time and where is the place wher this wasn't done in the entire scope of human civilization??

[dmallind]

11. Yeah good luck with that. When humanity has evolved beyond human nature perhaps. nt

[WinkyDink]

12. Clever: Make college unaffordable AND make the degrees worthless. "WE DON'T NEED NO EDUCATION...."

Well, it's less painful than what happened in China and Cambodia to intellectuals.

[FarCenter]

14. Historically, being an intellectual has not resulted in good earning power

Starving artists living in garrets and such?

Some intellectuals have made lots of money, but not resulting directly from their intellectual pursuits. John Maynard Keynes, for example.

[Name removed]

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[Enrique]

18. sounds like he's advocating "school reform" for universities

I don't trust Peter Orszag. First thing he did when he left the Obama administration is write an editorial calling for the extension of the Bush tax cuts.

(Peter Orszag is vice chairman of global banking at Citigroup Inc. and a former director of the Office of Management and Budget in the Obama administration. The opinions expressed are his own.)