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New Education Study

The Financial Times posted this piece on education and why it is so important to our economy. Its implications are very troubling and point to the need for continued investment in early childhood education as well as helping stem the tide of high school drop outs. What do you think?

America’s human capital is tested

By Clive Crook

Published: July 6 2008 17:43 | Last updated: July 6 2008 17:43

State Collige Illustration by Ferguson

A startling and profoundly important fact about the US economy has received surprisingly little attention. The educational quality of the country’s workers is starting to decline – not just relatively (because other countries are catching up and moving ahead) but also, for the first time, in absolute terms. Over the coming years, baby-boomers departing from the labour force will have better educational qualifications than the younger workers replacing them. If the ultimate source of an economy’s ability to grow and prosper is its human capital, the US is in trouble.

For decades the educational quality of the US labour force surged. In 1940, less than 5 per cent of the population aged 25-64 had at least a four-year college education. By 2000, the proportion had increased to nearly 30 per cent. Successive generations of workers improved on the educational attainments of their predecessors. Retiring workers were replaced by better-educated youngsters. This remorseless accumulation of human capital helped fuel the country’s postwar growth. According to at least one authoritative study, it was the principal driver.

This trend came to a halt with workers now aged 55-59. Younger cohorts are no better educated than these soon-to-retire boomers. Broadly speaking, educational quality has topped out – and on at least one measure, it is actually deteriorating. In 2006, Americans aged 55-59 collectively possessed more masters degrees, professional degrees and doctorates than Americans aged 30-34. This impending loss of educational capital is entirely outside the country’s experience.

The numbers come from a recent study by Jacob Funk Kirkegaard of the Peterson Institute for International Economics: The Accelerating Decline in America’s High-Skilled Workforce: Implications for Immigration Policy. As the title suggests, Mr Kirkegaard is chiefly concerned with the US visa system, which discriminates in a variety of ways against high-skilled immigrants. Easier entry of immigrants with scarce skills – for which high-tech employers such as Intel, Microsoft and others tirelessly plead – is the quickest and easiest fix and Mr Kirkegaard makes an unanswerable case for it. But the deeper problem, as he notes, lies with the education system. What is going on?

Has a natural ceiling been reached? If so – if everybody who wanted or might benefit from a college education was receiving one – then the halting of that decades-long trend of capital accumulation would be less of a concern. Some of the tailing off can reasonably be attributed to this saturation effect. But in many other countries, the proportion of people aged 25-34 with at least a college education is now as high as, or higher than, in the US – and the trend elsewhere is still pointing up. South Korea, Japan, Canada and Russia already have significantly higher proportions of young workers with a college education or better.

One could question the figures in other ways. Perhaps a modern college education is more valuable to the economy than a 30-year-old college education – so that, quality-adjusted, the country’s educational assets are still climbing. Stocks of knowledge do get out of date. But this is an argument that could go either way: some would argue that academic standards have fallen and that today’s college graduates are educated to a lower level than their elders.

Another plausible argument is that in-work training and mid-life schooling are more important than they used to be and that the figures ignore such assets. Yet another is simply that it is possible to send too many people to college – that for many students, another four years out of the workforce is not in fact a good investment and that it is an even worse investment for the taxpayers who subsidise it. There may be something to all of this.

Yet one key indicator suggests real cause for concern: the declining high school graduation rate, which affects the supply of those seeking to go to college. This too has been a bitterly contested statistic in the US. The country’s highly decentralised education system causes a proliferation of conflicting data sources and definitions. But a recent careful study by Nobel laureate James Heckman and Paul LaFontaine found that the high school graduation rate “has been falling for 40 years” and that this “explains part of the recent slowdown in college attendance”.

In 2002, the US enacted the bipartisan No Child Left Behind policy, which called on schools to boost standardised test scores in a limited range of key subjects and to raise graduation rates. The policy has been almost universally pilloried by teachers and education professionals, who complain that it encourages “teaching to the test”, a narrowing of the curriculum and other forms of self-defeating gaming of the system. They complain, too, that they have been asked to do more with no increase in resources – complaints that have some merit.

Barack Obama says he approves of the law’s goals, but that it has failed in practice and needs to be scrapped. Teachers and their unions have been less pleased to hear him say that he supports experiments with charter schools and other forms of school competition. As the furious debate over No Child Left Behind shows, education reform is an intensely charged political issue, and one where a Democratic presidential nominee needs to take particular care.

Be that as it may, if the US is unable to mend its failing school system, and unwilling to open its doors wider to skilled immigrants, then much of the current gloom about its longer-term economic prospects may, for once, turn out to be justified.

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