By Aaron Careaga
Courtesy to The Bellingham Business Journal
Education is intended to be a direct channel to meaningful employment and prosperity at the individual, state and federal levels, but the U.S. continues to struggle in igniting substantive economic recovery post-Great Recession.
Some opine that a stagnant economy and chronically higher level of unemployment is the new normal and that America should expect a European-type scenario. Yet corporate profits are soaring and hiring managers exhibit strong demand for those looking in the right spaces.
Recovery driven by greater productivity is greatly inhibited by employee-skill mismatch, more of a structural problem then necessarily cyclical as portrayed by much of mainstream news. Exorbitant costs of higher education, paired with diminishing return on invested capital and time, create a dire scenario for current and future generations that are supposed to, in some sense, become the economic saving grace.
From 2000 to 2010, the real cost of tuition and fees to attend a public four-year college have increased 72 percent (5.6 percent annually) while the average earnings for a full-time worker, age 25-34 and with a bachelor’s degree, have declined 14.7 percent (a decline 1.6 percent annually), according to Business Insider.
With consumers who can’t afford to purchase products and services (electronics, cars, homes, etc.) because they barely earn enough to cover necessities and student loan payments, the longterm outlook for the United States isn’t cheery. But this doesn’t have to be the country’s fate.
As Einstein stated: “Insanity is doing the same thing over and over again and expecting different results.”
Preparing students at all levels of education with outdated and unnecessary skills only prolongs the pain. Instead of continuing down the current path, communication between the general public, academia and public and private industries needs to evolve. Everyone should be taught a well-rounded basis of knowledge with greater importance placed on high-demand skills that prepare students for meaningful careers.
Lisa Kahn, a labor economist at the Yale School of Management, studied the earnings of men who left college and joined the work force during the deep recession of the early 1980s. Unsurprisingly, she found that the higher the unemployment rate upon graduation, the less graduates earned right out of school. But those workers never really caught up.
“The effects were still present 15 or 20 years later,” she said. “They never made that money back.”
The average net worth of someone age 29 to 37 has fallen 21 percent since 1983; the average net worth of someone age 56 to 64 has more than doubled. Thirty or 40 years from now, young millennials might face shakier retirements than their parents. For the first time in modern memory, according to Anne Lowrey of The New York Times, a whole generation might not prove wealthier than the one that preceded.”
Counterarguments that “you never know exactly where the jobs are needed,” and “it’s impossible to predict the future,” fail to realize the shortfalls of the current system.
Business Administration and MBA graduates were more valuable 50 years ago because of limited supply. Similarly, software developers, miners, welders, mathematicians, accountants, machinists, health care and engineering graduates are in high demand today, because relatively less students are encouraged to venture into more specialized fields.
Instead of churning out generalist degrees, academia’s focus should target competitive and skilled careers, as influenced from actual industry demand.
A recent report from the Society for Mining, Metallurgy and Exploration stressed the economic challenges arising from decreased research funding and weak public interest with the mining sector. SME noted that, “The main competition comes from countries with ongoing mining booms. Australia projects a need of 86,000 new miners by 2020. Canada needs 100,000.” Today’s international mining demand is similar to past employment trends and public interest seen in the U.S. that peaked in the early 1980s.
Patrick Taylor, director of the Kroll Institute for Extractive Metallurgy at the Colorado School of Mines, finds that “research funding is at an all-time high, as is our enrollment in extractive metallurgy… due to a combination of company support and government support.” With the majority of society unknowing to these programs, and research funding highly dependent upon private industry, domestic competiveness in similarly profitable spaces remains vulnerable.
Traditional routes engrained in society, going from high school straight to college, are not the only option. Few choose to attend training programs and specialty boot camps that can lead to well paying jobs at a fraction of the capital and time invested.
An April 2013 Associated Press article by Terence Chea told the story of Ken Shimizu, a 2010 marketing and public relations graduate from UCLA Berkley, who recently quit his job and spent his savings to enroll at Dev Bootcamp, a new San Francisco school that teaches students how to write software in nine weeks. The $11,000 gamble paid off: A week after he finished the program last summer, he landed an engineering job that paid more than twice his previous salary.
Dev Bootcamp is just one of the many alternatives that a majority of students are rarely exposed to, let alone encouraged toward.
Americans are a hardworking and resilient group, yet society in general seems to have become detached from economic reality.Discouraged and underemployed workers struggle to recover while future generations continue to be led down a similar path.
Public awareness of high-demand fields, effectively communicated from public and private industries through academia, needs government support for our country to achieve a more prosperous economic future.
Aaron Careaga is a research analyst at WealthMark LLC in Bellingham. He attended Western Washington University, earning a bachelor’s degree in financial economics.