Sunday, April 29, 2012
The market isn’t ready to absorb them. Specifically,
According to government projections released last month, only three of the 30 occupations with the largest projected number of job openings by 2020 will require a bachelor's degree or higher to fill the position — teachers, college professors and accountants. Most job openings are in professions such as retail sales, fast food and truck driving, jobs which aren't easily replaced by computers.
I had to smile at “college professors” making the list. When I entered graduate school during the first Bush administration, we were told that a great wave of faculty retirements was on the horizon, and that we’d be in high demand be the time we got out. We all know how that played out. It’s entirely possible that college professor positions will open in great numbers, but only if you fail to differentiate between adjunct and full-time positions. And having adjunct positions available hardly gets around the “underemployment” issue.
At the associate’s level, similar dynamics are playing out. For students who don’t intend to transfer for the four year degree, the market isn’t what it used to be. (The one partial exception is allied health, such as nursing. And even that isn’t a sure thing.) Many of the skilled trades took a beating when the construction market collapsed in 2008, and they’re yet to recover. (We’re pretty sure that’s why so many of the “green jobs” have yet to materialize: they’re based on construction.) Generic “business” degrees don’t do much, and generic liberal arts degrees don’t, either, unless you transfer.
In my darker moments, I sometimes wonder if the root of the problem with public higher education in America is that it was designed to create and support a massive middle class. And we’ve tacitly decided as a society that a massive middle class is not a priority. We’re trying to fulfill a mission that the country has largely abandoned. When the goal of a prosperous middle class was tacitly dismissed, dominos started to fall.
The meme making the rounds last week was the announcement that outstanding student loan debt in America reached a trillion dollars. That’s not a function of community college tuition, obviously, but it indicates that what we’re preparing students for, and what the economy wants them for, don’t align.
Although that’s presented as a failing of colleges, it mostly isn’t. (One could argue about the wisdom of getting a terminal bachelor’s degree in English at Nothing Special Private College, but that’s ultimately marginal.) It’s mostly a failing of the larger economy, of our politics, and of our priorities. The “starve the beast” strategy has been so effective that it’s easy to forget that as recently as 2000, we were actually paying down the national debt. Austerity is a choice.
None of which is terribly helpful if you’re twenty-two and graduating with tens of thousands of dollars of debt and no immediate prospects for a job that will make enough to pay both rent and loan payments.
The new economy is sometimes presented as an issue of intergenerational justice, with the outsize poverty of the young subsidizing the outsize wealth of the old. That’s true as far as it goes, but it ignores a larger issue. As the boomers retire and X’ers and Y’s fill the workforce, they’ll either have the skills to grow the economy, or not. They won’t develop those skills sitting on the sidelines. In the absence of growth, prospects for boomers’ retirements are grim, let alone the folks who come after them. According to the most recent report on social security, the system will go broke the year I turn 65. Thanks, guys. If we want to get things moving, we need to integrate the young into the productive workforce ASAP.
College still passes the “I’d send my kid” test. I fully intend to send mine. As insurance policies go, it’s weaker than it once was, but it still beats most of the alternatives. I just hope that as a society, we don’t make the mistake of blaming colleges for preparing students for jobs that aren’t there, when we made the choice to let those jobs dry up.
That about sums it up, I think.
Just don't blame boomers for the Walmart-driven push for cheap imported goods. That guy was from the "greatest" generation.
Austerity is a choice.
That struck home. The GDP in my state has recovered but state revenue has not. Why? Because we cut taxes during the Great Recession and covered that bet with stimulus money. The result is hurting the middle class who voted in the people making the cuts.
That said, I think you were too quick to discount the belief among many students that any degree from an expensive school has the same value as a particular degree from a top school. Go visit Harvey Mudd and read their "value added" statistic.
the [social security] system will go broke the year I turn 65
You didn't read the report very carefully. It won't be "broke", but it will only be able to pay 75% of what is promised. Even that assumes that the "normal" retirement age isn't moved from 67 to 68 for you and 69 for your kids. That eliminates the problem unless we don't restore or replace the "payroll tax". That "tax" cut has already shaved several years off of the break even point.
The bigger problem is how the government will manage to pay off all of the T-bills held by Social Security and retirement accounts.
Your claim about there being no wave of retirements is demonstrably false in my region. My college has replaced more than 1/3 of its faculty in the last decade or so (with tenured faculty) and that process is ongoing. When I visit my alma mater, almost all of the profs are new. The problem you see is that the pool of candidates does not consist exclusively of fresh PhDs like it did in 1965. AIP data show that very clearly, as does our applicant pool.
The trouble with college professors is a microcasm of the 'we don't need no thriving middle class'! problem. Adjuncting/working for a mega-growth fixated for-profit are not the jobs people get PhDs for.
I'm glad CCPhysicist has noted some problems with the default cynical analysis of social security. Far be it from me to argue with cynicism, but it seems to me that if one *wanted* to destroy the middle class, convincing them of the inevitable failure of SS might be pretty effective.
I'll live 7 years longer than a boomer. I can deal with working 2 years more.
The good news is, Edmund Dantes is fricking THRILLED. Every day is like Christmas.
How Bizarre. Edmund Dantes is far more upset than you are at these developments. Only one of my four college educated kids found a career in the US. One relocated to Europe, and met with success, and I haven't seen him or his family in three years. Two remain in the hunt. My own income peaked in 2001, and is down 30% from its temporary top. Believe me, I know all about the destruction of the middle class, of which I am struggling to remain a member.
The difference is, I see the destruction of the middle class as the logical if unintended consequence of deliberate Obama policy, not a mysterious right-wing cabal. I see the only hope for restoration of the middle class through the success of the Tea Party, with the assertion of control of the government by ordinary people. I don't believe that Keynes was right, or if he was, there are real limits to the effectiveness of government spending to promote the economy. We passed those limits long ago.
The transformation underlying the unemployment problem is the elimination of so many layers of middle management through enhanced information technology. This development has had ripple effects throughout the labor force, notably entry level jobs. Colleges have largely failed to acknowledge or respond to this development.
Finally, I find the readiness and enthusiasm of some "liberals" to impugn the motives of those who don't agree with them to be their least attractive quality.
Remember, President Bush wanted to invest our Social Security monies in the stock market (which would have made the wealthy investment companies even richer) until the market had its inevitable correction.
As for Obama's policies creating the end of the middle class, how about some supporting facts and figures? If you study how the middle class was doing and is doing under Democratic and Republican presidents, it is obvious where the damage was/is being done.
The whole generational conflict, even if not completely untrue, is overplayed. The real problem is that there just plain aren't enough jobs for new graduates. And the ones that are there aren't much good, even if you've been in the workforce for a while.
Until employers start looking at staff as more than just costs they have to pay for every month, things aren't going to change much. New graduates want to work and want fulfilling work, or at least a shot at it.
There's a natural progression of how economies develop and flourish. From farming to manufacturing to information/technology. Just as an economy based on farming would loose to an economy based on manufacturing 60 years ago, if we harken back to the days of blue collar factory work sustaining the middle class, we will loose to the economies that feed their middle classes investing in new technologies. The fact that only 3 of the greatest growth sectors are in information/technology fields is more than just a sign that we've abandoned the middle class. It seems a sign that we've abandoned growing our economy at all.
CC Physicist, easy additional T-bills.
Increases in health care costs are what are really going to eat away at things.
Notice what the degrees most likely to lead to a job all have in common – nursing and teaching require experience in the classroom setting and are both credentialed. For computer science, internships are a de facto requirement (every CS major I knew did a coop or two during their senior year) and I would imagine that accounting is very similar. They also all teach specific skills that lead directly to a job that is commonly found in any community. The nursing/teaching/accounting/CS programs that I have known have a well developed alumni network and relationships with local firms/schools who look for their grads.
I would make the following claim – the student who wants to major in “humanities” should be encouraged to do so only under two conditions. First, they should be required to have a job or internship every summer of their college career that is related to the field of work they eventually want to enter or during those summers, they should complete training for a trade or a license. Second, students should approach their education with the understanding that that their degree will enrich their lives only but that it will not lead them to be employed and therefore, they should not take on debt to get the degree that a minimum wage job ($10 per hour in CA) would not allow them to repay. I don’t mean this in a mean way – but it just doesn’t make sense to take on a non-dischargeable debt that does not lead to employment. The “build it and they will come” days of college education are over. I don’t know a single person who has become employed in the last 5 years without working some kind of a professional network. Any responsible faculty advisor is telling their students this everyday and helping them connect with others in the field they want to enter.
I’d also add that it would make sense to cut the gen ed requirement to increase capacity to produce more graduates at our overburdened schools but since that would also cut income per student per degree while increasing overhead, I’m not holding my breath.
CC Physicist, easy additional T-bills.
That is the way Southern European Socialists (Greece, Italy) think -- which is why they are broke -- but Northern European Socialists (Germany, Norway) know better.
The problem is that Social Security won't be buying them, and neither will future retirees unless the interest rate goes way up. However, higher interest rates will require tax increases just to pay the interest and you are back in Southern Europe.
Increases in health care costs are what are really going to eat away at things.
They will if we keep pretending that health care is free, that is, keep following the path of Southern European Socialists. (That is how I view the program of the Bush administration and the Republican health plan that Obama adopted.) But the fact that it isn't free is hidden from consumers.
I think our host's analysis is dead on. America once was a "can do" country, but starting the in 80s, it became more and more "can't do". We can't feed everyone. We can't provide medical care for everyone. We can't provide safe places to live for everyone. We can't have safe work places for everyone. Free marketers said it enough times, and now people actually believe it.
There are some things that can only be done by collective action, and they require state activism. If you want to industrialize, you need industrial policy. If you want a large middle class, you need pro-middle class policies. There are still no counter examples.
First, the world does not have enough resources at near current technology (i.e. without nuclear fusion or similar types of breakthroughs) to support 6 billion people on the material standard of living Americans currently enjoy.
Second, unless the US or other advanced countries do something seriously immoral (e.g. bomb Africa back to the Stone Age, or adopt grossly unfair trade policies that effectively do the same), less developed countries will eventually develop and compete effectively for natural resources.
This will lead to everyone having similar material standards of living. This means, given resource constraints, the US will have a poorer material standard of living.
Now, enter automation. It turns out that, in an advanced economy, one can produce material goods with less labor. This means we can keep our material standard of living (which is constrained by total world resources, which does not depend on population), but only if we have fewer people. We can have fewer people either by eliminating them (hopefully gradually through birth control) or by hoarding material goods to a subset of the population.
On the other hand, we could share these material resources, but to keep an economy going, we will need demand and supply for non-material goods. One non-material good certainly is research and scholarship. But this one (both in terms of supply AND demand) requires advanced levels of education that it is not clear everyone is capable of.
Sigh... No the problem is that they don't control their currency (in Greece you also have the problem they didn't collect taxes very well). The US doesn't have that problem. You do have to worry about inflation but hasn't really been a problem here in the US.
People are still buying T-bills despite being near 0 return. If people stop buying them we have bigger problems than Social Security. Given the current rate is less than the rate we were paying before is actually good.
You are correct about the long-term benefits from the low interest rates on the current set of T-bills, but that is purely supply and demand in the current economy. People choose perceived safety over perceived risk.
However, the problem in Greece and the other southern European countries facing a "debt crisis" is that they wanted (and still want) something for nothing. The observation that they didn't collect taxes very well is a symptom, not a cause. They don't want to pay any taxes.
It is a symptom shared by the US, but we do have the advantage of being able to print money to cover our problems. The northern European countries, on the other hand, also cannot control their currency but support strong social programs by the old-fashioned method of paying for them. A side effect is that they are also the most entrepreneurial countries in the world, well ahead of the US.