Why is this lesson so hard to learn? Education should be linked to job market

Henry Ford paid workers on his newfangled assembly line $5 a day. That was a lot of money back then. And the pattern he set – good pay for working on the line for folks without many skills – built the middle class in America and paved the way for widespread prosperity for nearly a century.

That’s mostly over.

There are lots of reasons. Many U.S. factory jobs got shipped overseas where, for example, workers in China earned in a year about what an American made in a week. Enormous gains in manufacturing productivity meant the number of workers required to run a plant at full tilt tumbled. And the skills required to hold down a job on the line – running and maintaining a robot, for example – meant a guy with only a high school degree couldn’t hack it.

Result: high and persistent unemployment, not just the result of the Great Recession but the consequence of a profound change in the skills-wages value proposition that underlay much of the economy in the 20th century.

OK. Most of us know this to one degree or another.

But what is striking is the persistent inability of our labor markets to relate the skills output of the human capital industry (schools, high schools, community colleges, universities) to the actual skills demand of the job market.

Every Michigan governor I’ve known going back to Bill Milliken has complained about this. And all of them have been frustrated at the lack of progress.

It’s easy to blame the schools for much of the problem. But how are the schools going to predict the skills needs of the job market 15 years out? The Germans have a highly developed system of apprenticeships for kids still in school to learn what they need to know to get a good job. But except for some parts of the building trades industry, we’ve got very little in this country.

So it was good to see the emphasis in last week’s Governor’s Education Summit conference, held in East Lansing. Governor Rick Snyder argued Michigan could lead the nation in economic growth if only we properly connected education and careers. “I think we have a disconnected situation in our economy in terms of making sure people are career connected,” he said.

Snyder pointed to how important a college degree is in today’s economy: “If you’re an engineer in Michigan today, you can get a job very easily.” But he also pointed that not everyone needs a BA to get a good job.

“We messed up because we didn’t equally emphasize the skilled trades,” he said.

But part of the mess-up can be laid squarely at the myopia of both schools and colleges. Tell me, if you can, just how many career counselors are left in our high schools, folks who can advise kids what kind of skills they need to get good jobs and how to go about getting those skills? The last number I saw was one counselor for every 600 students.

The universities are equally at fault. Career choices, they loudly claim, are no business of theirs. So they keep hands off the kid who wants to get a degree in French literature and discovers after graduation (with a ton of student debt) that there aren’t many jobs out there … and whatever jobs there are don’t pay squat.

What makes this an urgent problem and not just an aggravation is the rapidly growing tidal wave of student debt. My sense is that many college-age students are starting to get it: You’ve got to get a degree to get a good job. But without thoughtful career counseling from the get-go, young people are going to leave college with a lot of debt riding on a diploma that has little relationship to the needs of employers.

The critical thing in all this discussion is the fundamental lesson of economics: Connecting supply (of entrants to the labor market) with demand (of employers for relevant skills). Until that gets done, we’re condemned to have conferences on education that talk the good talk without, however, getting much done.