LABOR WATCH - America is suffering from a worker shortage, but a more persistent and perhaps even urgent problem is the profound lack of skills among younger Americans.
American elite universities may still be still regarded as the world's best, but for most young people, the educational system—from grade school to graduate school—is something of a failure, a critical engine of persistent inequality and diminished competition on the international stage.
This crisis in competence predates the pandemic. So does the very related labor shortage. The percentage of firms reporting shortages of labor more than doubled between 2015 and 2020, to 70 percent. Low birthrates among millennials has created what the forecasting firm EMSI describes as a "demographic drought," as U.S. population growth between 16 and 64 has dropped from 20 percent in the eighties to less than 5 percent last decade. By 2028, Korn Ferry projects there will be a deficit of at least six million workers.
But the bigger problem is not just numbers; consider that our competitors, notably China, face even more challenging demographics. The big issue is the lack of skills throughout the workforce. From grade to graduate schools, our education is deteriorating.
Our education system, with its hyper-focus on four-year colleges, has failed its students. This about one staggering statistic: Over the past 20 years, we have created twice as many bachelor's degrees as jobs to employ those who have earned them. Over 40 percent of recent graduates are underemployed, meaning that they're working in jobs that don't require their degree. Many graduate programs produce fancy degrees that never return the investment for an estimated 40 percent of master's students, particularly those earning degrees outside the sciences, business, medicine and education
Students are getting the message: A survey taken in 2020 found that only a third of undergraduates see their educations as advancing their career goals, and barely one in five think the BA is worth the cost. The basic reality is this: The upfront investment is high (tuition fees for four-year public colleges have increased by an average of 213 percent in real terms between 1988 and 2017) but the return on investment seems to be failing.
It is likely universities may have reached their apogee and are trending down from their high point. A survey from in 2020 found that only a third of undergraduates saw their education as advancing their career goals, and barely one in five think that a bachelor's degree is worth the cost. The vast majority of young people prioritize such things as finding a good paying job over the social uplift and hefty tuitions associated with four-year colleges. Not surprisingly, overall college enrollment is not simply dropping; it's fallen a full 11 percent in the past decade.
Increasingly employers recognize the education industry's failures. Companies like Google and Apple no longer require a college degree and entrepreneurs like Elon Musktreat universities with a skepticism that borders on disdain, calling it "not for learning" and favoring dropouts who "did something."
The logical alternative for many may be something that has been in decline for decades: a trade education. The country might be short of bodies of any kind, but the most persistent demand and greatest rewards lie for those with specific skills, from medical technicians to programmers. But the biggest unmet demand may be for blue-collar professionals like welders, machine tool operators, carpenters, and plumbers.
These workers, essential to the functioning of the economy, are where the employment future for most belongs. The current shortage of welders, now at 240,000, could grow to 400,000 by 2024. Amid a mild recovery in the U.S., by late 2021, nearly one million manufacturing jobs went unfilled. The current labor shortage suggests that skills in such fields as manufacturing, logistics and home-building are likely to remain long in demand. Such jobs generally pay better than those in services. In 2016, manufacturingstill accounted for more the one-fifth of all blue collar work, paying more than $15 an hour, twice its share of the overall workforce.
This suggests a bluer collar future than many seem to think. CEOs and top technologists may survive the robotic tsunami, but many more ordinary tech and service jobs—paralegals, accountants and other long respected professions—will not be so fortunate, to say nothing of coders.
In the post AI labor market, it's better not be an abstract geek but someone who can install plumbing systems or maintain machines.
It's the end of the economy as we know it. In the past, regional economies looked to elite research universities to drive their economy. Today they should consider boosting their skills-training programs, something that's well underway in Ohio, Kentucky, Nebraska and Tennessee following the successful approach employed in European countries like Germany, Sweden and Denmark. Tennessee has used its training program as a lure for car companies such as Ford and other manufacturers; it's become a critical part of its success in transforming the state into a center for the emerging electric car industry.
At a time of growing income inequality and diminished opportunity, a return to basic skills education promises a new future for America's working and middle class. This shift may not please many in the education bureaucracy, or those who think children should focus on issues of race and gender. But it could provide a way up for the vast majority—and new hope for our middle and working classes.
(Joel Kotkin is the Presidential Fellow in Urban Futures at Chapman University and executive director of the Urban Reform Institute. His new book, The Coming of Neo-Feudalism, is now out from Encounter. You can follow him on Twitter: @joelkotkin.)