Magazine article The American Prospect

The Overselling of Education: We Need a Better-Educated Citizenry, but the Cure for Increasing Inequality Lies Elsewhere

Magazine article The American Prospect

The Overselling of Education: We Need a Better-Educated Citizenry, but the Cure for Increasing Inequality Lies Elsewhere

Article excerpt

In discussing rising inequality in the United States, Federal Reserve Board Chair Ben Bernanke recently said, "It's a very bad development.... It's creating two societies. And it's based very much, I think, on educational differences."

A better-educated workforce is widely touted as the panacea for every economic problem. Education is said to be the cure both for unemployment and income inequality. To hear leaders of the financial sector talk, the underlying problem with the economy has not been a runaway financial sector but an unqualified workforce. In a recent Reuters special report on the U.S. economy, Diane Swonk, an off-quoted financial-sector economist, said, "The recession merely revealed a reality that has been with us for a long time. We faced a growing gap in education and skills that we tried to fill with debt and credit, which gave us the illusion of growth."

Or consider the statement of the Minneapolis Federal Reserve Bank president, Narayana Kocherlakota, which removes monetary policy as any part of the solution to current high unemployment:

"Firms have jobs, but can't find appropriate workers. The workers want to work, but can't find appropriate jobs. ... Whatever the source, though, it is hard to see how the Fed can do much to cure this problem. Monetary stimulus has provided conditions so that manufacturing plants want to hire new workers. But the Fed does not have a means to transform construction workers into manufacturing workers.... Most of the existing unemployment represents mismatch that is not readily amenable to monetary policy."

This is very comfortable reasoning for the very comfortable class. It identifies "failing" schools and dumb workers for the economic calamity actually caused by a deregulated financial sector following a massive redistribution of income and wealth. This shift was driven by corporate political power that allowed the top 1 percent to capture some 56 percent of all the income growth over the two decades preceding the Great Recession.

Blaming inequality and joblessness on worker skill deficits is an old alibi. In 1987, the Reagan administration's Workforce 2000 report foretold future "skill mismatches." In 1990, George H.W. Bush's secretary of labor, Elizabeth Dole, said, "America faces a workforce crisis where there is a diminishing number of people eligible and qualified for the ever-increasing complexity of jobs in our economy." Many panels, such as the Commission on the Skills of the American Workforce, warned around that same time of the need to radically up-skill our workforce or face long-term income and productivity stagnation.

The Clinton administration echoed this theme, saying more education was needed for workers to adjust during a "transition" to a new economy. It must have been a surprise, therefore, that in the mid-1990s there was a sharp uptick in the economy's productivity that has lasted for 15 years and was accomplished with the very workforce that allegedly put our nation in danger. In the late 1990s, when labor markets were tight, the supposedly unqualified lower-skilled workforce enjoyed solid, real wage gains.

ARE THE UNEMPLOYED THE "UNQUALIFIED"?

It is remarkable that anyone can claim that today's high unemployment is primarily due to a mismatch between the skills of the unemployed and the available jobs. After all, most of those who are unemployed today were productively employed just a year or two ago. The notion that production processes have radically changed is hard to square with the absence of a surge in productivity or investment. There have been roughly five unemployed people for every job opening, roughly twice the ratio at the worst moments of the last recession, which, recall, was considered a jobless recovery.

The shortfall in job openings relative to the last recovery is apparent in nearly every industry, indicating that the problem is across the economy rather than rooted in particular sectors. …

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