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National CrossTalk Summer 1999
News Editorial Other Voices Interview

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A College Degree is the Key
Higher education and the changing workforce

By Anthony P. Carnevale

Anthony P. Carnevale  
HELP WANTED: COLLEGE REQUIRED. More frequently than ever, this is the message that corporate America is sending to America's job seekers. More than two-thirds of the jobs being created in the fastest-growing sectors of the U.S. economy -- office jobs (including legal, sales and marketing, accounting, managerial and editorial positions), health-care jobs, and teaching positions -- now require at least some college.

The office sector alone is having an enormous impact on the U.S. economy and the skills it demands of its workers. The percentage of U.S. jobs in the office sector grew to 41 percent of the nation's 133 million jobs in 1997, up from 30 percent of all jobs in 1959. By 2006, the number of U.S. office jobs is projected to grow by another 4.4 million.

But creating these college-educated workers will require smarter investment strategies for the dollars we now devote to postsecondary education. The stakes are high. States that do not push enough of their students through college are going to lose jobs, skilled workers and tax revenue to locations that do. In an increasingly global economy, these jobs could as easily go to workers in Tokyo as Topeka.

Many of these new jobs are in education and health care -- jobs associated with the development and maintenance of human capital. Why? Because the new economy requires more education, the demand for health care continues to rise (especially as the population ages), and productivity in education and health-care jobs is not rising.

Meanwhile, the number of jobs, such as farm, factory, or behind-the-counter services jobs, that do not require a college education is falling. Factory employment declined from 33 percent in 1959 to 19 percent in 1997, and the number of farm jobs also continues to decline. Low-wage services jobs, which comprise about 20 percent of all U.S. jobs, have held steady since the 1950s and are not expected to become more plentiful over time.

As the structure of the U.S. economy has shifted, so have its skill requirements. The demand for specific vocational skills is giving way to a growing need for general cognitive skills -- mathematical and verbal reasoning ability as well as a new set of general problem-solving and interpersonal skills.

Little is known about how to develop and assess these general cognitive and behavioral skills in students and workers, but most employers associate them with educational attainment, especially college-level attainment. As a result, American employers use a college degree as the standard by which to screen job applicants.

The good news is that a growing number of students will come of age as the new century dawns. "Generation Y" (or the "baby-boom echo" generation) will enter college between 2000 and 2015, and promises to be bigger and more racially and culturally diverse than any generation before it (See figure 1). The bad news, however, is that not enough of these students will be going to college.

As a result of our past educational successes and our surging demographic changes, by 2015 there should be an additional 500,000 Hispanic undergraduates and 200,000 African American undergraduates between the ages of 18 and 24 on our nation's campuses. But these gains in diversity will be more apparent than real. The share of Hispanic and African American youth now attending our nation's colleges trails their share of all 18- to 24-year-olds by 630,000 students.

To improve access to college for students of all races, ages and income backgrounds will require a decisive response from educators and government officials at every level -- elementary, secondary and postsecondary, local, state and federal. Educational approaches and financial aid programs need review to ensure that the country's rising students are getting the skills and funding they need to enter and finish college, and to secure their place in the new American workforce.

College Degrees: A Must for New-Job Seekers
More than ever before, American employers -- whether industries, associations, government agencies, telecommunications firms, schools or hospitals -- are making college degrees a prerequisite for new jobs. "Where did you go to college?" has replaced "Did you go to college?" as the question facing applicants, because many employers assume that applicants already have a diploma.

There are many reasons why most of the new jobs in the U.S. economy now require a college education. In 1959, only 20 percent of workers between the ages of 30 and 59 needed at least some college; today that number is 56 percent.

There are at least four reasons why the demand for college is growing in the work place:

First, the number of low-wage, low-skilled services jobs in the U.S. economy -- jobs that do not require any postsecondary education -- is not growing. These jobs, which include restaurant and retail jobs, still comprise only 20 percent of all jobs in the U.S. economy -- the same percentage as when Eisenhower was president.

Second, the lightning-speed growth of the high-technology industries -- such as computers and fiber-optics as well as related industries, including telecommunications, software manufacture and design, and Internet service providers -- has done two things: It has helped shrink the number of factory jobs while increasing the skill level necessary for those that remain.

Contrary to popular belief, this loss in factory jobs is not being fully offset by gains in new high-technology jobs. High-tech jobs have grown from 3.4 percent to 6.6 percent of all jobs since 1959. This is largely because, as with factory jobs, it takes fewer people to make or repair high-technology equipment. And more education is expected of these workers. More than 80 percent of high-tech jobs require at least some college. As a result, the high-technology field is usually not the answer for displaced factory or other workers -- unless they have the ways and means to go back to school.

Third, as the baby-boomer population ages, and its children crowd the nation's schools, demand for workers in both the health-care and education fields has grown rapidly.

Unlike factory or high-technology jobs, teaching children or caring for patients are tasks that are more difficult to replace with technology. Machines simply cannot substitute for the human touch. They cannot perform surgery, or ensure that a child truly understands how to multiply fractions. As a result, the number of health-care jobs in the U.S. grew from 3.7 percent of all jobs in 1959 to 6.6 percent of all jobs in 1997. Over the same period, education jobs increased from 5.6 to 8.3 percent of all jobs.

Most of these new jobs, however, require higher education. More than one-half of education and health-care workers are managers or professionals, positions that require a two-year or a four-year college education. Overall, 78 percent of all education and health-care workers have at least some college education.

Hispanic and African American workers are underrepresented among the better-paying jobs in these fields as well. Only one in three Hispanic workers in the education and health-care fields has a managerial or professional job that demands a college degree. They are more likely to be orderlies and cafeteria workers than doctors, nurses, teachers or school administrators. African Americans actually have a larger representation than whites in the education and health-care fields but, again, are more likely to hold lower-skilled jobs requiring less education.

A fourth reason for the increase in demand for more highly educated employees is that office jobs demand them. And that is where most of the new jobs are.

The U.S. economy has, in large part, traded in its hard hat for a briefcase. The country that made the assembly line famous now employs more office workers than factory workers. Office jobs, a definition that also includes those working in the headquarters of manufacturing companies, now number 54 million in the United States, or 41 percent of the 133 million jobs in the American economy.

By 2006, the number of new office jobs is expected to swell by 4.4 million. In comparison, the information technology field is only expected to add 750,000 new jobs by then.

Office workers -- stockbrokers, accountants, managers, lawyers, editors, salespeople and their like -- also are America's best-paid group of employees. On average, male office workers with B.A. degrees or more earned $63,500 a year in 1997, and female office workers with B.A. degrees or more earned an average of $39,000. (In comparison, annual salaries in the health-care and education fields in 1997 averaged $58,600 for males, $33,800 for females.) Office workers also are well-educated: 66 percent of office workers today have at least some college education, while 30 percent have B.A. degrees.

Hispanics, in particular, are not getting their share of these new office jobs. Only one in four Hispanic men and one in three Hispanic women were employed in office work in 1997, compared to almost half of white workers and 36 percent of African American workers.

Standards Rising for Existing Jobs
While there is a 28 percent increase in the number of jobs that have traditionally required a college degree, the largest share of the increase in jobs with postsecondary education requirements -- about 72 percent -- comes from higher skills required in jobs that previously did not demand college-level education.

To put it another way, nearly three-quarters of the demand for workers with higher education come from educational upgrading within jobs. The remaining one-quarter is due to the shift in the distribution of occupations toward those that historically have required higher education credentials.

...In other words, the rise in the share of managers and professionals from 17 percent in 1959 to 29 percent in 1997 represents the shift in occupations (See figure 2). The increase in the share of managers with a four-year college degree from 40 percent in 1959 to 57 percent in 1997 represents educational upgrading.

...Between 1959 and 1997, the percentage of the nation's managers and professionals holding a bachelor's degree rose dramatically, from 41 to 63 percent. Over the same period, the percentage of these elite jobs that were awarded to individuals with no college education fell from 22 to 15 percent, while the percentage awarded to high school dropouts fell from 15 to 1 percent.

Today, 34 percent of the nation's 84 million prime-age workers (those between 30 and 59 years of age) hold high-paying managerial or professional jobs paying an average annual salary of $59,300 for men and $34,500 for women. Of these, more than 85 percent have at least some postsecondary education.

The story is the same among people who hold "good" jobs, such as crafts workers, technicians and clericals. In 1959, 57 percent of the men and 30 percent of the women holding these good jobs were high school dropouts. By 1997, only 11 percent of the men and five percent of the women holding these same jobs were high school dropouts. Instead, more than half of the workers in these jobs in 1997 had two-year degrees or some college course work. In 1959, only 14 percent of the men and 18 percent of the women holding these jobs had two-year degrees or less.

Today, 37 percent of the nation's prime-age workers hold these good jobs, which pay an average annual salary of $36,000 for men and $22,000 for women. Of these, more than half have some college, more than one-third have two-year degrees, and more than 15 percent have four-year degrees or better.

Diversity Is Increasing, But Not Fast Enough
From a diversity standpoint, there is good news. The percentage of Hispanic and African American undergraduates in America's colleges and universities has grown, and their participation in the economy's better jobs has grown along with it.

As all populations increase their college enrollment and graduation rates, the opportunity gap is closing slowly. But the gap persists, especially in attainment of B.A. degrees. In general, minority women are making more progress than minority men, especially Hispanic men.

As a group, Hispanics are farthest behind. Between 1973 and 1997, the share of Hispanics with some college education rose from 9.2 to 17.7 percent for men and from 7.5 percent to a dramatic 22.2 percent for women. For African Americans, by 1997, 45 percent of males and 51 percent of females had some postsecondary education.

The number of Hispanics and African Americans holding better jobs has risen, too. From 1979 to 1997, the number of Hispanics employed in professional and managerial jobs rose by three percent, with a higher proportion of Hispanic women (19.8 percent) holding these jobs than men (13.3 percent). In 1997, 18 percent of African American males and 25.2 percent of African American females held elite jobs, and 33.8 percent of African American males and 36.6 percent of African American females held good jobs.

But again, from a diversity perspective, there remains cause for concern. While African American and Hispanic students are entering and staying in college in greater numbers -- and thus landing the jobs that only a college degree can bring -- so is the rest of the population.

...From 1973 to 1997, the number of white students with at least some college education grew from 33.1 to 59.9 percent for men, and from 24.8 to 59.6 percent for women. Over the same period, the number of white students awarded at least a four-year degree rose from 19.9 to 33.2 percent for men, and from 12.8 to 30.2 percent for women. And, on average, white students who enter college are more likely than either Hispanic or African American students to complete a four-year degree.

...Although more good and elite jobs are being held by African American and Hispanic workers than ever before, white workers continue to hold a larger percentage of the nation's elite and good jobs, while African American and Hispanic workers hold substantially greater shares of the nation's less-skilled jobs.

What Impact Would True Educational Equity Have on America's Economy?
...These trends reveal a stubborn, troubling pattern. It appears that not enough members of Generation Y will go to college. Projections show that by 2006, the number of low-skilled workers in the U.S. economy will outnumber low-skilled jobs.

But imagine an alternative scenario -- one in which the African American and Hispanic communities had the same distribution of college education as the white community.

First of all, we would fill more of those college jobs that may otherwise go begging, go to under-skilled American workers, or go to foreign workers. Second, the difference in national wealth that would result from this infusion of human capital would be startling. If African Americans and Hispanics had the same education as the white majority, African Americans would add $113 billion annually in new wealth; Hispanics would add another $118 billion to the nation's annual economic output. Together, that is $231 billion a year, an amount equivalent to 6.8 percent of all Americans' earnings. Moreover, assuming an average combined federal, state and local tax rate of 35 percent, the new wealth created by this new human capital would result in more than $80 billion in new public revenues.

Increasing human capital among the African American and Hispanic communities also would benefit minority families substantially. Higher incomes would raise the standard of living of minority families and increase the quality of their lives in countless ways that cannot be measured.

College: Now More Than Ever
More than ever, college is a must. Postsecondary education has become this country's worker training and retraining system.

And though a bumper crop of young talent is moving through the nation's elementary and high schools, we must redouble our efforts to ensure that these students enroll in college, and graduate. More Hispanic and African American students are entering U.S. colleges and universities, but not enough. Many are limiting their college experience to two-year programs or just some college instead of finishing four-year programs. Meanwhile, the rising cost of a college degree is likely to have an impact even on those students who plan to attend college.

Yet, without that college experience, these young people will find it difficult to get good jobs and form stable families, and too many could spend time on the welfare roll, not the payroll.

The nation's higher education institutions will need to handle the new wave of 18- to 24-year-old students from Generation Y while maintaining their commitment to non-traditional students -- those who are older, have families, and may be working or looking for work. Already, 42 percent of all college students are over the age of 24. Among Hispanic college students, more than half are above the age of 24.

Nontraditional students rely on two-year and four-year institutions for retraining or a second chance. For instance, more than 75,000 dislocated workers used Pell Grants, and 48 percent of them also used college loans to restart their careers in 199091, the most recent year for which these data are available. In 199697, 357,400 welfare recipients and 119,400 of their dependents used Pell Grants to improve their prospects. Some assessments suggest that 32 percent of women on welfare are ready to do postsecondary work and, with a boost from 200 hours of basic-skills preparation, another 37 percent would be ready.

If more is not done for the workforce of the future, the U.S. economy of the new century may face rough waters. Keeping the U.S. workforce well-educated is critical to filling the economy's jobs. This is crucial if America is to compete with its overseas competitors. This, in turn, is crucial to ensuring that America's high-paying, high-skilled jobs are filled by Americans in America. Without an educated workforce, companies may relocate or, as they did in 1998, bring in more overseas talent.

Better skill building, more funding, greater access to a college education. An all-hands-on-deck approach to the educational challenges of America's new century is required. The time for it is now.

Anthony P. Carnevale is vice president for public leadership, Educational Testing Service.

Photo by Dennis Brack, BlackStar, for CrossTalk

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