The Growing Demand for Higher Education

The long-term success of American business depends on a robust and universally accessible system of higher education.


The ability of American higher education to respond to the changing expectations of the world around it has become crucial to America's social and economic well-being. The business community-operating in an increasingly information-based economy that is demanding a more highly educated citizenry than ever before-has a primary stake in ensuring that American colleges and universities meet this demand. In the 21st century, every citizen requires access to high-quality postsecondary education.

Accelerating technological development and global competition are fueling an unprecedented need for people possessing new and higher skills. Over the past half-century, the ratio of unskilled to skilled jobs has shifted dramatically. Between 1950 and 1997, the proportion of American jobs classified as unskilled dropped precipitously from 80% to approximately 15%2. More importantly, it is projected to drop still further-to 12%-by 20063. According to Bureau of Labor Statistics projections, 70% of new jobs will require significant postsecondary education.4 An analysis of such trends has raised serious concerns that Americans as a whole will not be adequately educated to meet the growing educational demands of the 21st-century workplace. According to one recent estimate, by 2028 there will be 19 million more jobs than workers sufficiently prepared to fill them.5

Businesses have already felt the effects of serious skill deficiencies in the current workforce. During a period of explosive economic expansion in the late 1990s, for example, employers participating in an American Management Association study reported that 40% of job applicants lacked necessary workplace skills,6 and a full 69% of CEOs surveyed by Coopers and Lybrand cited employee skill deficiencies as a barrier to growth.7

The especially pressing shortage of highly skilled information technology workers has prompted American businesses to rely heavily on educated foreign nationals as a means of sustaining their productivity. In the late 1990s, Congress passed legislation enabling rising numbers of temporary, nonimmigrant workers to enter the United States on temporary H1-B visas. Between 1998 and 2000, the annual cap on such workers rose no less than five times, increasing from 65,000 to 195,000.8

Such numbers speak volumes about the continuing misalignment between the American educational system and rising skill demands. While the severity of the skill gap has abated during the recent economic downturn, the prospect of sustained future growth might well founder on similar-or even worse-deficiencies.


As the global shift from a manufacturing to a knowledge economy continues, those nations with the best-educated citizenry will enjoy a decisive competitive advantage. Countries across the globe are making rapid gains in educational and technological attainment, improving their productivity and thereby increasingly challenging U.S. economic strength. Norway, Britain, and the Netherlands have recently surpassed the United States in the proportions of their populations graduating from college, and other countries are closing in on U.S. levels of educational attainment.

In this new world, market share is moving to countries best able to deliver skilled workers, particularly in the areas of science and technology. The business community has ample cause for alarm when it observes the number of college graduates in high-demand areas such as engineering and science increasing far more quickly abroad than in the United States. According to the National Center for Education Statistics, for example, only 5% of bachelor's degrees awarded in the U.S. are in engineering, compared to 21% of German degrees and 46% of Chinese degrees.9


In light of rising demand for college-educated citizens, an examination of demographic trends brings both good news and bad news. The good news is that growing numbers of Americans will seek postsecondary education in the coming years. The bad news: higher education as currently constituted may well prove unable to accommodate these prospective students.

As enrollments grow larger and more diverse, American higher education will confront growing barriers to ensuring universal access to college. Current projections of enrollment growth are startling. By 2011, the vast majority of recent high school graduates will seek significant postsecondary education and training, contributing to a projected 20% jump in college enrollments over the next decade.10 Not included in these projections is the substantial and rising share of working adults who will return to higher education repeatedly throughout their careers. These trends threaten to overwhelm already strained funding mechanisms, potentially shutting the doors to college for thousands of eligible students.

The success of American higher education will be judged in part on its ability to serve growing minority populations. While college attendance among minorities has been on the rise, it still lags far behind the rate for white students. Absent a significant change in current trends, moreover, the number of minorities attending college in 2015 will remain disproportionately small.11 The commitment to ensuring minorities the same educational opportunities their white counterparts enjoy has always been a moral imperative. Because minorities will comprise a large and growing share of the workforce, this commitment has become an economic imperative as well.


Americans and non-Americans alike have long described the U.S. system of higher education as "the best in the world." Given the dramatic changes confronting this system, however, the time has come to redefine what it means to be the best. When prosperity depended largely on the unskilled labor that fueled the manufacturing economy, the existence of a few prestigious research universities was sufficient to secure the preeminence of American higher education. Significant gains in educational access achieved by the G.I. Bill after World War II and the expansion of the community college system some 20 years later have done little to shift this focus from elite institutions.

At a time of unprecedented demand for widespread access to postsecondary education, the accomplishments of individual colleges or universities cannot serve as a measure of the entire system's quality. Patrick Callan, president of the National Center for Public Policy and Higher Education, has formulated this point in compelling terms:

    The reputation of American higher education as "the best in the world" is derived from that of a few elite institutions and from the research contributions of a small number of universities. This reputation has little to do with higher education as most Americans experience it.12
Educators, policy makers, and business leaders will have to divert their attention from particular institutions to the rapidly changing populations those institutions must serve.

The long-established emphasis on the reputation of individual institutions is especially inappropriate in this era of lifelong learning. In the course of their careers, Americans will move between jobs, technical schools, two-year colleges, and four-year colleges, often assembling disparate courses and learning experiences into recognized credentials. Driven in large part by the growing skill requirements of an increasingly dynamic labor market, the demand for such frequent and varied lifelong learning opportunities does not respect institutional or curricular boundaries. Americans will increasingly judge the quality of their higher education system on its ability to facilitate these learning opportunities, regardless of where or when.

As it strives to remain competitive in a world that is evolving quickly, the business community must promote the ability of American higher education as a whole to serve the increasingly diverse needs of a larger and far less homogenous population.

2 Philip R. Day, Jr., and Robert H. McCabe, "Remedial Education: A Social and Economic Imperative," Issue Paper (Washington, D.C.: American Association of Community Colleges, October 1997).
3 Michael Porter and Debra van Opstal, U.S. Competitiveness 2001: Strengths, Vulnerabilities and Long-Term Priorities (Washington, D.C.: Council on Competitiveness, 2001).
4 Bureau of Labor Statistics, Occupational Outlook Handbook, 2000-01 edition (Washington, D.C.: U.S. Department of Labor, January 2000).
5 Investing in People: Developing All of America's Talent on Campus and in the Workplace (Washington, D.C.: Business-Higher Education Forum, 2002).
6 American Management Association,
7 "Coopers and Lybrand Trendsetter Barometer," 1998, cited in Robert I. Lerman and Felicity Skidmore, Helping Low-Wage Workers: Policies for the Future (Washington, D.C.: Urban Institute, 1999),
8 Milton Goldberg and Susan L. Trainman, "Why Business Backs Education Standards," Brookings Papers on Education Policy, 2001, ed. Diane Ravitch (Washington, D.C.: Brookings Institution Press, 2001), 84.
9 National Science Board, Science and Engineering Indicators, 2000 (Arlington, VA: National Science Foundation, 2000, NSB-00-01), appendix table 4-20.
10 National Center for Education Statistics, Projection of Education Statistics to 2011 (Washington, D.C.: U.S. Department of Education, October 2001).
11 Anthony P. Carnevale and Richard A. Fry, Crossing the Great Divide: Can We Achieve Equity with Generation Y? (Princeton: Educational Testing Service, 2000), 10.
12 Patrick Callan, "Introduction," Measuring Up 2002: The State-by-State Report Card for Higher Education (San Jose: National Center for Public Policy and Higher Education, 2002), 15.