As many readers are aware, my other life has me in a classroom as an adjunct professor at Northwestern University. As an elite university, NU is a special place with a very challenging 12 percent acceptance rate that attracts some our nation’s and the world’s best and brightest.
It is that exposure to the next generation that gives me confidence in the future of this great nation.
In this article, I want to step back for a broader discussion. As Baby Boomers may recall, if you were a good high school student, your directed curriculum included: math, science, history and a language.
However, if you were an athlete, or scored lower in any of a variety of tests, you were directed into Industrial Arts. This included the ever-present wood shop, auto shop, metal shop and drafting. Is it not interesting that such was the default curriculum of those perceived to be not college material?
After high school, 30 percent of baby boomers graduated college. The remaining pursued successful careers under a variety of vocations, including the trades. One learned a trade under a union apprenticeship program or a vocational school. Southside Chicagoans may recall Washburn Trade School near Comiskey Park.
However, many of those trade schools have fallen by the wayside, and union membership continues to consolidate as well.
Limited access to that type of training is now manifested in a skill shortage. For foundation, please understand that when a specific country is trying to determine its standard of living, it does so by benchmarking against other nations. The metrics to determine such are many; however, these are at the top of the list:
Having effectively mastered the first two, please recall that, as we entered this millennium (now 15 years ago); there was a desire to pump up the percent of Americans owning their own homes. Credit was abundant and available, was easy to secure, and was extended to those not positioned to ever repay.
There was this ill-conceived concept called a mortgage teaser rate marketed as an ARM (Adjustable Rate Mortgage). These came home to roost, en masse 48-60 months later. By the way, many of those mortgage adjustments manifested in 2008/2009. For those of you have not yet viewed “The Big Short,” run, don’t walk to the movie. It will boil your blood and punctuate the absence of consequences to corruption, of government agencies or those deemed too big to fail.
By the way, those bad mortgages were bundled together and sold as institutional investments known as CDOs (Collateralize Debt Obligations) — better described as FRAUD!
On to college
After the housing implosion, we focused our energy upon increasing the percentage of Americans who were graduating college. We now sit with an excess of $1 trillion in school loans, of which 38 percent are already non-performing. George Santayana said: “Those that don’t remember the mistakes of the past are condemned to repeat them!”
Please note, that a university is a high fixed cost model. In addition to the significant brick and mortar, they often have union contracts with no cut provisions for the administration staff, tenure for professors and the expensive requirement to maintain accreditation. This effectively renders them the highest of fixed cost structures. Baby boomers numbered 76 million, thus a 30 percent college completion rate was financially viable. This was due to the big denominator (numbers of boomers). The more modest numerator (boomers finishing college) worked fine. Along came Generation X, a much smaller numerator, in fact, 31 million fewer.
Given the high cost structure of the typical university, our society needed to increase the numerator (Gen Xers graduating college).
I focus on the Gen Xers as they are the generation now taking over the leadership roles of our industry and, for that matter, everything else. You hear much about millennials as they are many, talented, visible, and entertaining.
However, Gen Xers are the generation replacing the boomer leaders. Due to their size, they are effectively the less visible “middle child.”
Certainly, having invested 15 years of my life securing my college degrees, coupled with 30 years of teaching, I am not denouncing a college education. However, I am pointing out certain realities that render the ability to graduate in four years much more difficult. If your kid tells you that he/she needs a fifth year (commonly known as the “victory lap”), please stop short of beating them or calling foster care to donate, as they may not be lying (I hope my daughters never read this because they will wonder who has possessed their father, for they do not recognize the aforementioned words.)
We have created academic majors to allow students to find the route to a college degree free of math, science, and even reading. Are these skills even used in real life? We have replaced the “three R’s” with the ever-popular ethnic studies and tolerance training.
The end result is kids graduating with nonmarketable degrees. At times, an esoteric major may be needed. However, it comes without a salary sufficient to sustain economic life, let alone to repay student loans averaging $27,000 on the day of graduation. Many exit college with over a $100,000 in debt. Today, as reflected in the graph at right, there are 5 million more Americans attending college than 2000. We are producing students with skills for which there is no market need.
Technical workers: Short supply, high demand
The real disservice to society was to create the narrative that a college degree was the only path to success. It is indeed a path to success, but certainly not the only path. Simple supply and demand dynamics drive much of economic life. If the stock market closed “up” on a particular day, it means that there were more buyers than sellers (demand exceeded supply). It closed “down” when sellers outnumbered buyers (supply exceeded demand).
The demand for technical workers (welders, plumbers, electricians, carpenters, and truck drivers) will exceed the supply. Therefore, the wages of the technical class will continue to increase. There is the story of the guy who calls a plumber to fix a sink and gets presented with a bill for $400! The outraged homeowner proclaims, “That’s ridiculous, I have an attorney and he doesn’t charge that much!” To which the plumber replies, “I know, I used to be an attorney.”
The demand for technical skills exceeds supply, however, the supply of candidates with generic undergraduate and graduate degrees exceeds demand.
To bring this supply/demand matter closer to equilibrium, we need to convert our nation’s community colleges to more or perhaps even exclusive technical training. That in itself will produce a population with marketable skills and sufficient earnings to provide a healthy standard of living. Would we still need to send X-rays overnight to India to be read and interpreted? What more worthy cause for a government than keeping its masses employed?
Our issue is a shortage of skilled workers and an abundance of unskilled workers who don’t want to abandon a welfare system that does not motivate those inclined not to be motivated. Wal-Mart did not raise the minimum wage to $9 out of humanitarian motivation, but rather the inability to find help at $7.
Let’s not overcomplicate. Look at the unrest and even overthrows occurring in countries with high unemployment, especially among the youth who are more inclined to challenge authority … Ya think?
Dr. Jill Biden, the wife of the nation’s vice president, is a professor at a community college. What a great optic it would send, if at some point in the seven years of his tenure, the president had elected to give a commencement speech at a community college. Would he not have put the community colleges on the map? Would it not put them in an elevated light? Would it not help solidify the potential that they represent to rectify some of the issues with the shortage of skilled workers?
I do believe there is a growing awareness that our nation’s community colleges are underutilized opportunities. Further, funding for vocational and STEM education is increasing, but both need to accelerate, lest we fall even further behind in this world arena, as evidenced the chart:
In conclusion, keep the faith. We are still the best option the world over. For if you didn’t pursue your trade or business here in America, then where? I didn’t think so.
“The key to successful managing is to keep the five guys who hate you away from the four guys who haven’t made up their minds.” – Casey Stengel