US: Degree shortfall will hit economy hard

America will need 22 million new degree-holders over the next eight years but will fall short of that number by at least three million, according to a new report. The nation will also have vacancies for at least 4.7 million new workers with post-secondary certificates and the shortfall will mean lost economic opportunity for millions of American workers, the report says.

In an example of what is happening in many countries around the western world, the report shows how the demand for skilled workers and university-trained graduates is rising much faster than the numbers graduating from universities and colleges. As the authors also note, the shortage is the latest indication of how crucial post-secondary education and training has become to national economies.

"[In the US] the shortfall amounts to a deficit of 300,000 college graduates every year between 2008 and 2018 and results from burgeoning demand by employers for workers with high levels of education and training."

The report, Help Wanted: Projections of jobs and education requirements through 2018, was prepared by researchers at the Georgetown University Center on Education and the Workforce.

The authors' calculations show that America's colleges and universities would need to increase the number of degrees they confer by 10% every year for the next decade. As they admit, that is "a tall order but meeting the demand is not a challenge we can afford to ignore".

The report says that over the past 35 years, higher education has become "a virtual must" for American workers. Between 1973 and 2008 the share of jobs requiring post-secondary education increased from 28% to 59% and the future promises more of the same.

It says high school graduates and dropouts will find themselves left behind in the coming decade as employer demand for workers with degrees continues to surge. Post-secondary education provides access to occupations across the economy while workers with a high school diploma or less are largely limited to three occupational clusters that are either declining or pay low wages.

"As the economy gets back on track over the next five years, 60 million Americans are at risk of being locked out of the middle class, toiling in predominantly low-wage jobs that require high school diplomas or less. The shift to a college economy will continue over the next decade."

The report says the 'core mechanism' driving the increasing demand for post-secondary education and training is the computer. Once called the 'magic machine', the computer now automates repetitive tasks and "increases the value of non-repetitive functions in all jobs".

Occupations with high levels of non-repetitive tasks, such as professional and managerial jobs, tend to require post-secondary education and training. While these types of jobs are growing, positions dominated by repetitive tasks that tend to require a high school qualification or less, such as those in production industries, are declining.

"Federal, state and local governments face a dilemma as they formulate economic development strategy because the traditional approach to understanding career pathways starts with an industry-based perspective while careers, and career mobility, are based on occupation," the authors state.

"The emphasis on post-secondary preparation for new hires means that workers will tend to be attached more to the occupations they will be filling than to the specialised industries in which they work. The day when people left high school to go to work in the local industry and then worked their way up is disappearing."

The report makes it clear that starting out from high school "on the loading dock or in the mail room and climbing to the CEO's corner office" is no longer an option: "People do not go to work in industries any more. They get educated or trained, go to work in occupations and progress in an occupational hierarchy."

The report concludes that higher education is critical to success in the coming economy.

As a result of widespread concern about the US under-performing in post-secondary education, President Barack Obama promised a joint session of Congress in February 2009: "By 2020, America will once again have the highest proportion of college graduates in the world."

But subsequent analysis at the National Center on Higher Education Management Systems estimated that achieving the President's goal would require an additional 8.2 million post-secondary graduates by 2020. At current costs, producing 8.2 million new graduates would require an additional $158 billion at the state and federal level.

As the report notes, the costs are daunting at nearly $16 billion per year. And it points out that while the Obama administration has provided an extra $36 billion for spending on Pell grants, this still leaves $122 billion outstanding which would have to come from state and local budgets.

In something of an understatement, the authors say they recognise that in the current budget climate this will make it difficult for the states to come up with their share. Ultimately, federal and state governments will need to engage post-secondary institutions as partners in finding ways to pay to reach this goal.

"Failure to achieve the mix of funding and reform required for the President's goal will not only leave more and more Americans behind, it will damage the nation's economic future.

And that, quite simply, is something we cannot afford," the authors declare.

geoff.maslen@uw-news.com