The U.S. has an unemployment problem. It has an education problem. It has a regulation problem. And they are fundamentally interrelated.
This past Friday, the Department of Labor reported that there are roughly 14.1 million Americans in the ranks of the officially unemployed. Ignoring the millions more who may not be counted because they’ve either stopped looking or have taken part-time work, it is costing taxpayers just under a quarter of a trillion dollars per year to support those 14-plus million.
That is a serious unemployment problem.
It would be a radical change in the outlook for the national economy (never mind the national psyche) if unemployment were instead dramatically lower and the more than 7 million Americans now on unemployment payments were instead working, paying taxes (including payroll taxes), and producing goods or services while reducing government expenditures by $10.2 billion per month.
Sounds like a worthy goal, doesn’t it?
What is the dividing line between the bleak reality and the more optimistic vision? The single most important benchmark for employability is level of education. The Bureau of Labor Statistics regularly reports the unemployment rate by level of education. It is a fairly straight line: Americans with less than a high-school diploma have an unemployment rate of 14.3 percent. Those with a high school diploma, 10 percent. For Americans with some college or an associate degree or certificate, 8.4 percent. For those with at least a bachelor’s degree, 4.4 percent.
Transforming the U.S. labor force and the unemployment plague will not happen in weeks, months, or even a few years. But the tight link between education and labor-market success demands that a medium-to-long range solution to preempting unemployment is incentives for more young Americans to attain their highest possible level of education.
That is a pro-employment, pro-growth, pro-future way to address the unemployment problem.
A sensible education strategy will, however, avoid the pitfall of one-size-fits-all thinking. Americans are familiar with the traditional four-year college route to greater education. But for others, this route may be blocked by financial, social, academic, or other barriers. So, those who share the same productive potential as the freshmen waiting for the fall semester at, say, Vanderbilt or Nebraska may choose to find another course — literally. They may opt to attend a career-oriented college or university.
To qualify for student-aid programs, for-profit institutions must meet the same rigorous accreditation standards, imposed by the same rating agencies, as Harvard or Stanford. The only difference is that students who attend for-profit colleges are taught the professional skills applied in the field of their chosen career.
Career-oriented colleges’ student bodies have a higher percentage of minorities. The students are typically older, have a higher probability of having a family, and have a strong appreciation for the value of a college diploma. These colleges are part of solving the education problem facing the U.S.
Sadly, the Department of Education has targeted for-profits colleges. Its so-called “gainful employment” rule seeks to undercut for-profit colleges and stack the deck in favor of traditional four-year schools. Of course, the ultimate burden of this ill-designed regulation is borne by the very same young who are at the highest risk to remain intractably unemployed. The rule was shoved through the Department of Education in spite of having to withdraw the very research on which it was based. Unfortunately, disqualifyingly flawed research did not stop a flawed rule. The gainful-employment rule is emblematic of America’s anti-growth regulation problem.
President Barack Obama claims to have the best interests of those in most need at heart. If that is true, and if he truly wants to be known as a president who had a dramatic, positive influence on America’s at-risk young people, he would demand the Department of Education withdraw this flawed rule. To let it stand is to sentence millions of Americans to a lifetime of underemployment.
The problem isn't a lack of employability among the unemployed. The problem is a lack of job openings. Something that more college aid will only HURT rather than help, since either current or future taxpayers will have to cover it.
Reply to this commentLinkReport AbuseDouglas - are you serious? Did Phoenix U pay you to write this? LOL! Here are some quick questions:
1. How much more likely is a student at a "for profit" to default on their loan?
2. How likely is a graduate from a "for profit" to actually attain employment in the field they "studied?"
And here are some facts (I know facts aren't popular among the "global warming is a myth" crowd - but it's worth a try...) For profit universities have demonstrated a horrible track record when it comes to preparing their students for employment. Their students are twice as likely to default on govt. loans than non-profit students, and the fact that for profit universities invest more in business development (AKA selling their "services" to dupes) than in academics shows you where their priorities lie.
Similar to the banks and ethanol farmers, for-profit universities represent yet another stakeholder group that's trying to latch even more tightly onto the teat of the govt. - remember, their lifeblood is all of that FAFSA loan money that the govt. doles out. As a tax payer, do I want these "universities" to tighten up their standards before getting more of my money? You bet. But just like those other stakeholders mentioned above, you can always count on a "Conservative" to look past the facts, and make a blatant case for why someone should get a pass from the govt. in order to secure a handout, all while espousing conservative values. You should be ashamed. For-profit universities are the pay-day lenders of academia. But you'd probably make a case for those cats, too. LOL!
Reply to this commentLinkReport AbuseHear hear!
There is a sort of crude political tribalism that makes some conservatives think they have a duty to:
* Love Wal-Mart and hate Whole Foods
* Love NASCAR and hate soccer
* Love for-profit schools and hate state universities
and so on and so forth.
Me, I'm a proud right-wing nutjob and always will be...but in each of the above cases, I hate the former and have great appreciation for the latter. And I make no apologies for that.
Reply to this commentLinkReport AbuseAgreed 100%
Reply to this commentLinkReport AbuseOne word: immigration.
Doug, you fail to account for that massive issue (and one all too often neglected/ignored/sugarcoated, especially among the political class).
This country takes in approximately 1 million legal immigrants and 500K - 1 million illegal immigrants per year. Of that number, 50K are high-skilled immigrants who are in this country on a work visa. That means that 2-3% of immigrants are here because they have a discernible skill that permits them to receive work here.
Typically, that skill means that they have graduated from a US-quality university and are qualified to work as a white-collar professional. In other words, these people are smart, they contribute hugely to the US economy, they make decent money, but they aren't necessarily Einsteins. In (still) other words, only 2-3% of immigrants are able to enter the middle-class economy that most Americans today have access to.
Our immigration policy has created a massive underclass of at least 10-20 million illegal immigrants and their families. Additionally, we allow in significant numbers of legal immigrants via family chain migration who too often are ill-equipped to enter the workforce at a level where they will be able to earn enough money to be independent of government (taxpayer) welfare.
Now, who can be surprised when we have well over 20 million people who, frankly, are not able to compete for decent jobs in a competitive, global economy that there are huge numbers of unemployed -- and, just as bad, a growing number/proportion of jobs in food service, retail and other low-skill/no-skill sectors? That's where much of the labor supply is.
In order to be able to compete for jobs that can increasingly be done by the Chinese, Indian or other people whose median education levels are actually increasing, unburdened by huge influxes of unskilled Central American migrants, we will need first and foremost to reformulate our immigration policy around skills, education, financial independence, and move from the chauvinist, racialist policies that dominate today -- allowing particular ethnic/geographic groups of immigrants to dominate and not be accountable to the law because of their chauvinist, racialist lobbies and desire among landscapers/restaurateurs to have ever-cheaper labor to provide essentially no-value-add services.
That is more important than anything you mention, Doug, but political correctness has made tried to remove fromt he table that basic truth and common-sense position -- a harmful state of affairs for the nation.
Reply to this commentLinkReport AbuseThis post has apparently been transmitted directly to The Corner from some alternate universe where the higher-ed bubble and the underemployment travails of the recently-graduated do not exist or have not yet begun to be recognized.
There's too much inanity here and too little time, so let's look just at the last sentence.
As it happens, we already "sentence millions of Americans to a lifetime of underemployment". This has gone on since well before President Obama and his Department of Education got involved. And it's not primarily, or even significantly, an access problem.
A large number of those sentenced already *have* degrees, from both traditional and "career" schools, from state schools and privates and for-profits. Far from saving these unfortunates from underemployment, this access to higher education has instead only added to the sentence of underemployment a large non-dischargeable debt obligation.
I hope that Mr. Holtz-Eakin simply doesn't know what he's talking about...because I'd hate to think that his Pollyannish view of higher ed in general, and of for-profits and "career" schools in particular, has anything to do with some private pecuniary interest he or his think tank may have in the matter. Though that would make this post make a *lot* more sense...
Reply to this commentLinkReport AbuseSo far the comments have missed the point. Here is the real issue: When one is dining with the devil it is best to use a looooong spoon.
The traditional schools are using the mechanism of the government to disadvantage the competitors. Never mind default rates or anything else, this is a pure business ploy. Think UPS using the law to disadvantage Fed EX and on and on.
Nothing more than that here to see.
Reply to this commentLinkReport Abuse"Never mind default rates"? You say that like it's not your money being loaned to these students.
Yes, the traditional schools are trying to use government to disadvantage their competitors. But it does not necessarily follow that their competitors do not nonetheless deserve to be disadvantaged.
And they do. Instead of generating profit through the creation of value, as a legitimate for-profit enterprise does, the University of Phoenix and its ilk are generating profit through the ruthless capture of government subsidies, heedless of the long-term costs and benefits to the poor saps taking out the loans.
Reply to this commentLinkReport AbuseOf course it is my money that is being loaned to the college kids. But the point here isn't default rates it is the fact that the government, once again, has put itself in a position to pick winners and losers. As long as the government stays meddlesome these distortions in the market will plague us.
And the UoP and others are simply working the government's rules and playing to win. How do you think hospitals survive? If you don't like the UoP's behavior then join us conservatives in demanding the abolition of the department of education. And energy, and agriculture and on and on and on.
Reply to this commentLinkReport AbuseWhere did I say I approved of the Department of Education?
Just because I view the aggressive capture of student loans by for-profit operators as a waste of taxpayer money--slightly redolent of fraud, even--doesn't mean I'm a big-government liberal who loves the student loan program.
I very much wish we didn't have a Department of Education. But so long as there is one, and so long as it offers a student loan program, I would at least prefer that resources not be misallocated to feed institutions that stand as grotesque parodies of both the university and wealth-generating free enterprise.
And that goes double when such institutions offer educational content that is even more suspect, and societal value that is even more dubious, than more traditional bottom-feeding schools.
Reply to this commentLinkReport AbuseIf education were the problem, American jobs would be zooming off to places with better-educated people, like France, Germany, and Russia. Instead, they're going to China, India and Mexico.
Some of the jobs in India are done by highly-educated programmers, but it's not BECAUSE their education is better, it's because the expected standard of living is lower and it's easier to hire and fire them.
Education is NOT the primary variable.
Reply to this commentLinkReport AbuseCorrelation does not imply causality. In fact, we have discovered this through a couple decades of subsidizing higher ed. More BAs has not led to low unemployment and high productivity--it's led to the devaluation of the BA.
Reply to this commentLinkReport AbuseExcept that the reverse is true...unemployment among the educated is low, and productivity is higher than it's ever been in history. But don't let facts cause you any any dissonance.
Reply to this commentLinkReport AbuseJust because unemployment among the "educated" is low doesn't mean that the value of a Bachelor's degree is the same as it was 20 years ago. Jobs that used to require a high school diploma now require a bacelor's degree. When an employer has a job opening, they can use the phrase "Bachelor's degree required" as a first filter to cut down on the number of applicants. When I see "bacelor's degree required" or "degree required" without specifying the degree, I know that it is being used as a filter.
Reply to this commentLinkReport AbuseOr, alternatively, we can get the federal government out of education altogether, since it isn't within their limited powers under the Constitution.
(Since I keep beating this equine, I find it funbny the captcha is: hobby-horse)
Reply to this commentLinkReport AbuseIt's a dead horse that needs the occasional beating, I believe.
Rather sad, though, that next November it will have been dead 70 years.
Reply to this commentLinkReport Abuse"The single most important benchmark for employability is level of education."
No, it's that the jobs for non-college educated workers have dried up or beens shipped overseas. Having more people get "degrees" in Fashion Design or Photography is not going to make those jobs appear.
Reply to this commentLinkReport AbuseThe US already has huge numbers of college graduates working in jobs that reasonably intelligent high school students can learn. Many of the kids now in college have basic skills that would have been thought weak for fifth graders a couple of generations back. Scraping the bottom of the barrel to process more kids through college will accomplish nothing except to make the problem of credential inflation (employers insisting that applicants have college degrees no matter how little they've learned for jobs that call for no academic expertise) worse.
Reply to this commentLinkReport AbuseMy point exactly. Many college freshmen are taking remedial courses, to get them up to speed on knowledge that 20 years ago you gained in the eigth grade. So what we have here is taxpayer funding of 12 years of elementary and secondary schooling, followed by a year's worth of self-, private- or publicly-funded college (very much more expensive) to teach the things that the student should have learned in those previous, taxpayer-funded 12 years.
Reply to this commentLinkReport AbuseMillions of Americans are sentenced to a lifetime of underemployment because they are products of the American education system* and/or come from families that have a history of underemployment and expect someone to take care of them.
The biggest problem with our education system is lack of choice (pre-college) due to the unholy alliance of unions and bureaucrats and high cost (post-secondary) due to subsidization in order to make college 'more affordable'.
* A large portion of the potential labor force is illiterate, can't do basic math (often it does not matter if they've dropped out of HS or graduated) and assume that someone is going to take care of them.
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