The U.S. emerged from World War II as the richest country in the world. Although our prosperity has certainly hit a number of speed bumps over the 60 years, our prosperity has given our children an unprecedented luxury. They could study virtually any subjects in which they had an interest and, assuming they did reasonably well in college, have a reasonable chance of obtaining a good job and earning at least, a middle-class lifestyle.
Have we outgrown this luxury? Should students who hope for a reasonable shot at the American Dream follow the lead of Chinese and Indian students by focusing their studies in the fields that offer the best prospects of employment, rather than those that feed their passions?
Realities of the Great Recession
The traditional American educational luxury of pursuing one’s passion (like many other luxuries during our current mini-depression), is beginning to look less and less affordable. Young adults, aged 20-24, currently face 15% unemployment, up from 8.2% in 2007. While recent college graduates certainly fare much better than those with high school degrees, the National Association of Colleges and Employersestimates that corporate entry-level hiring has fallen by more than 20% and that only 19.7% of 2009 graduates who have so far applied for jobs have actually received offers.
In fact, it claims that the total number of jobs for 2009 graduates will fall by 22% from 2008—during a year in which colleges are graduating more students than any year in the last decade. Moreover, many of those students who are lucky enough to receive offers are having to settle for lower-level positions, jobs outside their preferred field and jobs that do not teach the skills needed to compete with those who graduate two or three years from now.
The damage, according to recent study by Yale School of Management economist Lisa Kahn, can be long-lasting. Graduates who join a company during a recession (1981 for her study) not only start at lower wages, but they generally continue to earn lower wages and find it difficult to compete with younger, more recent graduates when normal hiring patterns resume.
And one thing is certain. Things will become more difficult before they improve. Although we have begun to see a number of promising “green shoots,” most economists agree that unemployment rates will rise—probably above 10%—before they are likely to begin to decline around mid-2010. Moreover, it is likely to be 2014 before our economy will produce the same number of jobs as in 2007—and that does not even begin to account for the 100,000 new jobs that must be created each month just too keep up with new labor force entrants. More challenging still, globalization will claim a growing number of new jobs and, increasingly, a growing percentage of relatively high-paying knowledge jobs.
As I have discussed in previous reports (“Why the Private Sector Must Develop Socially Responsive Workforce Globalization Policies“) and articles (“Welcome to the Global Knowledge Economy“), two separate 2007 and 2008 studies by Princeton Economics Professor Alan Blinder and the Harvard Business School concluded that a minimum of 21% and up to a potential of 42% of U.S. jobs had the potential of being offshored.(Not that they will be offshored mind you, but they have the potential.) The greatest future challenges will occur not in manufacturing, but in knowledge jobs—those that generally require college degrees and that pay moderate to high wages.
Accommodations to the New Normal
Although this sounds pretty gruesome, all is not gloom and doom. Some newly-minted graduates have had no problem finding the jobs they desire. Some even have the luxury of selecting among two or more attractive offers (fewer offers than in previous years to be sure, but still enough to provide a choice). As discussed in the Council of Economic Advisors’ July 2009 report, “Preparing the Workers of Today for the Jobs of Tomorrow”, these offers tend to concentrate in:
- A relative handful of industries, such as healthcare, education, aerospace, pharmaceuticals and environmental sciences; and
- Job functions and disciplines that entail specialized, post-secondary education, ranging from associate- and vocational-level programs (like medical records technicians and home health aides), to college degrees (registered nurses and teachers), through post-graduate degrees in fields such as medicine, biochemistry and electrical engineering. The Bureau of Labor Statistics’ Occupational Outlook Handbook, 2008-09 provides details on jobs that offer the best and worst prospects through 2016.
This, however, begs the question. Have U.S. children lost—or are they in danger of losing—the luxury of using education to pursue our passions? Must we begin to view higher education as we view apprenticeships and view vocational schools—as preparations for a job, rather than for a preparation for life?
I don’t think so. As I will discuss in my next blog, I believe that students not only can continue to use education to pursue their passions—they must do so to optimize their prospects. A relative handful of students may, as they always have, have the opportunity to reshape realities to accommodate their own interests and needs. The rest of us, however, while still able to pursue our educational and occupational passions, may have to make a few accommodations to an environment that is increasingly being called the “New Normal.”