Wednesday, November 25, 2015

Higher Education in America: The Jobs Crisis Foments Another

American college attendance has had a good, long run.  Per the National Center for Education Statistics, in 1869 and 1870 only 1.3% of those aged 18 to 24 were enrolled in post-high-school educational institutions.  That did not reach 5% until 1921-1922 and 10% until 1945-1946.  The G.I. Bill, which provided funding for World War II soldiers to attend universities, along with higher prosperity in general, caused steady increases from then through the fall of 1957, when the share reached 22%.  It continued climbing almost every year, and broke 40% in the fall of 1975 and 50% 14 years later.  In 1995, the tracked data switched to those at degree-granting institutions, and attendance continued to rise, from 34.3% that year through 42.0% in 2011.  Since then it has been edging down, to 41.0% in 2012 and slightly lower, though not certainly as the data is still incomplete, since then. 

Which way will it go from here?  For several reasons, it is probable that the percentage of young adults in college will continue to drop.  The main two are the intertwined combination of ever-higher student loan debt, which has shot up from $366 billion ten years ago to at least $1.2 trillion today, and poorer job prospects for graduates; in 2012, 28% of bachelor’s-degree holders were not working, double the rate of 2000, and other studies have shown that only one third of them had positions related to their majors.  Yet at the same time, overall lifetime earnings are frequently claimed to be much higher for those with four-year degrees than those without. 

Into this growing controversy came Peter Cappelli, a Wharton business professor and author of 2012’s Why Good People Can’t Get Jobs.  In that book, he showed that what some have called the “skills gap” between employers and possible employees is actually a matter of the former refusing to either pay true market rates or to provide training, both of which were more likely in the past.  His effort from earlier this year, Will College Pay Off?, addressed what is happening between universities and the job market.  Although he does not seemingly believe in a permanent jobs crisis, neither does he see any labor shortage now, and makes some fine iconoclastic points.  Which are the best?

First, higher education is different now.  “It is less likely to be a four-year experience on a campus and more likely to be something spread out over many years, often across different colleges, and frequently delivered in office parks.”  About two-thirds of students now work.  It is also more expensive than ever, with an increasing share of that cost managed through loans, and costs more than anything else many families will ever buy, even their houses, with American students paying “about four times more than their peers in countries elsewhere.” 

Second, colleges have taken over vocational training.  In the past, most people working at skilled trades and lesser manual positions learned what they needed either on the job or in high school industrial arts classes.  Such instruction now mainly comes from community colleges.  That is also the case for many skills needed for office jobs, for which as recently as the 1990s training usually came from employers.  Overall, according to one 2011 study, only 21% of workers had received any on-the-job training, at all, for the previous five years. 

Third, despite great efforts and an enormous outpouring of new majors which, as Cappelli pointed out, sound like job titles, colleges are still not connecting well with employers.  These new lines of study – examples of majors (not courses) in the book range from “international hospitality management” and “invasive cardiovascular technology” to “casino construction management” and “pharmaceutical marketing” – are financially risky, since decisions to enroll in them are typically made five or six years in advance and thus with little knowledge of ultimate employer demand.  They also tend to overemphasize first jobs, which, with employers increasingly promoting from outside, may not lead to a true career.  Few universities have information on their graduates’ career success, and what they have is often marred by nonrespondent bias in surveys and lack of incorporating positions students already had before their studies started.  The gap between apparent educational qualifications and actually getting a job has historically been large, and is little smaller now.

Fourth, there is no surplus of STEM (science, technology, engineering, and mathematics) opportunities.  As of 2013, only 22% of majors in those fields got jobs in them.  Engineering and information technology in particular have long had notoriously cyclical demand, and often students starting college when such positions were readily available find an oversupply of candidates when they finish.  After noting also that career progression in technical fields has become less likely, Cappelli concluded that “there just is no evidence at all of a greater need for science and math grads.”

Fifth, people may need to get degrees for jobs which don’t officially require them.  At a presentation I gave this month I advocated becoming a paralegal, since they were taking over more and more work from lawyers.  A woman in the audience said she, with that job, had been losing opportunities to unemployed lawyers!  I said that would not happen with medical doctors, since their supply was kept low, but could be the case in other fields where those with the highest set of credentials were often jobless.  I personally saw that phenomenon at a lower level in college town Bloomington, Indiana in its early-1980s near-depression, when those hiring could require bachelor’s degrees even for clerks and cashiers, since plenty of unemployed people had them.  Cappelli called that “bumping,” and noted that it was especially prevalent during the Great Recession.

Sixth, the idea that college helps lifetime earnings has no fewer than four serious logical flaws.  The first is the maturity difference between people at age 18 and those 22 or older.  The second error is that universities do well at identifying applicants who have or are on course to have skills and attributes that help them in their work lives.  Relatively intelligent people who usually finish what they start tend to make more money, with or without college time.  Third, such statistics reflect people who had half or more of their careers in the past, and the worst of the problem of recent graduates is more recent.  The fourth problem, which Cappelli did not mention, is that many people at the top of the socioeconomic pyramid can obtain first-rate opportunities for children who get the proper education, a connection in which universities are more a conduit to success than a reason for it. 

Seventh, when the above is taken into account, the financial outcome of attending college for many is negative.  There is no getting around that, and, as a result, enrollment is likely to drop from here. 

Given this rather depressing but real situation, how can people make the best choices on colleges, universities, and other sources of training?  That will be the subject on December 11th.  

Friday, November 20, 2015

Clearing the Exhaust Fumes about Self-Driving Cars and Jobs

Two large articles and one small one about a new technology area hit the press last week.  The first, in The Economist, “If Autonomous Vehicles Rule the World from Horseless to Driverless,” reminded me of a landmark February 2011 Economist Technology article describing how 3D printing “may have as profound an impact on the world as the coming of the factory did” and “is likely to disrupt every field it touches.”  It discussed the current and emerging state of self-driving technology and made predictions, some framed as facts in the future tense, that such autos “will also challenge the very notion of car ownership,” that “coming generations will consider the era of car ownership to have been much stranger,” and even that the thought of automotive executives that many will continue owning vehicles “sounds a lot like wishful thinking, if not denial.”  The second, “The Dream Life of Driverless Cars” by Geoff Manaugh, printed November 15th in the New York Times Magazine, presented a projection that automated vehicles would make up “up to” 75% of those in 2040, but was less giddy about their future, naming dependence on “cars being able to navigate the built environment,” incomplete areas of their software’s development, and the inherent difficulty of interpreting what their programming needed to drive flawlessly while ignoring that, such as “glares, reflections, and misunderstood signs” which it would not.  The third article was a simple news item in The New York Times and picked up elsewhere, reporting that on November 12th a driverless car in Google’s hometown of Mountain View, California had been pulled over for obstructing traffic by going 24 miles per hour in a 35 zone.  The police did not issue a citation, but indirectly pointed out a flaw in its software, by directing its two non-driving operators to briefly take it off the road if other vehicles stacked up behind it. 

As I documented in an April post, 3D printing has not yet approached projections made almost five years ago, but will driverless vehicles justify the Economist clipping by 2020?  I offer eight observations.

First, there is no assurance whatever that automated cars would cut the number of those on the road by anything like the 80% to 90% one source claimed.  Simply having access to less expensive taxis, which is hardly a short-term certainty itself, would not cause the bulk of car owners to turn them in, as they live, work, and run errands in areas where they would need to wait too long for one, driverless or otherwise, to arrive.  Also, if there were fewer of them and their utilization were high, it would take even more time.

Second, if existing road and surrounding structures need to be standardized or otherwise modified to accommodate driverless cars, it may take decades.  The United States government and its constituents have done nothing comprehensive on national infrastructure needs as it is.  Accordingly, it may well prove to be another case where America is behind the world leaders, to the point where automated vehicles have widespread use elsewhere but not here.

Third, one thing authorities will need to address is preventing driverless cars from being hacked.  A one-ton-plus machine capable of moving at dozens of feet per second is a deadly weapon.  Even if malevolent people can succeed only in deactivating them, that could cause catastrophic transportation-system delays, especially if large numbers could be put out of commission at once.

Fourth, while self-driving vehicles seem to be safe so far – in fact, Google claims those it has made have caused no injuries or even at-fault accidents in 1.8 million miles – it is almost certain that bizarre circumstances, and programming bugs, will cause some spectacular ones sooner or later.  As a robotics professor put it in the Times Magazine story, since “we will have millions of these cars, the very unlikely will happen all the time.”  It is not inconceivable, for example, that a driverless tractor-trailer could interpret a stopped rainbow-colored van as an atmospheric phenomenon, as its software might not know that vehicles could have that color pattern, and run it down without even slowing.

Fifth, however, if we look at the reasons I cited for 3D printing not becoming massive, none apply to self-driving autos.  There can be no shortage of “killer aps” for these new cars, and one clear to materialize is their usability by those who should not or cannot drive otherwise.  As their new technology is easily duplicable software instead of physical parts, the automated ones almost guarantee to be cost-effective.   I also perceive no concern with either quality or performance, both of which have slowed the use of 3D technology, for self-driving autos as compared with ordinary vehicles.

Sixth, the safety of driverless cars will provide large incentive for their implementation and purchase.  With 32,719 Americans killed in motor vehicle accidents during the most recent data year of 2013, and 94% of those mishaps from driver error, that provides over 30,000 deaths with at least the potential to be eliminated.  Even if only 15,000 lives were saved, that would be almost 1½ times the number I projected, in a post last month, from bipartisan gun-law reform.

Seventh, as opposed to the ending of the Economist piece, automated vehicles would not mean an end to personal freedom.  The only difference would be, due to the likely requirement that such cars be fit with airliner-style black boxes, that information for all trips would be a matter of record.  With the share of Americans owning GPS-monitoring smartphones at 64% and rising, that seems likely to bother few.

Eighth, the number of jobs that self-driving cars will create or destroy will depend heavily on its acceptance.  Even though the technology stands to save many lives, the peculiar disasters that will happen along the way will unnerve many.  After the 1986 Challenger space shuttle disaster, a remarkable number of Americans thought space travel and exploration should be discontinued – and indeed the next launch did not take place until 31 months afterwards.  Others may, for whatever reason, be resistant to getting in driverless taxis or sharing the road with automated 18-wheelers. 

How will this new capability affect jobs?  We could be looking at a wholesale drop in the number of cabdrivers by 2020, or their numbers could still be strong a decade or more later.  Truckers, likewise, may keep their jobs, or see them severely decimated.  Overall, self-driving technology may be almost here, but we cannot presume to know its effect.  As with other jobs-related areas, I will keep track of developments and let you know.          

Friday, November 13, 2015

GOP Contenders and Jobs – What Do They Recommend, and How Good Is It?

Tuesday’s main Republican presidential candidate debate was the most substantive of the four so far.  It was run by Fox Business, which apparently was determined to avoid personal history and overly combative questions.  Although the inquiries were easy at times, they allowed the eight on the stage to showcase what they felt strongest about, especially on the directed topics of jobs, taxes, and the economy in general.  Several months into a campaign which has too often seemed to produce platitudes at best and personal attacks of questionable merit at worst, it was fine for these top-ranking 2016 hopefuls to give parts of their stump speeches to the nation instead of to highly partisan crowds, and in relative peace. 

Fox also published similar material in a November 6th Elizabeth MacDonald article, “In Their Own Words:  The GOP Candidates on the Economy.”  Between that and what they said in Tuesday’s debate, we have solid material on candidates’ views on improving our jobs situation.  The eight combined for ten different ideas, with each advocating from one to six of them.  So who spoke up for what, and how much merit do these proposals have?

Most common was removing anti-employment regulations, voiced by six:  Ben Carson, Marco Rubio, Ted Cruz, Jeb Bush, John Kasich, and Carly Fiorina.  Although it may be the easiest to say, and one of the best and seemingly most obvious, there are reasons, beyond the ideological positions of those in power, why more have not been cut already.  To name three, many have entrenched and highly influential special interests supporting them, there would be great difficulty in identifying (let alone even-handedly evaluating) these destructive rules, and a focused effort to remove them would call for a level of bipartisan cooperation and commitment vastly past what we have seen in Congress for decades.  That is not to say that assessing and eliminating many employment-related regulations is a bad idea, but that getting there would be much more difficult than passing a new program.

The second most frequently named measure, suggested by Rubio, Bush, Kasich, and Rand Paul, was to cut corporate taxes.  I have advocated adjusting the business tax code to reward companies that create American jobs, but what these four want is not the same, and does not have merit.  According to Standard & Poor’s, 2,000 American nonfinancial companies now combine for $1.82 trillion in cash and other investments, which is, amazingly, more than double what it was in 2008, only six years before and prior to the Great Recession.  At the same time our country is over 17 million jobs short, with the total number of positions barely higher now than seven years ago.  If big business is so much flusher with so few jobs added, why would trillions more from tax savings help?

Three ideas gathered expressed support from three candidates apiece.  Rubio, Cruz, and Bush all spoke up for comprehensively maximizing United States energy resources.  It has been an oddity that our country is one of the few in the developed world that does not get the most of what it has, not only in fossil fuels but renewable ones such as wind and hydroelectric.  It is insufficient to assert either that environmental concerns are automatically more important than all others put together or that a need to develop other sources justifies sharp limits on coal and oil production.  More jobs are a certainty with more energy work, which comes ahead in other ways as well, so these three Republicans are correct here.  The same cannot be said for another idea from the same three, repealing Obamacare.  That program is certainly flawed, and will eventually get the rework it needs, but in the meantime it is the only comprehensive healthcare program, a clear necessity, the United States has ever had.  It is not reasonable to presume that if it is repealed it will quickly be replaced by a better system, so that should only be done with simultaneous replacement.  As for jobs, it is hard to see how any program which causes the total amount of health care resources to climb sharply can cut them, therefore no merit here.  The third three-person idea, leaving the minimum wage the same, is, as I have written repeatedly before, classically positive for the number of jobs, a point made by Carson, Rubio, and Donald Trump.    

Two suggestions were made by two candidates.  Rubio and Trump spoke out for the need for less illegal immigration, and, in the case of Trump, advocating comprehensive deportation.  Yes, Donald, going door-to-door would create tens of thousands of jobs, but it’s unworkable if not just silly.  I give partial credit for the rest of the idea, since it is unclear how many positions vacated by undocumented foreigners would actually then be filled by Americans.  The second, a flat income tax requested by Cruz and Paul, is an intriguing if probably fatally regressive revenue-collecting idea with pro-employment effects possible but hardly guaranteed. 

Three remaining thoughts on improving American employment were put forward by one candidate each.  Kasich said there would be more jobs if the budget were balanced – why, and how quickly?  Rubio advocated more vocational training, and hinted that it has stopped taking place, which would be a surprise to millions at community colleges and the like; that has only a small amount of merit, as too many of the jobs for which it prepares workers are shrinking in number.  I was surprised that only Paul spoke out for an end to the payroll tax, which is regressive, takes money away from those most likely to need it and spend it, and charges businesses for having employees at a time when we would be better off paying them instead. 

Of these ten ideas, only one – that of more vocational training – is likely to be supported by either major Democratic candidate.  These are conservative suggestions.  That, however, does not mean that liberals should reject them out of hand.  Just as the more Democratic idea of a WPA-style infrastructure project, which both Hillary Clinton and Bernie Sanders have advocated, should also be by Republicans, more liberals would do well to consider, for example, whether we really need as many employment-related regulations as are now on the books.  The country, after all, belongs to all of us, and even official joblessness won’t keep dropping forever.  We have had almost seven years under a moderate Democrat – whether we should have nine, five, or just one more is for us, considering the thoughts above, to decide. 

Saturday, November 7, 2015

Behind October’s Strong Employment Data, AJSN Rises to 17.5 Million as Latent Demand for American Jobs Increases

Yesterday morning’s Bureau of Labor Statistics data release was a good one.  The headline seasonally adjusted official unemployment rate reached another post-recession low of 5.0%, and the economy added another 271,000 jobs, about double that needed to cover population increase.  The count of those without work for 27 weeks or longer and still qualifying as jobless held its September improvement and it still at 2.1 million, whereas that of people working part-time for economic reasons, or employed less than full-time while wanting that status, amazingly shed another 269,000 and is at 5.8 million, down from 6.5 million just two months before.  The unadjusted unemployment rate also dropped 0.1%, to 4.8%.

The two best measures of how common it is for Americans to be working, the labor force participation rate and the employment-population ratio, stayed the same and increased 0.1 percent respectively and are now at 62.4% and 59.3%.  The first of those two numbers is still at the post-1977 low it reached last month, whereas the second, while still small by the standards of the past few decades, continues to be helped by lower official joblessness. 

Average private nonfarm hourly earnings, which had actually decreased in September, gained 9 cents per hour last month.  They are now at $25.20, with the October gain reflecting a strong 4.3% annual rate.  That number is up a more-than-inflation 2.5% so far in 2015.

However, despite the solidly positive results above, latent demand for jobs actually increased last month.  That was because the number of people reporting that they wanted to work but had not looked for it in the previous year was up 131,000, which more than offset the 31,000 drop in official unemployment.  In addition, those counted as discouraged from looking, who below are credited with the same probability of taking employment as the technically jobless, rose 30,000.  On the other side, the total of those claiming no interest in working, which is rising more consistently than any other group but fluctuates a remarkable amount from month to month, was off over 600,000, cutting latent demand by over 30,000.  Overall, the American Job Shortage Number, which shows how many additional jobs could be quickly filled if they were readily available, gained 66,000 as follows:

What is noteworthy about the AJSN this month?  Two related things.  First, although October’s employment data was legitimately positive in not only specific but broad-based ways, our national job shortage worsened.  Second, although many people think of new jobs going to the jobless, more and more latent demand for them comes from people with other working statuses.  Of the almost 17.5 million more positions that could be absorbed quickly, only 6,837,000 would go to the officially unemployed.  That 39.1% share shows how many people not in that group want to work, and their numbers are not shrinking at all.

So where are we now?  The pattern of the past several years, dropping official unemployment showing less and less of the American job shortage, continued in October.  While there were slightly more work positions across the population, the share of people in the labor force did not rebound from September’s fall, and is poised to set another low in November or December.  But fair is fair, and the turtle did, indeed, take a step forward last month.   

Monday, November 2, 2015

Speaking Engagement / Late AJSN

On Thursday evening, I will be giving a presentation, “How to Find a Lasting Career in the New Age of Work,” at Waubonsee Community College west of Chicago.  Unfortunately I will not be back until late Friday.  Accordingly, October’s American Job Shortage Number will not be available until Saturday morning. 

Here is the information on Thursday’s program, which is open to the public: .

I shall return!