Saturday, May 09, 2009

Elections Have Consequences
The unemployment figures released on Friday--while still quite horrible--suggest that we might at least have hit bottom in the current recession. But I find much more encouraging the remarks of the President yesterday:

[I]f we want to come out of this recession stronger than before, we need to make sure that our workforce is better prepared than ever before. Right now, someone who doesn't have a college degree is more than twice as likely to be unemployed as someone who does. And so many of the Americans who have lost their jobs can't find new ones because they simply don't have the skills and the training they need for the jobs they want.

In a 21st century economy where the most valuable skill you can sell is your knowledge, education is the single best bet we can make -- not just for our individual success, but for the success of the nation as a whole. The average college graduate earns 80 percent more than those who stopped after high school. So if we want to help people not only get back on their feet today but prosper tomorrow, we need to take a rigorous new approach to higher education and technical training. And that starts by changing senseless rules that discourage displaced workers from getting the education and training they need to find and fill the jobs of the future.
So today I'm announcing new steps we are taking to do exactly that -- to give people across America who have lost their jobs the chance to go back to school today to get retrained for the jobs and industries of tomorrow.

The idea here is to fundamentally change our approach to unemployment in this country, so that it's no longer just a time to look for a new job, but is also a time to prepare yourself for a better job. That's what our unemployment system should be -- not just a safety net, but a stepping stone to a new future. It should offer folks educational opportunities they wouldn't otherwise have, giving them the measurable and differentiated skills they need just -- not just to get through hard times, but to get ahead when the economy comes back.
Say an unemployed factory worker wants to upgrade his skills to become a mechanic or a technician. In many states, that worker might lose temporary financial support if he enrolls in a training program. And to make matters worse, unemployment might mean he can't afford higher education, and he likely won't qualify for federal help simply because he may have made a decent salary a year ago, before he was laid off.

Well, that doesn't make much sense for our economy or our country. So we're going to change it. First, we'll open new doors to higher education and job training programs to recently laid-off workers who are receiving unemployment benefits. And if those displaced workers need help paying for their education, they should get it -- and that's why the next step is to make it easier for them to receive Pell Grants of the sort that Maureen used.

I've asked my Secretary of Education, Arne Duncan, and my Secretary of Labor, Hilda Solis, to work closely with states and our institutions of higher learning and encourage them not only to allow these changes, but to inform all workers receiving unemployment benefits of the training programs and financial support open to them.
These steps are just a short-term down payment on our larger goal of ensuring that all Americans get the skills and education they need to succeed in today's economy. And to that end, I have asked once again every American to commit to at least one year or more of higher education or career training. It can be community college or a four-year school; vocational training or an apprenticeship; but whatever the training may be, every American will need to get more than a high school diploma. And we will be backing up that effort with the support necessary. And we will ensure that by 2020, America will once again have the highest proportion of college graduates in the world.

In the weeks to come, I will also lay out a fundamental rethinking of our job training, vocational education, and community college programs. It's time to move beyond the idea that we need several different programs to address several different problems -- we need one comprehensive policy that addresses our comprehensive challenges.

Not to overdramatize it, but this is the speech that many of us in workforce development have been waiting to hear from a president for the bulk of our professional lives.

It's not LBJ on civil rights or Reagan in Berlin--hell, I might not even have known about it if it weren't for emails circulated by advocacy groups; job training and education have never been sexy content for the press, and as far as I can see, there was no prominent coverage of this speech other than a line or two of reference in stories about the job loss figures. But it sends the message both that Obama gets that knowledge now drives our economy (and that, going forward, this is a much more solid foundation for growth than a return to insanely over-leveraged financial shenanigans), and that his policymaking will reflect this understanding. Three years ago, we had a president who annually proposed to gut funding for human capital formation activities and a Congress that half-heartedly pushed back to moderate the worst of the cuts but still enabled a year-over-year reduction in support, even as an increasingly dynamic/unstable labor market (of which more below) necessitated a stronger safety net. Now we've got a president who understands the problem and a Congress that, if anything, might push him farther on ensuring adequate resources. (Here is the administration's fact sheet on Department of Labor funding in the FY2010 budget.)

And not a moment too soon. Over the last thirty years, we've seen a handful of related fundamental changes in the labor market: manufacturing jobs have all but disappeared, unions have shrunk in power and influence, and income returns to education have spiked, as this 2008 chart shows:

The trend is, if anything, probably accelerating and intensifying. According to a presentation by an economist with the Center for Labor Market Studies at Northeastern University, between 1979 and 2005-2007, the percent change for expected lifetime earnings in constant dollars for New York City residents was -8.8 percent for those who didn't complete high school; -3.6 percent for high school graduates; -2.5 percent for those with one to three years of college; +28.5 percent for bachelors degree completers, and +45.5 percent for those with a masters or higher. Further, as Obama remarked, education also provides a strong measure of protection against unemployment, through good times and bad.

The upshot of all this, as was noted in the same presentation, is that the public has a huge stake in the educational attainment of its citizens. Over the course of a working lifetime, a New Yorker who didn't complete high school could be expected to cost the public treasury $134,037 more, in cash and in-kind assistance and "institutional costs"--incarceration, the shelter system, and so forth--than he or she will pay in taxes. By contract, a high school graduate or GED completer will contribute a net $192,715, and someone with a Master's or higher can be expected to contribute a net of more than $1.5 million. (Presumably, this isn't me; this is me, plus some corporate macher who makes in a day and a half what I make in a year, divided by two.)

Of course, all this is good reason to invest much more than $50 million in dropout reduction--but that's probably another subject for another day. And more needs to be done to help low-income people balance responsibilities of employment, family, and education, including policies around flex-time and income insurance (one of the notions Obama seems to hint at in the speech). But this is a very promising start.

Embedded in our societal ethic of rugged individualism and deference to free markets is the notion that education is primarily a private good, especially after high school when it's no longer publicly provided or mandated, where the rewards of attainment accrue more or less solely to the educated individual. But in a global economy where we compete on grounds of skill, innovation and creativity, this is less true with every passing day; aggregate educational outcomes in any community you care to discuss exert an enormous impact on equality, prosperity, and public safety, to name just three factors. It's profoundly encouraging to me that our current leaders seem to appreciate this reality.

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