Tuesday, November 16, 2004

G-Man's Thoughts on Workforce Development

G-man just forwarded to me the following piece of policy analysis and thought questions. I find this area to be one of extreme interest, although I know that I do not know enough to intelligently comment upon it, so I will leave it to G-man as this is one of his areas of expertise. Basically the Bush Administration wants to transfer a significant amount of funding away from voke-tech and potentially shifting it to academic high school programs. The rest is G-man's words, not mine.

Another potential example of bad policy by the Bush Administration.
Although frankly, if they do what they are threatening, I'll be a bit


---Thoughts on Bush Policy---

Although Gray zings the administration a bit in the article, I assure
you he does not do it from a political or ideological standpoint, but an
institutional one - his life is workforce development, and he sees them
about to make a bad decision. In fact I attended a convention last week
and the policymakers their seemed to think federal cuts for vocational
education were inevitable.

For my part, I'm partially bewildered that Bush is thinking about doing
this. In fact, early on they made noises as if they were about to
increase support for this kind of thing, but now the position seems
reversed. I would think also that they would be more interested in
getting kids through technical, perhaps more economically relevant skill
sets that the treatment they get in our liberal arts colleges and
universities (a treatment Rush would remind us is liberally mind

The best possible explanation is that this is simply a political

First, almost every parent out there is convinced that a four year
degree is the key to their child's success, and many think vocational
education is strictly for losers (an impression that is partly due to
the habit of school systems shunting poor performers to vocational
schools to improve the scores of their academic schools). So few will
likely bat an eye if they do it.

Second, few will complain if Bush addresses the so called funding
problem of NCLB by redirecting funds to the academic schools. Based on
stuff I know that I will not relate here, additional funding will likely
raise these scores in aggregate, but have very little impact on outcomes
that matter, i.e. graduation, employment, and income.

Sadly, everything I've seen suggests we really *need* to keep an expand
our vocational programs, even if it's at the expense of academic high
school programs (although like Gray I think they can be integrated).

Just think about what's happened to the labor market over the last 25
years, and the implications for the standard liberal arts degree.

(1) First, we saw a *reduction* of middle manager positions in corporate
America thanks to Japanese competition.

(2) Then we saw a *reengineering* of corporate America, in which many
jobs were eliminated (ex: secretaries) and many more were outsourced
domestically to contractor firms - resulting in less pay and benefits
for the casualties.

(3) During the boom of the 90s we saw *insourcing* of 1 million H1-B
visas, which allowed firms to import IT workers who would work for
substantially less (35-40K vs. 55-60K) than domestic workers

(4) An now we have *off-shoring.* It's now $60 an hour vs. $6 an hour.
The government doesn't collect these numbers (and I'm not holding my
breath that they will) but several private firms (Mckinsey, Forrester,
Goldman Sachs) and universities have. Here are some figures:

Goldman Sachs - 300-500K jobs off-shored in last three years
Business Week 400-500K
Forrester 400K off-shored last year alone

These numbers are all rough, and 500K jobs represents a small part of
the 137M folks in the workforce (although it's a tasty part in terms of
income). But the gut clenches when you consider the future.

Forrester predicts that by 2015 3.3 Million positions will be
off-shored, meanwhile a UC Berkley study has identified 14 million jobs
in occupations at risk for off shoring.

So I would claim the prospects for the four year degree are dimming -
corporations don't value it the way they used to, and in any case they
don't need as many domestic liberal arts graduates. Although a "good"
bachelor's degree gives one a hedge against a changing labor market, the
increasing demand for technical skills is reducing the usefulness of
that hedge. Plus a lot of people with the degree never acquired enough
skills to effectively hedge anyway.

But you can't off shore a nurse, pipe fitter, or construction worker.
Many of the un-offshorable job opportunities can be realized through
vocational education (and these jobs pay well).

As I said, I don't know what they are thinking. Hopefully they'll
correct before they announce official policy (because once they utter
something, they seem reluctant to change their minds).

[Note most figures are from an article by the Brookings Institutions]

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