education for what: the rising demand for skill and the decline of manual labor
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Education for What: The Rising Demand for Skill and the Decline of Manual Labor. Stephen J. Rose State Higher Education Executive Officers July 12, 2012. Most Americans Think That The Expansion of Higher Education Has Had A Lot To Do With Our Strong Economic Growth . - PowerPoint PPT PresentationTRANSCRIPT
Education for What: The Rising Demand for Skill and the Decline of Manual Labor
Stephen J. RoseState Higher Education Executive Officers
July 12, 2012
Most Americans Think That The Expansion of Higher Education Has Had A Lot To Do With Our Strong Economic Growth
1929
1932
1935
1938
1941
1944
1947
1950
1953
1956
1959
1962
1965
1968
1971
1974
1977
1980
1983
1986
1989
1992
1995
1998
2001
2004
2007
$0
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
Real GDP Per Person, 1929-2008, 2008 Dollars
More Education Results in Higher Earnings
Less than HS
HS Diploma
Some college, No Degree
Associates Degree
Bachelor's Degree
Master's Degree
Doctoral Degree
Professional Degree
1,000,000 2,000,000 3,000,000 4,000,000
973,000
1,304,000
1,547,000
1,728,000
2,268,000
2,671,000
3,252,000
3,648,000
Lifetime Earnings by Highest Educational At-tainment, 2009 Dollars
The Premium For Getting A College Degree Has Grown In the Last Thirty Years Because of Rising Demand For College-Level
Skills
1915 1940 1950 1960 1970 1980 1990 2000 20050%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
89%
65%
37%
49%
59%
48%
66%
78%81%
College Wage Premium Over High School, 1915-2005
If We Don’t Increase The Number of People with Certificates and College Degrees, Our Economy Will
Underperform
Almost 20% gap
The Rise in Managerial and Professional Jobs, Three Occupation Tiers, 1960-2008
1960
1969
1971
1973
1975
1977
1979
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
2007
15
20
25
30
35
40
45
Managers and Professions
Less Skilled Blue-Collar, Sale clerks, and Service
Skilled Blue Collar, Supervisors, and Clerical
The economy has shifted from manufacturing to office work and high end services, areas that benefit more from greater skills associated with postsecondary education.
1960
1969
1971
1973
1975
1977
1979
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
2007
0
5
10
15
20
25
30
35
40
45
50 Shares of Functional Employment,1960-2008
Office, Public Administration&Finance
Industrial Production, Construction,&Transportation
Retail and Low-Skill Services
Education, Health Care, and communication
Agriculture, Mining, & Timber
75% of Earnings Go to Office and High-Skill Workers
1.1%12.2%
11.3%
22.1%
53.2%
Share of Total Earnings by Functional Area, 2009
FarmBlue CollarLow-Skill ServicesHigh-Skill ServicesOffice
Understanding Structural Change by Deconstructing Value Chains over Time
Using Input-Output Tables to show complete “value chains”--the direct and indirect inputs needed to produce final output.
Technological change means that it takes a smaller share of our resources to produce common goods and services. For example, in 1947, food and clothing were 43% of what we consumed; the comparable figure in 2007 was 16%.
The Changing Composition of What We Consume, 1947 - 2007
1947 20070%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Business ServicesEducationRecreationHeath CareTransportationPublic Administration and ServicesClothingHousingFood and Drink
Changing Shares by Type of Consumption,
1947-2007
Food a
nd Drin
k
Clothi
ng
Transp
ortati
on
Housin
g
Public
Adminis
tratio
n and
Servi
ces
Recre
ation
Educat
ion
Busin
ess Se
rvices
Heath
Care
-19.1%
-7.9%
-1.4% -0.1%
3.0% 3.4% 3.8%5.3%
13.0%
Changing Educational Composition in Producing Exports, 1967-2007
No HS/GED
HS or GED
AA and Some college, no four-year degree
Four-year degree
Graduate degree
0% 5% 10% 15% 20% 25% 30% 35% 40% 45%
20071967
Changing Functional Composition in Producing Exports, 1967-2007
Farm
Factory and other blue collar
Low-skill services and Retail
High-skill services
Office and Finance
0% 10% 20% 30% 40% 50% 60%
20071967
Changing Occupational Composition in Producing Exports, 1967-2007
Managers and Professionals
Good medium skill jobs
Less skilled jobs
0% 5% 10% 15% 20% 25% 30% 35% 40% 45%
20071967
Rising Demand for College-Educated Workers, and Triple Whammy for Manual
WorkersFirst, final output has shifted from goods
production (food, clothing, transportation) to services (health care, business services, and education).
Second, within each activity, the industrial share of raw material and manufacturing industries needed to produce final output has declined: e.g., in 1967, 26% of the value of food and drink came from farming and food manufacturing industries; in 2007, the comparable figure was 13%.
Third, within manufacturing industries (and all other industries), the share of production workers out of total employment has declined.
In the Future, Most Young People Will Need Some Form of Postsecondary
Education The wages of those with a HS diploma or less
have been falling. A growing option is occupationally-focused
certificate from a Community College or private for-profit school.
Placement matters: Those with a certificate earn 37% more if they work in an occupation for which they have been trained.
In two- and four-year colleges, there have been fewer students majoring in liberal arts and the humanities because of low earnings of recent college graduates.
The earnings premium for getting a BA remains at a high level
More BA graduates are getting a graduate degree, and more are getting jobs in business and not just education or health care.
DON’T
Questions?