Skills Slowdown

A new report from the College Board tackles the challenge of the skills slowdown--the fact that stagnant rates of educational attainment have caused the United States to fall from first in the world to 21st in the percentage of our students who graduate from high school. While the U.S. ranks second internationally in the percentage of adults over age 55 with a bachelor's degree, we rank 11th among the percentage of younger workers who do so. If we're not careful, the next generation of workers could be the first in our nation's history to have less education than the retirees they replace.

Cato Unbound is hosting an interesting discussion this week of Charles Murray's recent book, Real Education, which argues that America is sending too many young people to college and the 4-year BA should be replaced with shorter, more narrowly tailored vocation programs. Respondents Kevin Carey and Bryan Caplan both have interesting things to say. But what really caught our eye was economist Pedro Carniero's response. Following a dissection of the evidence for and against Murray's thesis, Carniero shifts focus to what he sees as a more pressing issue:

The current generation of young adults may be the first since World War II, possibly the first in American history, to be less educated than the generation that preceded them, according to a new report from the American Councils on Education. The report, Minorities in Higher Education 2008, is the 23rd annual report looking at trends in college enrollment and completion by race and ethnicity.

This dropoff in educational attainment, which economists have described as a skills slowdown, is due in large part to widening educational attainment gaps between white and Asian young adults and their black and Latino peers. While white and Asian adults ages 25-29 are more likely to have a college degree than whites and Asians over age 30, black and Latino adults ages 25-39 are less likely to have college degrees than those over age 30. Add in stagnation in attainment among many subgroups of white young adults, and demographic changes, and you get an overall trend towards skill stagnation and possibly even decline.

In today's New York Times, columnist David Brooks proclaims the "skills slowdown"--the stagnation of young Americans' educational attainment in recent decades--"the biggest issue facing the country," and endorses high-quality early education interventions, of the sort Democratic presidential candidate Barack Obama has called for, as the key to addressing this pressing problem. In fact, Brooks' column offers a striking endorsement of Obama's education agenda--in particular his early childhood agenda--over rival John Mccain's. Sounds like Brooks thinks he's found an answer to the question he asked last month.

Brooks is correct that the skills slowdown is a major challenge that threatens our nation's economic future. He's also correct that greater access to high-quality early education is essential to get America out of its skills slump and improve both educational equity and achievement for our nation's children. It's no coincidence that many of the countries that have surpassed us in secondary and higher education attainment also offer high-quality childcare and/or preschool programs for young children.

A new paper by Joseph G. Antolji, Prashant Bharadwaj, and Fabian Lange looks at whether or not American youth have responded to increasing economic rewards for skills and education by investing more in skills and education:

We examine changes in the characteristics of American youth between the late 1970s and the late 1990s, with a focus on characteristics that matter for labor market success. We reweight the NLSY79 to look like the NLSY97 along a number of dimensions that are related to labor market success, including race, gender, parental background, education, test scores, and variables that capture whether individuals transition smoothly from school to work. We then use the re-weighted sample to examine how changes in the distribution of observable skills affect employment and wages. We also use more standard regression methods to assess the labor market consequences of differences between the two cohorts. Overall, we find that the current generation is more skilled than the previous one. Blacks and Hispanics have gained relative to whites and women have gained relative to men. However, skill differences within groups have increased considerably and in aggregate the skill distribution has widened. Changes in parental education seem to generate many of the observed changes.