4 September 2008

Education value fizzles

By Jim Pinto

Globalization and technology together are creating big changes in how work gets done. Knowledge work can be broken into smaller tasks and redistributed around the world. And the rapid growth of virtual offices is transforming what it means to be “at work.”

There is a mixture of enthusiasm and fear for what is happening. American jobs are becoming more interesting and complex, while supposedly rote tasks move offshore, or are eliminated. At the same time, workers feel competitive pressures that leave little time or room for creativity and innovation.

Employers are seeking knowledge workers with higher levels of education. But these jobs fill up with foreign workers brought in on work visas—and American employees often train the lower-paid foreigners who take their jobs. So degreed people compete for fewer high-paying jobs, and many move to completely different businesses that offer higher pay and benefits—for example, hospital IT services. Many qualified people end up working in service jobs at vastly reduced pay.

The latest report from the Bureau of Labor Statistics shows the real wages and salaries of U.S. civilian workers are below five years ago. There are persistent signs of a gloomier outlook ahead, as U.S. job satisfaction keeps plummeting to record lows. Workplace demands have increased tremendously, especially as technology (e-mail, cell phones, Internet) makes it ever harder to get away from work.

Two decades of rising incomes for educated workers have come to a halt. When adjusted for inflation, the real wages of U.S. workers with at least a bachelor’s degree are barely higher than they were in 2000, an unpleasant surprise in a world in which education is seen as the route to success.

Wage stagnation, combined with 60% rise in college tuitions since 2000, seems to discourage many young Americans from getting a college education. The next generation of young Americans may actually be less educated, creating a growing gap between the kinds of people companies need and the workers available.

As a result of these shifts, knowledge work is increasingly going offshore, where lots of upwardly-mobile knowledge workers are available to generate quick results.

Related links:

• Which Way To The Future?:
  http://www.businessweek.com/magazine/content/07_34/b4047403.htm
• The Decline and Fall of American Education:
  http://www.hoover.org/publications/digest/3062866.html
• Income Of U.S. Workforce Projected To Decline If Education Doesn’t Improve:
  http://www.highereducation.org/reports/pa_decline/index.shtml

Behind the byline

Jim Pinto is an industry analyst and founder of Action Instruments. You can e-mail him at jim@jimpinto.com or view his writings at www.JimPinto.com. Read the Table of Contents of his book, Pinto’s Points, at www.jimpinto.com/writings/points.html.